Weekly Recap

Wall Street trended on a positive tone after the strong rebound above the support of the 15,500 level two weeks ago with the Dow surging above the psychological level of 16,000 points, despite weaker crude oil prices which stayed below the US$30 level at the start of the week. The Dow advanced 222.57 pts to 16,196.41 pts on Tuesday and after the crude oil price climbed above US$30 per barrel on Wednesday, follow-through buying interest was noted among retail and banking stocks like Citigroup and Bank of America Corp; the key index gained 257.42 pts to 16,453.83 pts on Wednesday. However, profit taking activities emerged and the key index fell 40.40 pts and 21.44 pts to 16,413.43 pts and 16,391.99 pts over the next two trading days respectively. On a W.o.W basis, the Dow increased 418.15 pts.

Similarly, share prices on Bursa Malaysia were on a positive trend as the FBM KLCI started the week with an upward gap, where the key index rose 6.22 pts to 1,649.96 pts on Monday, followed by another increase of 15.03 pts to 1,664.99 pts on Tuesday, led by plantations stocks amid a stronger crude palm oil price above the RM2,600 level. After the FBM KLCI ended flat at 1,664.32 pts (-0.67 pts) on Wednesday, buying interest resumed in tandem with the recovery of crude oil prices – the FBM KLCI added 15.70 pts to 1,680.02 pts on Thursday as SapuraKencana was in focus (+8.9% W.o.W). Nevertheless, the FBM KLCI staged a mild pullback and slid 5.14 pts to 1,674.88 pts on Friday. Still, the FBM KLCI gained 31.14 pts last week

FBM KLCI Weekly Technical Readings

The weekly MACD Histogram has turned green, while the weekly RSI has crossed above 50.

Meanwhile, the daily MACD Indicator trended positively above the zero level. The daily RSI is hovering strongly above 50.  

FBM KLCI Support & Resistance

With the recovery of the FBM KLCI last month above the 1,600 level, the key index continues to trend higher above the 1,660 level. As both the daily and weekly indicators are suggesting that the positive momentum is intact, the FBM KLCI may trend higher towards the 1,690-1,700 levels over the near term. Meanwhile, if the FBM KLCI trips below the 1,630 level, further support will be pegged around 1,600.

Moving Forward

Based on the current momentum after the rebounding move on the Dow and S&P 500 last month, we expect further buying interest to be seen over the near term to retest the 17,000 and 2,000 psychological levels respectively. Meanwhile, share prices on Bursa Malaysia could trend higher in tandem with the recovery in crude oil prices above the US$30 per barrel mark. Meanwhile, plantations counters could see increased trading interest as CPO prices is trending near the RM2,600 level.

Sector focus

The Plantation index formed a Breakout-Pullback-Continuation pattern above the 7,722 level. The weekly MACD Histogram has turned green, while the weekly RSI is above 50. The index is likely to trend higher towards the 8,209 level. Support will be located around the 7,473 level.

Stocks to focus

BPLANT – Price experienced a breakout above the RM1.50 level with improved volumes, forming a bullish engulfing candle. With the MACD Indicator trending positively above zero, price may rally towards the RM1.60-RM1.75 levels. Support will be envisaged around the RM1.45 level.

TDM – Price trended sideways between the RM0.695-RM0.715 levels with improving volumes. The MACD Histogram has turned green, while the RSI is approaching 70. Monitor for a breakout above the RM0.715 level, targeting the RM0.80 level. Support is set around the RM0.68 level.

Source: M+ Online Research - 22 Feb 2016