Weekly Recap

The Dow extended its sideway trend over the past month between the 18,000 to 18,400 levels as investors and traders continue to digest several U.S. data and crude oil price to predict a potential hike in interest rates in the upcoming December FOMC meeting. The Dow started off the week on a negative tone – the key index fell 54.30 pts and 85.40 pts to 18,523.85 pts and 18,168.45 pts on Monday and Tuesday respectively.

However, with the crude oil price steadying above the US$48 level after OPEC cuts crude output, coupled with a better-than-expected U.S. jobs data, where jobless claims fell 5,000 to 249,000; the Dow jumped 112.58 pts to 18,281.03 pts on Wednesday. Nevertheless, selling pressure picked up near the 18,300 level and the key index slid 12.53 pts to 18,268.50 pts on Thursday, followed by another drop of 28.01 pts to 18,240.49 pts on Friday. Overall, the Dow fell 67.66 pts on a weekly basis.

Meanwhile, share prices on Bursa Malaysia managed to recoup some losses after the sharp fall at the end of September. The FBM KLCI resumed on Tuesday after the Awal Muharram holiday on a positive tone – the FBM KLCI rose 8.70 pts to 1,661.25 pts on Tuesday as bargain hunting activities emerged within banking heavyweights like Hong Leong Financial Group, Maybank and Public Bank. Follow-through buying support was noted and the key index rose 1.67 pts to 1,662.92 pts on Wednesday, forming a hammer candle above the 1,660 level.

With the strong positive momentum seen on WTI crude oil prices, oil and gas heavyweights were focused; the FBM KLCI rose another 3.81 pts to 1,666.73 pts on Thursday, led by SapuraKencana. However, selling activities resumed as the FBM KLCI traded near the 1,670 level and the key index ended lower at 1,665.38 pts (-1.35 pts) on Friday. Nevertheless, on a W.o.W basis, the FBM KLCI gained 12.83 pts.

FBM KLCI Weekly Technical Readings

The weekly MACD Line continues to trend below the zero level. The weekly RSI, however, is staying above 50. The daily MACD Line has crossed above the daily Signal line, but hovering below the zero level. Meanwhile, the daily RSI has surged above 50.

FBM KLCI Support & Resistance

The FBM KLCI trended sideways and rebounded mildly above the 1,660 level for another week as traders were indecisive on a shortened trading week. With both the daily indicators suggesting that the short term positive momentum is intact, we may expect the FBM KLCI to retest the 1,680 resistance level over the near term. Meanwhile, support will be located around the 1,640 level, followed by the psychological level of 1,600.

Moving Forward

U.S. stockmarkets are likely to continue their sideways trend over the near term with the Dow remaining rangebound between the 18,000-18,400 levels over the near term as the U.S. presidential election outcome might dictate the direction of the markets. Meanwhile, most shares on Bursa Malaysia may see slower trading interest throughout the month as trading focus would be given to government-linked companies ahead of Budget 2017. Also, export-related stock may see a boost on the back of the weaker Ringgit.

Sector focus

The Properties index continues to stay above the EMA20 level. The MACD Line is hovering above the zero level, while the RSI trended positively above 50. Next resistances will be around 1,222 and 1,250. Meanwhile, support will be set around 1,220.

Stocks to focus

UOADEV – Price has surged above the RM2.59 level with higher-than-average volumes. The MACD Line is hovering above zero. The RSI is staying above 50. Price may rally towards the RM2.80-RM3.00 levels. Support will be pegged around RM2.45.

SUNSURIA – Price rebounded off the RM0.925 level last week. The MACD Indicator expanded positively above zero. The RSI, however, is overbought. Price may rally towards the RM1.00 level after a short consolidation. Support will be set around the RM0.90 level.

Source: M+ Online Research - 10 Oct 2016