Weekly Recap

U.S. equities moved strongly in a positive tone at the start of the week in tandem with the rising WTI crude oil prices that surged above the US$30 level last week – the Dow rocketed 228.67 pts to 16,620.66 pts on Monday. However, the buying interest lost momentum as gains were digested and the key index fell 188.88 pts to 16,431.78 pts on Tuesday, led by profit taking activities among banking and technology shares like Wells Fargo & Co. and Bank of America Corp. Nevertheless, the Dow managed to reverse its losses as bargain hunting activities emerged; the key index rose 53.21 pts and 212.30 pts to 16,484.99 pts and 16,679.29 pts over the next two trading days respectively. Despite the Dow ended lower at 16,639.97 pts (-57.32 pts) on Friday, the key index still gained 247.98 pts on a W.o.W basis.

Meanwhile, share prices on Bursa Malaysia saw a downward trend, accompanied by lacklustre volumes last week amid profit taking activities on the back of weaker-than-expected corporate earnings. The FBM KLCI trended mixed at the start of the week and ended at 1,674.59 pts (-0.29 pts) and 1,677.28 pts on Monday and Tuesday respectively. As the key index retested the 1,686 level three times over the past two weeks, strong selling pressure sent the FBM KLCI lower to end at 1,664.17 pts (-13.11 pts) and 1,658.16 pts (-6.01 pts) over the next two trading days respectively, led by selling on selected oil & gas and telco heavyweights such as Petronas Chemical (-3.1% W.o.W) and Axiata (-3.3% W.o.W). Last week, the FBM KLCI lost 11.44 pts.

FBM KLCI Weekly Technical Readings

The weekly MACD Histogram extended another green bar, in tandem with the weekly MACD Line, which is approaching zero. The weekly RSI is hovering above 50.

Meanwhile, the daily MACD Indicator trended flat last week. The daily RSI is hovering near the 50 level.

FBM KLCI Support & Resistance

The FBM KLCI trended mixed and flirted with the 1,660 level as most of index heavyweights were beaten down as market sentiments turned cautious. With both indicators suggesting a mildly positive signal, the FBM KLCI may trend sideways in the upcoming week around the range of the 1,630-1,700 levels. However, if the key index falls below the support of 1,630, next support will be pegged around 1,600.

Moving Forward

Wall Street may see further buying interest as most energy shares could stay in focus amid the recovery in WTI crude oil prices above the US$30 per barrel mark. The Dow and the S&P 500 are likely to trend higher towards the 17,000 and 2,000 psychological levels respectively. Share prices on the bursa Malaysia, however, could extend its consolidation phase due to lack of fresh catalyst and softer reported corporate earnings.

Sector focus

The Properties index could be forming a Breakout-Pullback-Continuation pattern above the 1,116 level as the index rebounded off the EMA9 level. The MACD Line is approaching zero. Resistance will be envisaged around the 1,138-1,148 levels. Support will be set around the 1,116 level.

Stocks to focus

UEMS – Price formed a Breakout-Pullback-Continuation pattern above the RM1.00 level. The MACD Line is holding above the zero level, while the RSI is above 50. Price may recover to the price target of RM1.05-RM1.11 levels. Support will be set around the RM1.00 level.

IGB – Price experienced a breakout above the RM2.33 level with mild volumes. The MACD Indicator expanded positively above zero, but the RSI is overbought. Price may retest the resistance of the RM2.45 and RM2.61 levels after a short consolidation. Support will be pegged around RM2.33.

Source: M+ Online Research - 29 Feb 2016