U.S. stockmarkets trended negatively last week as the WTI crude oil price plunged below the US$40 per barrel mark, coupled with the cautious market sentiments ahead of the FOMC meeting. The Dow dropped 117.12 pts to 17,730.51 pts on Monday. Follow-through selling pressure continued and the key index tanked to end at 17,568.00 pts (-162.51 pts) and 17,492.30 pts (-75.70 pts) on Tuesday and Wednesday respectively. However, mild bargain hunting activities emerged and the key index rebounded 82.45 pts to 17,574.75 pts on Thursday. Nevertheless, energy shares were solddown again amid the weaker crude oil prices - the Dow dived 309.54 pts to 17,265.21 pts on Friday. Last week, the Dow declined 582.42 pts.

Meanwhile, share prices on Bursa Malaysia trended negatively after mild bargain hunting activities amongst banking heavyweights on Monday - the FBM KLCI rose 4.13 pts to 1,672.00 pts at the start of the week. However, selling pressure emerged and the FBM KLCI declined 2.76 pts and 9.88 pts to 1,669.24 pts and 1,659.36 pts on Tuesday and Wednesday respectively. As the WTI crude oil prices plunged below the US$40 per barrel mark, selling interest picked up amongst the oil and gas heavyweights like SapuraKencana (-9.3% W.o.W); the FBM KLCI dived further by 10.71 pts and 8.51 pts to end at 1,648.65 pts and 1,640.14 pts over the next two trading days respectively. On a W.o.W basis, the FBM KLCI lost 27.73 pts, marking the second consecutive weekly losses.

FBM KLCI Weekly Technical Readings

The weekly MACD Line stayed below 50 and the weekly MACD Histogram extended another red bar. However, the weekly RSI is above 50.

Meanwhile, the daily MACD Indicator has expanded negatively below zero, while the daily RSI is below 50.  

FBM KLCI Support & Resistance

After two weeks of consolidation below the 1,700 level, the FBM KLCI finally violated the 1,660 level. With both the weekly and daily indicators suggesting that the momentum is weakening, further retracement is expected on the FBM KLCI. Support is likely to be set around the 1,600 level. Meanwhile, if the FBM KLCI can surpass the 1,660 level, resistance will be envisaged around the 1,700 level.

Moving Forward

Since Wall Street traded negatively last week ahead of the potential interest rate hike in the upcoming FOMC meeting, we may see further selling pressure on the Dow and S&P towards the 17,000 and 2,000 level respectively. Meanwhile, share prices on the Bursa Malaysia are likely to stay on a cautious note and trend lower as the FBM KLCI’s 1,660 support level has been breached and selling interest within the lower liners and small caps could emerge this week.

Sector focus

The Technology index trended higher and retested the 25.50 level last week. The MACD Indicator has turned red, but the RSI is hovering above 50. Support will be located around 24.51. Meanwhile, if the index can surge above the 25.50 level, the resistance will be located around 27.62.

Stocks to focus

EFORCE – Price experienced a breakout above RM0.81 with high volumes. The MACD Indicator expanded positively above zero, but the weekly RSI is marginally overbought. Price may rally towards the RM1.00 level after a short consolidation. Support will be located around RM0.75.

JCY – Price trended sideways between the RM0.865 and RM0.90 levels over the past two weeks. The MACD Line is hovering above zero, while the RSI stood at 50. Monitor for a breakout above RM0.90, targeting the RM1.00 level. Support will be anchored around RM0.86.

Source: M+ Online Research - 14 Dec 2015