Weekly Recap

U.S. stockmarkets were trending cautiously upwards before the announcement on the Brexit results on 23rd of June. The Dow traded slightly higher on Monday, reversing some of the selling pressure two weeks ago; the key index rose 129.71 pts to 17,804.87 pts, followed by another marginal increase of 24.86 pts to 17,829.73 pts on Tuesday as the “Remain” camp was leading ahead of the referendum. However, profit taking activities picked up and the Dow fell 48.90 pts to 17,780.83 pts on Wednesday.

Nevertheless, Wall Street rallied strongly ahead of the polls results as investors were anticipating that the U.K. will remain in the EU – the Dow rocketed 230.24 pts to settle at 18,011.07 pts on Thursday. Soon after the Britain surprised markets with the “Leave” camp securing 51.9% vs. 48.1% of the voting results, the Dow plummeted 610.32 pts to 17,400.75 pts, forming another “Black Friday” event. The Dow erased 274.41 pts on the weekly basis.

Meanwhile, share prices on Bursa Malaysia rebounded after most shares were sold down two weeks ago. The FBM KLCI continues to trade on a technical rebound phase after rebounding off near the 1,610 level two weeks ago and end higher at 1,634.23 pts (+10.05 pts) on Monday.

Despite the cautious sentiment across the regional stockmarkets on the back of Brexit referendum vote, follow-through buying interest were noted and the key index rose 3.46 pts and 2.29 pts to 1,637.69 pts and 1,639.98 pts over the next two trading days respectively.

However, selling pressure picked up strongly after the U.K. voted to leave the European Union. Tracking the negative tone among regional stockmarkets, the FBM KLCI traded towards the intra-day low of 1,611.88 pts, before recouping some of the losses to end near the 1,630 level at 1,634.05 pts (-5.93 pts) on Friday. Nevertheless, on a W.o.W basis, the key index gained 9.87 pts.

FBM KLCI Weekly Technical Readings

The weekly MACD Histogram has turned green, while the weekly RSI is oversold. Meanwhile, the daily MACD Histogram has turned red, in tandem with the MACD Line. The daily RSI has crossed below 50.

FBM KLCI Support & Resistance

The FBM KLCI trended sideways between the 1,610-1,660 range over the last two months. With the daily indicators suggesting that momentum is negative, the FBM KLCI may trend lower over the near term. If the FBM KLCI violates below the 1,610 level, further downside will be pegged around the 1,580 level. Meanwhile, if the FBM KLCI surges above the 1,660 level, the next resistance will be located around 1,680.

Moving Forward

Wall Street and the global stockmarkets were in shock after the U.K. voted to leave the European Union, leaving traders and investors still in the midst of digesting the effects of the Brexit. The Dow and S&P 500 could trade into the correction phase once the neckline of 17,400 and 2,025 pts are violated respectively.

Meanwhile, share prices on the local front will likely trade on the negative side as post- Brexit fears are lingering. Nevertheless, traders may take position within certain uptrend intact counters with a cut loss point set before trading.

Sector focus

The Consumer index rebounded off the 593 level last Friday. The MACD Line is hovering above the zero level. The RSI is trending above 50. The consumer index is likely to trend within the range between the 594-600 levels over the near term.

Stocks to focus

WANGZNG – Price trended positively above the EMA20 level last week. The MACD Line is hovering above zero, while the RSI is above 50. Monitor for a breakout above the RM1.00 level, targeting the RM1.10-RM1.15 levels. Support will be set around RM0.95.

YOCB – Price rebounded off the RM1.16 level and ended above the EMA9 level. The MACD Line is hovering above zero. The RSI, however, slid below 70. Price target will be envisaged around RM1.24-RM1.30. Support will be located around the RM1.16 level.

Source: M+ Research Online - 27 June 2016