Weekly Recap

U.S. stockmarkets advanced at the start of the week ahead of the corporate earnings season; the Dow added 47.37 pts to 17,131.86 pts on Monday led by retailers like Amazon.com. The Dow, however, slipped 49.97 pts to 17,081.89 pts on Tuesday as industrial shares were sold down amid weak China import data, followed by another drop of 157.14 pts to 16,924.75 pts on Wednesday amid weaker-than-expected results from JPMorgan Chase & Co.. Nevertheless, the key index managed to rebound on a stronger tone and ended at 17,141.75 pts (+217.00 pts) and 17,215.97 pts (+74.22 pts) over the next two trading days respectively on the back of a rebound in WTI crude oil prices above the US$47 level. On a W.o.W basis, the Dow rose 131.48 pts. Similarly, share prices on Bursa Malaysia extended its technical rebound phase above the 1,700 level last week, tracking the positive gains on Wall Street. The FBM

Technical Outlook

FBM KLCI KLCI started the week on a positive tone, adding 3.32 pts to 1,709.86 pts on Monday, followed by another gains of 1.28 pts to 1,711.14 pts on Tuesday led by Technology and lower liners like Frontken Corporation and Century Software. After a holiday on Wednesday, the FBM KLCI resumed and financial heavyweights like AMMB Holdings (+4.4% W.o.W) and Hong Leong Bank (+5.0% W.o.W) were focused - the key index rose 2.11 pts to 1,713.25 pts on Thursday, Follow-through buying interest was noted and the key index ended at 1,716.82 pts (+3.57 pts) on Friday. Last week, the FBM KLCI gained 10.28 pts. FBM KLCI Weekly Technical Readings The weekly MACD Histogram extended another green bar. The weekly RSI has crossed above 50. Meanwhile, the daily MACD Histogram, however, has extended another red bar, while the daily RSI is overbought.

FBM KLCI Support & Resistance

The FBM KLCI has surged above the 1,700 level and stayed above EMA9 last week on a slightly cautious note as shooting stars and Doji candles were formed. However, as both the daily MACD and RSI indicators are suggesting that the momentum is weakening, the FBM KLCI’s upside might be limited around the 1,740 level. Meanwhile, if the key index dropped below the support of 1,692, further support will be pegged around the 1,660 and 1,600 levels.

Moving Forward
Wall Street is likely to trade higher as the Dow has rebounded off the EMA20 level last week on the back of recovering WTI crude oil prices. Meanwhile, share prices on Bursa Malaysia might take a short breather around the 1,700 psychological level after an extended technical rebound phase from the low of 1,600 to 1,720 recently. Traders may lookout for opportunities related to oil and gas counters as the crude oil price is recovering.

Sector focus

The FBM ACE index trended higher and stayed above the EMA9 level. The MACD Indicator has expanded positively above zero, but the RSI is overbought. Resistance will be envisaged around the 6,221 and 6,543 levels. Support will be pegged around 5,893 level.

Stocks to focus

KRONO – Price experienced a breakout above RM0.175 with improved volumes. The MACD Indicator has expanded positively above zero, while the RSI is hovering above 50. Price may rally towards RM0.26 after a short consolidation. Support will be located around the RM0.165 level.

CONNECT – Price experienced a strong consolidation breakout above the RM0.25 level. The MACD Line is trending higher, but the RSI is overbought. Price target will be envisaged around the RM0.32 level. Meanwhile, the support will be anchored around the RM0.255 level.

Source: M+ Online Research - 19 Oct 2015