Weekly Recap

After trending sideways three weeks ago, U.S. stockmarkets started the week lower as traders were cautious ahead of the FOMC and BOJ meetings, coupled with the Brexit referendum – the Dow dived 132.86 pts to 17,732.48 pts on Monday. Despite the Federal Reserve keeping the key interest rates unchanged, follow-through selling pressure was noted and the key index slipped 57.66 pts and 34.65 pts to 17,674.82 pts and 17,640.17 pts over the next two trading days respectively amid the slower global economic growth conditions.

As the Dow hit the intra-day low of 17,471.29 pts, bargain hunting activities emerged, snapping the five-day losing streak and ended higher at 17,733.10 pts (+92.93 pts) on Thursday as traders were speculating that Britain will remain in the European Union. Nevertheless, buying interest quickly fizzled off as healthcare and technology counters faced another round of selling pressure – the Dow slid 57.93 pts to 17,675.16 pts on Friday. On a W.o.W basis, the Dow lost 190.18 pts.

Meanwhile, tracking the negative sentiments on the regional indices, share prices on Bursa Malaysia follow suit and ended softer for the week. The FBM KLCI fell 11.45 pts and 3.46 pts to 1,629.77 pts and 1,626.11 pts on Monday and Tuesday respectively led by selected banking heavyweights CIMB (- 5.4% W.o.W) and Maybank (-1.3% W.o.W). However, bargain hunting activities emerged near the 1,610 level and boosted the key index marginally higher to 1,627.96 pts (+1.85 pts) on Wednesday. Nevertheless, as the crude oil prices plunged below the US$48 mark, oil and gas heavyweights like SapuraKencana (-14.0% W.o.W) and Petronas Chemical (-2.9 % W.o.W) saw sharp drops and the key index dived 13.36 pts to 1,614.90 pts on Thursday.

Despite a mild recovery of 9.28 pts to 1,624.18 pts on Friday, the key index lost 17.04 pts on a weekly basis.

FBM KLCI Weekly Technical Readings

The weekly MACD Line continues to trend lower, in tandem with the MACD Histogram. The weekly RSI has crossed below 30.

Meanwhile, the daily MACD Indicator has expanded negatively below zero, but the daily RSI is trending towards the 50 level.

FBM KLCI Support & Resistance

The FBM KLCI has gapped-down below the EMA9 level and ended below the support of 1,630 level last week. However, with the momentum indicators suggesting that the FBM KLCI is oversold, the key index may trend higher towards the 1,630 level over the near term. Meanwhile, the support will be pegged around the 1,600 level.

Moving Forward

U.S. equities may be due for a relief rally on the back of easing fears on the Brexit issue as polls suggesting the “In” camp has a three-point lead against the “Out” camp. The Dow and S&P500 may retest the near term resistance of 18,000 and 2,100 psychological levels respectively. Meanwhile, on the local front, share prices may rebound after the FBM KLCI was supported near the 1,610 level. Also, traders may look out for uptrend consumer counters and oil and gas stocks amid the crude oil rebound.

Sector focus

The Consumer index stayed positive above the EMA120 level. The MACD Indicator Histogram has turned green, while the RSI has crossed above 50. Monitor for a breakout above 590, targeting the 600 level. Support will be located around 585.

Stocks to focus

ACOSTEC – Follow-through interest was noted after the breakout above RM0.80 two weeks ago. The MACD Indicator has expanded positively above zero and the RSI is hovering above 50. Target will be envisaged around the RM0.90-RM1.00 levels. Support will be located around the RM0.80 level.

JAYCORP – Price rebounded off the RM1.06 level and stayed above the EMA9 last week. The MACD Line is above zero, but the RSI is overbought. Price may rally towards the target of the RM1.28 and RM1.42 levels after a short consolidation. Support will be set around the RM1.05 level.

Source: M+ Online Research - 20 June 2016