After six consecutive weeks of gains, Wall Street faced renewed selling pressure and the Dow tumbled 179.85 pts to 17,730.48 pts on Monday. However, mild bargain hunting activities emerged and the key index rebounded to end higher at 17,758.21 pts (+27.73 pts) on Tuesday. Nevertheless, as concerns mount over the possible interest rates hike in the upcoming FOMC meeting, investors started to reduce their exposure in the stockmarkets; the Dow fell 55.99 pts to 17,702.22 pts on Wednesday, followed by another two-day dive of 254.15 pts and 202.83 pts to 17,448.07 pts and 17,245.24 pts on Thursday and Friday respectively. Commodities-related shares tumbled amid the lower WTI crude oil prices, which trended downwards below the US$44 level last week. For the week, the Dow fell 665.09 pts.

Meanwhile, share prices on Bursa Malaysia traded sideways and on a cautious tone at the start of the week as the FBM KLCI ended marginally higher by 0.41 pts to 1,686.11 pts. However, after the Deepavali public holiday, the stockmarket resumed with an extremely negative tone as the FBM KLCI dived more than 20 pts to end at 1,665.32 pts on Wednesday, led by banking heavyweights like CIMB (-3.0% W.o.W) and Public Bank (-1.2% W.o.W), while selected plantations stocks such as IOI CORP (-4.4%) saw some selling pressure. Follow-through selling activities were noted and the key index declined 2.12 pts and 4.29 pts to 1,663.20 pts and 1,658.91 pts on Thursday and Friday respectively. On a W.oW basis, the FBM KLCI lost 26.79 pts,

FBM KLCI Weekly Technical Readings

The weekly MACD Histogram has turned red and the weekly RSI is below 50.

Meanwhile, the daily MACD Line has tripped below the zero level, while the daily MACD Histogram has extended another green bar. The daily RSI, however, is oversold.

FBM KLCI Support & Resistance

After the FBM KLCI retested the 1,690 level, renewed selling pressure was seen within the banking heavyweights; the FBM KLCI further pulled back below the support of the 1,660 level last week. However, as the short term RSI momentum indicator is oversold, the FBM KLCI may be due for a technical rebound towards the 1,700 level over the near term. Meanwhile, further support will be set around 1,600.

Moving Forward

U.S. stockmarkets may be due for further correction after the recent selldown activities below their respective EMA20 on the Dow and S&P 500. With the market anticipating that interest rates might be hiked in December, investors could be reducing their position over the near term. Similarly, the FBM KLCI may follow suit as sentiments turned negative. However, traders may look for trading ideas within the Technology sector on the back of the weaker Ringgit.

Sector focus

The Technology index has surpassed the previous peak of the 23.44 level. The MACD Indicator has expanded positively above zero, while the RSI is hovering above 50. The index may rally towards the 25.65 level. Support will be set around 23.44.

Stocks to focus

ECS – Price could be forming a flag formation above the EMA9 level with declining volumes. The MACD Line is above zero, while the RSI is hovering above 50. Monitor for a breakout above RM1.63, targeting the RM1.77 level. Support will be pegged around RM1.58.

NOTION – Price has experienced a breakout above the RM0.435 level with higher-than-average volumes. The MACD Indicator has expanded positively above zero, but the RSI is overbought. Price may rally towards the RM0.50-RM0.55 levels after a short term pullback. Support will be anchored around the RM0.43 level.

Source: M+ Online Research - 16 Nov 2015