Weekly Recap

Following the U.S. stockmarkets’ sharp decline two weeks ago, the Dow rebounded at the start of the week led by banking and consumer stocks like Bank of America and Amazon; the Dow increased 117.52 pts to 17,891.16 pts on Monday. However, selling pressure emerged and the Dow dived 140.25 pts and 99.65 pts to 17,750.91 pts and 17,651.26 pts over the next two trading days respectively, as concerns over slower global economic growth resurfaced amid the weaker-than-expected factory data from the U.K. and China.

Despite the recovery in energy shares amid the rebound in the WTI crude oil prices, the Dow trended sideways on Thursday ahead of the key employment data on Friday – the Dow stayed marginally positive at 17,660.71 pts (+9.45 pts). Nevertheless, bargain hunting activities were noted after the jobs data announcement that boosted the key index higher to 17,740.63 pts on Friday. Still, the Dow lost 33.01 pts last week.

Meanwhile, share prices on Bursa Malaysia trended on a negative tone following the sharp fall on the overseas stockmarkets; the FBM KLCI dived 21.28 pts to 1,651.44 pts on Tuesday as renewed concerns over another bond payment by 1MDB on 11th May forming a bearish engulfing candle. The selling pressure, however, took a pause as the FBM KLCI traded near the 1,630 level; buying interest re-emerged as traders scooped up oversold shares and the key index rose 6.14 pts to 1,657.58 pts on Wednesday.

Tracking the negative performance of the overnight Dow, the FBM KLCI succumbed to another round of selling and declined 12.49 pts to 1,645.09 pts on Thursday, led by Petronas Chemical, IOI Corp and Genting Malaysia. Nevertheless, the FBM KLCI managed to close higher at 1,649.36 pts (+4.27 pts) on Friday with gains on selected banking stocks like Maybank and Public Bank. Overall, on a W.o.W basis, the key index, however, has lost 23.36 pts. 

FBM KLCI Weekly Technical Readings

The weekly MACD Indicator has issued a “Sell” signal, while the weekly RSI has crossed below 50 after hitting the overbought region three weeks back.

Meanwhile, the daily MACD Indicator expanded negatively below zero. The daily RSI, however, is oversold.

FBM KLCI Support & Resistance

Follow-through selling pressure was noted as the FBM KLCI plunged below the 1,660 level. However, as soon as the FBM KLCI hit the 1,630 level and the RSI is indicating an oversold position on the key index, it may perform a technical rebound towards the 1,660 level over the near term. Further resistance will be envisaged near the 1,680 level. Meanwhile, support will be pegged around the 1,600 level.

Moving Forward

With the crude oil price stabilising above the US$40 per barrel mark over the past two weeks, energy shares within the U.S. stockmarkets are being focused. Despite the Dow traded below the 18,000 level, technical rebound may be seen over the near term. Meanwhile, share prices on the Bursa

Malaysia may react in the similar fashion as the RSI is oversold – the FBM KLCI may revisit the 1,660 level with the support on the oil and gas index heavyweights.

Sector focus

The Construction index has formed a potential Breakout-Pullback-Continuation pattern above 279. The weekly MACD Indicator is hovering above zero, while the RSI is above 50. The index may retest the resistance around 294-300. Meanwhile, the support will be set around 279.

Stocks to focus

AZRB– Price experienced a short term breakout above RM0.73. The MACD Histogram has turned green, while the RSI has crossed above 50. Price may rally towards the RM0.775 and RM0.80 levels. Support will be located around RM0.705.

OKA – Price experienced a breakout above RM1.05. The MACD Indicator is trending higher above zero, while the RSI is hovering above 50. Price may rally towards the RM1.10-RM1.15 levels. Support will be pegged around the RM1.00 level. 

Source: M+ Online Research - 9 May 2016