Weekly Recap

Following the sharp selloff on Wall Street two weeks ago, buying support emerged and the Dow managed to rebound strongly at the start of the week – the Dow surged 123.07 pts to 17,251.62 pts on Monday led by technology companies like Apple Inc. and Avago Technologies. Follow-through buying support continued to boost the Dow to end higher at 17,417.27 pts (+165.65 pts) and 17,602.61 pts (+185.34 pts) over the next two trading days respectively amid a strong recovery in WTI crude oil prices, which rebounded 9.8% W.o.W and commodities related shares were in focus. However, buying support fizzled out and profit taking activities picked up on a shortened trading day before the Christmas holiday – the Dow fell 50.44 pts to 17,552.17 pts on Thursday. Still, on a W.o.W basis, the Dow rocketed 423.62 pts.

Despite a weak start last week, share prices on the Bursa Malaysia managed to recover throughout the week after investors digested the impact of the interest rate hike by the Fed, coupled with a Christmas rally in overseas markets. The FBM KLCI dipped 14.89 pts to 1,629.09 pts on Monday, led by selected oil and gas heavyweights like SapuraKencana, Petronas Dagangan and Petronas Gas. Tracking the strong overnight performance on the Dow, the FBM KLCI rebounded with buying support that boosted the key index to end higher at 1,643.26 pts (+14.17 pts) on Tuesday, followed by another 20.25 pts advancement to close at 1,663.51 pts on Wednesday. The FBM KLCI gained 19.61 pts on a shortened trading week.

FBM KLCI Weekly Technical Readings

The weekly MACD Line is below zero, but the weekly MACD Histogram has turned green. Nevertheless, the weekly RSI is below 50.

Meanwhile, the daily MACD Indicator has issued a “Buy” signal, while the RSI is trending higher, approaching 50.

FBM KLCI Support & Resistance

After the FBM KLCI revisited the 1,630 level last week, it has rebounded strongly as sentiments on the global stockmarkets have turned positive after the recovery in crude oil prices. With both the daily indicators suggesting that the short term momentum is positive, the key index may trend higher towards the resistance around the 1,695 level. Meanwhile, support will be set around the 1,630 level.

Moving Forward

U.S. equities could see the continuation of last week’s rally over the final week of 2015 on the back a potential recovery of the WTI crude oil prices. Similarly, the spillover effect is likely to be seen across stocks on Bursa Malaysia, which may see the FBM KLCI trade higher towards the 1,700-1,730 level. Investors may look for opportunities within the Industrial Products sector amid the softer Ringgit, while traders may focus in construction sector as they were heavily traded last week.

Sector focus

The Construction index experienced a channel breakout above the 276 level. The MACD Indicator has flashed a “Buy” signal, while the RSI has hooked above 50. The resistance will be pegged around the 284 level. Meanwhile, support will be located around the 269 level.

Stocks to focus

WCT – Price experienced a strong sideways consolidation breakout above the RM1.52 with high volumes. The MACD Indicator issued a “Buy” signal, but the RSI is overbought. Price may rally towards RM2.00 after a short consolidation. Support will be anchored around the RM1.50 level.

KEURO – Price gapped up strongly last week above the RM0.90 level with higher-than-average volumes. The MACD indicator expanded positively above zero. The RSI, however, is overbought. The resistance will be pegged around RM1.20. Support will be located around RM0.96.

Source: M+ Online Research - 28 Dec 2015