Weekly Recap

Wall Street started on a slightly negative tone as investors stayed cautious ahead of the FOMC meeting, coupled with the weaker WTI crude oil prices early last week – the Dow slipped 23.65 pts and 41.62 pts to 17,623.05 pts and 17,581.43 pts on Monday and Tuesday respectively. However, the Dow rebounded strongly by 198.09 pts to 17,779.52 pts on Wednesday led by banking stocks as investors were speculating that the Fed might increase interest rates. Nevertheless, the key index hit some road bumps after the Fed kept interest rates unchanged and the Dow declined 23.72 pts and 92.26 pts to 17,755.80 pts and 17,663.54 pts over the next two trading days respectively. Still, the Dow managed to gain marginally by 16.84 pts last week.

Meanwhile, share prices on Bursa Malaysia performed negatively over the week after Budget 2016 was tabled two weeks ago – the FBM KLCI fell 4.14 pts and 9.84 pts to

1,706.79 pts and 1,696.95 pts on Monday and Tuesday respectively. As the selling activities were focused within the oil and gas and finance heavyweights like CIMB (-6.1% W.o.W) and Maybank (-3.8% W.o.W), the FBM KLCI further extended its downward spiral to end at 1,686.51 pts (-10.44 pts) and 1,666.98 pts (-19.53 pts) over the next two trading days respectively. Despite a strong recovery on WTI crude oil prices above the US$44 per barrel mark, the FBM KLCI continues to fall 1.27 pts to 1,665.71 pts on Friday. On a W.o.W basis, the FBM KLCI plunged 45.22 pts, its worst performing week since September 2015.

FBM KLCI Weekly Technical Readings

The weekly MACD Histogram has turned red. The weekly RSI is hovering below 50 – suggesting that the momentum is negative.

Meanwhile, the daily MACD Indicator has issued a “Sell” signal. The daily RSI, however, has tripped below 30 (oversold).

FBM KLCI Support & Resistance

After settling above the 1,700 psychological level three weeks ago, the FBM KLCI has finally tripped below 1,700 as finance heavyweights were being sold down last week. As both the weekly and daily MACD Indicators are suggesting that the momentum is weakening, the FBM KLCI might continue its downward movement towards the 1,630-1,660 levels. Meanwhile, resistance will be envisaged around 1,700.

Moving Forward

U.S. equities could continue to trade higher as the Dow and S&P 500 are trending strongly above their EMA20 respectively after the Fed kept interest rate near zero for now. Meanwhile, share prices on the Bursa Malaysia may see further profit taking activities as the FBM KLCI is hovering below the 1,700 level and the key index has formed a bearish candle on the weekly chart. However, traders may trade within industrial products as it could be due for a rebound move this week.

Sector focus

The Industrial Product index has rebounded off the 143 level. The MACD Indicator, however, has issued a “Sell” signal, while the RSI has tripped below 70. The Industrial Product index’s upsides might be limited to around the 147 level. Support will be set around 140.

Stocks to focus

LCTH – Price rebounded off the RM0.70 support level with improved volumes. The MACD Histogram has turned green, while the RSI continues to hover above 50. Price may rally towards the RM0.80-RM0.90 levels over the near term.

KNM – Price has pullback towards the EMA60 level without significant volumes. The MACD Line is hovering above zero. The RSI has tripped into the oversold position (below 30). Monitor for a breakout above the RM0.535 level, targeting the RM0.58-RM0.60. Support will be set around RM0.52. 

Source: M+ Online Research - 2 Nov 2015