Weekly Recap

After U.S. equities hit a fresh 2016 high near the 17,811 level (Dow Jones) two weeks’ ago, renewed selling pressure was noted as investors were looking for fresh catalysts for the market’s uptrend to stay. The Dow slipped 55.75 pts and 133.68 pts to 17,737.00 pts and 17,603.32 pts on Monday and Tuesday respectively. However, mild buying interest returned as WTI crude oil prices rebounded off the US$34 level; the Dow gained 112.73 pts on Wednesday as energy stocks were focused. Nevertheless, as traders and investors digested the Fed’s minutes with a slightly negative view on the global economic growth, coupled with the corporate results season that will kick off this week, the Dow lost 174.09 pts to 17,541.96 pts on Thursday. Despite a marginally higher closing on Friday, the Dow ended 215.79 pts lower to 17,676.96 pts on a W.o.W basis.

Meanwhile, share prices on the FBM KLCI started the week on a stronger note, but

followed by a sideways consolidation trend over the next few trading days. Tracking the positive performance on the overnight Dow, the FBM KLCI jumped 14.69 pts to 1,725.24 pts on Monday led by Maybank and Maxis. However, as crude oil extended its consolidation phase, coupled with the selling pressure on Genting Bhd (-6.0% W.o.W), the FBM KLCI traded lower as profit taking activities were in focus - the key index fell 7.16 pts and 1.07 pts to 1,718.08 pts and 1,717.01 pts on Tuesday and Wednesday respectively. Nevertheless, bargain hunting activities emerged amid a mild recovery in crude oil prices and this boosted the key index by 7.28 pts to 1,724.29 pts on Thursday. On a W.o.W basis, the FBM KLCI added 7.85 pts.

FBM KLCI Weekly Technical Readings

The weekly MACD Line continues to trend higher above zero and the weekly MACD Histogram turned green. The weekly RSI is hovering above 50.  

Meanwhile, the daily MACD Line is below the daily Signal Line. The MACD Histogram has turned red. However, the daily RSI is at 50.

FBM KLCI Support & Resistance

Despite the FBM KLCI trending sideways last week, the key index managed to stay above the EMA9 level, indicating that the trading momentum is still on a positive bias mode. However, overall indicators are suggesting mixed signals; hence the trading range for the FBM KLCI is likely to stay within the 1,700 level towards the 1,730 level over the near term. If the FBM KLCI trips below the 1,700 level, further support will be pegged around 1,660.

Moving Forward

Wall Street has retreated from the 2016 high last week. With the slower global economic outlook, traders may take this opportunity to take profit over the near term and the Dow and S&P 500 may trend lower towards their psychological levels of the 17,000 and 2,000 points respectively. Similarly, share prices on Bursa Malaysia could take the same course and consolidate below the EMA20 level after failing to surpass the 1,730 level over the past three weeks. Despite an extended recovery of crude oil prices, further

trading activities might be seen only when the crude oil price can sustain its price above the US$40 per barrel mark. Nevertheless, traders can look for opportunities within the construction sector.

Sector focus

The Construction index extended its uptrend above the 290 level. The MACD Indicator expanded positively above zero, but the RSI is overbought. The index may revisit the 300 level over the near term. Meanwhile the support will be pegged around the 290 level.

Stocks to focus

EKVOEST – Price experienced a strong consolidation breakout above the RM1.09 level with high volumes. The MACD Indicator has expanded positively above zero, but the RSI is overbought. Price target is located around the RM1.31-RM1.40 levels. Support will be set around the RM1.05 level.

IKHMAS – Price experienced a flag formation breakout above the RM0.73 level with higher-than-average volumes. The MACD Histogram has turned green. The RSI, however, is overbought. Price target will be envisaged around the RM0.835. Support will be anchored around the RM0.72 level.

Source: M+ Online Research - 11 Apr 2016