Weekly Recap

Following the sharp selloffs three weeks ago, Wall Street started the week on a continuation of the selling pressure – the Dow plunged 312.78 pts to 16,001.89 pts on Monday led by commodities shares amid weaker WTI crude oil prices, which was trading below the US$50 per barrel mark. The Dow, however, rebounded after hitting the support of 16,000 as healthcare stocks were focused; the Dow added 47.24 pts to 16,049.13 pts on Tuesday, followed by another strong gain of 235.57 pts to 16,284.70 pts on Wednesday. After the Dow took a minor pause at 16,272.01 pts (-12.69 pts) on Thursday ahead of the jobs data, the Dow jumped strongly by 200.36 pts to 16,472.37 pts on Friday. On a W.o.W basis, the Dow gained 157.70 pts.

Meanwhile, tracking the downward trend on the Dow two weeks ago, the FBM KLCI faced with renewed selling interest amongst banking heavyweights like CIMB and RHB Capital – the FBM KLCI headed lower to

1,608.43 pts and 1,603.32 pts on Monday and Tuesday respectively. However, as the FBM KLCI retested the psychological level of 1,600, bargain hunting activities boosted the key index by 17.72 pts and 12.89 pts to 1,621.04 pts and 1,633.93 pts over the next two trading days respectively as plantations heavyweights were traded higher on the back of the recovering crude palm oil prices above the RM2,400 level. Nevertheless, the FBM KLCI fell 5.13 pts to 1,628.80 pts on Friday as profit taking activities were noted on banking and plantations heavyweights. Still, the FBM KLCI gained 13.79 pts for the week.

FBM KLCI Weekly Technical Readings

The weekly MACD Line continues to trend higher. Also, the weekly RSI is recovering below the 50 level.

Meanwhile, the daily MACD Line is trending higher towards zero, while the daily MACD Histogram extended another green bar. The daily RSI is hovering above 50.

FBM KLCI Support & Resistance

The FBM KLCI has retested the psychological level of 1,600 last week and the key index rebounded as plantations heavyweights were traded higher. With both the daily MACD and RSI indicators suggesting that the short term momentum is still positive and intact, the FBM KLCI may rebound higher towards the resistance of the 1,640-1,660 levels. Meanwhile, the support will be pegged around the 1,600 level, followed by the 1,560 level.

Moving Forward

Wall Street may extend its buying support after a strong session on Friday - the Dow could rally towards the 17,000 level over the near term as crude oil prices stabilises around the US$46 per barrel mark. Similarly, share prices on Bursa Malaysia are likely to follow suit on the back of positive Wall Street performances, coupled with strong recovery of crude palm oil prices. Traders may look into oil and gas and plantations shares.

Sector focus

The FBM Small Cap index experienced a flag formation breakout last week. The MACD Line is hovering above zero, while the RSI is trending higher above 50. The index may extend its rally further towards 15,180. Support will be set around 14,531.

Stocks to focus

LCTH – Its price experienced a short term breakout above the RM0.635 level with improved volumes. The MACD Indicator has issued a “Buy” signal, while the RSI has hooked above 50. Price target will be located around the RM0.675 and RM0.705 levels.

TOMYPAK – Price experienced a consolidation breakout above the RM2.07 level with high volumes. The MACD Indicator has expanded positively above zero, but the RSI is overbought. Price may rally towards the RM3.00 level after a short consolidation. Support will be set around RM2.10.

Source: M+ Online Research - 5 Oct 2015