Weekly Recap

U.S. equities traded on a highly volatile manner throughout the week as investors were focussed on the FOMC meeting. However, with the rebound in the WTI crude oil prices, the Dow rose 103.29 pts and 156.41 pts to 17,368.50 pts and 17,524.91 pts on Monday and Tuesday respectively, led by energy shares. The key index rallied higher to 17,749.09 pts (+224.18 pts) on Wednesday after the Fed increased interest rates for the first time in nearly a decade by 25 basis points. However, investors started to digest the impact of the interest-rate hike that would pressure on commodities prices and could slow global growth - the Dow plunged 253.25 pts and 367.29 pts to 17,495.84 pts and 17,128.55 pts over the next two trading days respectively. On a W.o.W basis, the Dow dipped 136.66 pts.

Meanwhile, investors were cautious ahead of the FOMC meeting and cause the FBM KLCI to wobble at the start of the week – the FBM KLCI fell 10.18 pts and 7.12 pts to

1,629.96 pts and 1,622.84 pts on Monday and Tuesday respectively, led by selected O&G heavyweights like SapuraKencana (-8.2% W.o.W). However, bargain hunting activities were noted as the FBM KLCI was oversold and it rebounded 11.29 pts to 1,634.13 pts on Wednesday. Further follow-through buying support came in after the Fed increased interest rates; the FBM KLCI rallied 22.39 pts to 1,656.52 pts on Thursday. Nevertheless, profit taking activities emerged after the key index traded near the EMA20 level. Still, the FBM KLCI gained 3.76 pts for the week.

FBM KLCI Weekly Technical Readings

Both the weekly MACD Line and the MACD Histogram trended lower, but the weekly RSI is above 50.

Meanwhile, the daily MACD Line is hovering below zero, while the RSI is trending below 50.

FBM KLCI Support & Resistance

The FBM KLCI trended lower towards the 1,630 level after the violation of the 1,660 level two weeks ago. With the weekly indicator suggesting that the momentum is weak, the FBM KLCI may decline below the support of 1,630 to the 1,600 psychological level. Meanwhile, if the FBM KLCI can surge above the 1,660 level, the next resistance will be pegged around the 1,700 level.

Moving Forward

Wall Street might be facing more headwinds ahead as investors are reducing their equity exposures on the back of expectations of slower global growth prospects. The Dow may drop below the 17,000 over the near term. Similarly, share prices on Bursa Malaysia are likely to decline amid the negative sentiments abroad. Nevertheless, traders may look into opportunities within export related shares in the Industrial Products segment as the Ringgit may weaken further.

Sector focus

The Industrial product index trended strongly above the EMA9 level. The MACD Indicator has issued a “Buy” signal above zero, while the RSI is hovering above 50. Resistance will be located around the 155 level. Meanwhile, support will be pegged around the 150 level.

Stocks to focus

RUBEREX – Price experienced a breakout above the RM0.845 with high volumes. The MACD Indicator expanded positively above zero, but the RSI is marginally overbought. Price may rally towards the RM1.00 level after a short consolidation. Support will be located around RM0.82.

HALEX – Price experienced a strong breakout above the RM0.705 with higher-than-average volumes. The MACD Line is hovering above zero, but the RSI is overbought. Price target will be envisaged around the RM0.80-RM0.89 levels. Support will be set around the RM0.68 level.

Source: M+ Online Research - 21 Dec 2015