Weekly Recap

Despite the negotiations in Doha failed to produce an agreement on an oil output freeze, U.S. stockmarkets maintained their positive trend and the Dow chartered its way above the 18,000 psychological level for the first time since July 2015. Follow-through buying interest was also noted as crude oil prices recovered from a plunge on Monday and the key index gained 49.44 pts and 42.67 pts to 18,053.63 pts and 18,096.27 pts on Tuesday and Wednesday respectively, led by energy producers. However, the key index was unable to sustain its uptrend amid a mixed bag of corporate earnings – the Dow fell 113.75 pts to 17,982.52 pts on Thursday. Nevertheless, bargain hunting activities quickly emerged as the key index dropped below 18,000; the Dow gained 21.23 pts to 18,003.75 pts on Friday. Meanwhile, disappointing results from Google and Microsoft sent the Nasdaq index to its lowest point in two weeks. Still, on a W.o.W basis, the Dow increased 106.29 pts.

Meanwhile, share prices on Bursa Malaysia started the week on a weaker tone after the OPEC meeting failed to come to a common ground on production freeze. The FBM KLCI tanked 10.31 pts to 1,717.68 pts on Monday. Follow-through selling pressure extended among oil and gas heavyweights like SapuraKencana (-4.8% W.o.W) and the FBM KLCI fell 6.53 pts and 2.24 pts to 1,711.15 pts and 1,708.91 pts over the next two trading days respectively. Tracking the overnight positive performance on the Dow, however, traders started scooping up oversold shares and boosted the key index higher by 12.56 pts to 1,721.47 pts on Thursday, led by Tenaga and Genting. Nevertheless, the FBM KLCI pared down some of the gains and ended lower at 1,717.96 pts (-3.51 pts) on Friday. Overall, the FBM KLCI lost 10.03 pts last week.

FBM KLCI Weekly Technical Readings

The weekly MACD Histogram has turned red. The weekly RSI, however, has crossed into the overbought region.

Meanwhile, the daily MACD Line continues to trend below the daily Signal Line. Also, the RSI has crossed below 50.

FBM KLCI Support & Resistance

The FBM KLCI extended its sideways consolidation phase between the 1,700- 1,730 levels over the past five weeks. As the daily indicators are mixed, they suggest that the FBM KLCI’s upside may be capped around the 1,730 level. Meanwhile, if the FBM KLCI breaches below the 1,700 level, next support will be anchored around the 1,660 level.

Moving Forward

Wall Street continues to stay positive for 2016 after a strong recovery in February. However, traders may stay on a cautious trading tone ahead of the FOMC meeting this week. Also, as a bearish divergence signal was spotted on the Dow and S&P500 - EMA20 to serve as the trailing stop loss for the near term. Meanwhile, share prices on Bursa Malaysia might stay sideways for the time being as trading catalysts are still lacking to boost market sentiments and volumes over the past month. The FBM KLCI is likely to consolidate further between the 1,700-1,730 levels over the near term.

Nevertheless, traders may look out for opportunities within the consumer sector as timber stocks improved last week.

Sector focus

The Consumer index experienced a breakout above the 596 level, maintaining its uptrend intact formation. The MACD Indicator expanded positively above zero. The RSI is hovering above 50. Resistance will be located around the 600-604 levels. Support will be pegged around the 590 level.

Stocks to focus

LIIHEN – Price experienced a trendline breakout above the RM2.43 level after a resistance breakout of the RM2.24 level last week. The MACD Line is above zero, but the RSI is overbought. Price may rally towards RM2.67 after a short consolidation. Support will be set around RM2.24.

POHUAT – Price has experienced a sideways consolidation breakout above the RM1.52 level with high volumes. The MACD Line is approaching zero, but the RSI is overbought. Price target will be envisaged around the RM1.70-RM1.74 levels. Support will be pegged around the RM1.43 level.

Source: M+ Online Research - 25 Apr 2016