Weekly Recap

Following the sharp fall in the first week of 2016, U.S. equities managed to stage a short term technical rebound at the start of the week on the back of bargain hunting activities – the Dow rose 52.12 pts and 117.65 pts to 16,398.57 pts and 16,516.22 pts on Monday and Tuesday respectively led by tech stocks like Apple and Intel. However, the selling pressure re-emerged as the WTI crude oil prices experienced an extended selloff and the Dow tumbled 364.81 pts to 16,151.41 pts on Wednesday. After the selling subsided and stocks stabilised around the 16,000 level amid a recovery in crude oil prices, the Dow added 227.64 pts to 16,379.05 pts on Thursday, However, selling activities regain traction and the Dow dived 390.97 pts to 15,988.08 pts on Friday. On a W.o.W basis, the Dow tank 358.37 pts.

Meanwhile, stocks on Bursa Malaysia were hammered badly for the second week as concerns over the plunge in crude oil prices and softer economic outlook in China took its toll – the FBM KLCI lost 20.02 pts to 1,637.59 pts on Monday. The FBM KLCI staged a technical rebound as bargain hunting were noted; the key index rose marginally by 3.78 pts and 1.17 pts to 1,641.37 pts and 1,642.54 pts over the next two trading days respectively. Nevertheless, as investors continues to withdraw their exposures within selected oil and gas heavyweights and banking stocks, the FBM KLCI ended lower at 1,633.44 pts (-9.10 pts) and 1,628.55 pts (-4.89 pts) on Thursday and Friday respectively. Last week, the FBM KLCI dived 29.06 pts.

FBM KLCI Weekly Technical Readings

The weekly MACD Histogram extended another red bar, while the weekly has crossed below the 50 level.

Meanwhile, the daily MACD Indicator trended negatively below the zero level. Similarly, the daily RSI has tripped below 50.  

FBM KLCI Support & Resistance

Tracking the sharp selldown at the start of 2016, the FBM KLCI continues to stay on a weaker position and tripped below the 1,630 level last week. With both the MACD and RSI indicators suggesting that the momentum is weak, the FBM KLCI could pullback towards a lower position near the 1,600 level. Meanwhile, if the FBM KLCI can surge above 1,660, next resistance will be envisaged around the 1,700 level.

Moving Forward

As Wall Street is hammered down after the violation of the psychological level of 17,000 and 1,900 on the Dow and S&P 500 respectively, further correction might be seen over the near term. Similarly, share prices on Bursa Malaysia could be moving in tandem with the overseas market and the FBM KLCI is likely to retest the support near the 1,600 level this week. However, traders may look into plantations stocks as they are seen trading near their support lately.

Sector focus

The Plantation index trended sideways between the 7,481 to 7,722 levels over the past month. The MACD Line is hovering above the zero level, while the RSI is still above 50. Resistance will be envisaged around 8,201. Meanwhile, the support will be pegged around the 7,481 level.

Stocks to focus

TMAKMUR – Price could be forming a Breakout-Pullback-Continuation pattern around RM1.40. The MACD Line is hovering above zero. The RSI is trending above 50. Price target will be envisaged around RM1.54-RM1.68 levels. Support will be located around RM1.40.

KRETAM – Price experienced a resistance breakout above the RM0.52 level. The MACD Indicator is trending above zero, while the RSI is hovering above 50. Price may rally towards the RM0.585 and RM0.63 levels. Support will be pegged around RM0.505.

Source: M+ Online Research - 18 Jan 2016