Weekly Recap

Wall Street started the new year on an extremely negative tone after China’s stockmarkets went limit down (by 7.0%) and triggered the circuit breaker two times last week amid its weaker manufacturing data - the Dow declined 276.09 pts to 17,148.94 pts on Monday. The key index, however, stabilised and ended 17,158.66 pts (+9.72 pts) on Tuesday after a rough start. Nevertheless, the selling pressure resumed amid the slump in the crude oil prices, coupled with a weaker Yuan; the Dow lost 252.15 pts to 16,906.51 pts on Wednesday. Further selling activities on the Dow were noted, which sent the key index plunging 392.41 pts and 167.65 pts to 16,514.10 pts and 16,346.65 pts over the next two trading days respectively. On the W.o.W basis, the Dow dived 1,078.58 pts.

Similarly, Malaysia’s stockmarket tanked after trading was halted in China on the back of a 7.0% drop; the FBM KLCI dived 39.14 pts to 1,653.37 pts on Monday.

However, bargain hunting activities emerged and the FBM KLCI rebounded 12.33 pts and 2.27 pts to 1,665.70 pts and 1,667.97 pts on Tuesday and Wednesday respectively. Nevertheless, as the WTI crude oil prices trended below the support of US$33.55, registering the lowest point in eleven years, the FBM KLCI declined 12.84 pts to 1,655.13 pts on Thursday, led by the selling pressure within oil & gas heavyweights like SapuraKencana (-8.4% W.o.W), Petronas Dagangan (-3.5% W.o.W) and Petronas Gas (-3.8% W.o.W). Despite a minor recovery on Friday, the FBM KLCI ended the week lower at 1,657.61 pts, losing 34.90 pts.

FBM KLCI Weekly Technical Readings

The weekly MACD Line and weekly MACD Histogram has turned negative, but the weekly RSI is above 50.

Meanwhile, the daily MACD Indicator trended negatively last week. The RSI, however, is hovering above 50.  

FBM KLCI Support & Resistance

After the positive momentum attained in the final trading week of 2015, the FBM KLCI gave away most of its gains and dipped below the 1,660 level. With both the weekly and daily MACD Indicators indicating that the negative momentum is picking up, the FBM KLCI may pullback further towards the 1,630 level. However, if the FBM KLCI can surpass the 1,660 level, the next resistance will be envisaged around the 1,700 level.

Moving Forward

As U.S. equities have lost more than 1,000 pts in the first trading week and the RSI is suggesting that both the Dow and S&P 500 are oversold, the indexes may be due for a technical rebound over the near term. Meanwhile, share prices on Bursa Malaysia could trade on a downward bias mode after the sharp decline last week that was led by oil and gas stocks. However, traders could still look for opportunities on construction stocks and export related stocks on the back of weaker Ringgit.

Sector focus

The Construction index has trended sideways between the 272 to 278 levels over the past three weeks. The MACD Histogram has turned green, while the RSI is hovering above 50. Monitor for a breakout above 278, targeting the 283-288 levels. Support will be set around 272 level.

Stocks to focus

MUDAJYA – Price experienced a strong breakout above RM1.27 with high volumes. The MACD Indicator expanded positively above zero, but the RSI is overbought. Price may rally towards the RM1.76-RM1.88 levels after a mild consolidation. Support will be set around RM1.27.

FAJAR – Price experienced a short term breakout above the RM0.54 level with improved volumes. The MACD Indicator expanded positively above zero, but the RSI is overbought. Target price will be envisaged around RM0.60-RM0.65 levels. Support will be located around RM0.53.

Source: M+ Online Research - 11 Jan 2016