Weekly Recap

U.S. stockmarkets traded on a slightly volatile manner as traders were focusing on corporate results to acquire a clearer picture of the global economic outlook, coupled with the economic data coming from China. The Dow started the week on a positive note, led by energy shares amid stronger crude oil prices as OPEC may reach a deal to cut production - the key index added 88.55 pts to 18,329.04 pts on Monday. However, the key index plunged 200.38 pts to 18,128.66 pts after Alcoa reported a weaker-thanexpected corporate result. Nevertheless, the key index managed to stablise near the 18,000 level and rebounded 15.54 pts to 18,144.20 pts on Wednesday.

Thereafter, the Dow slid 45.26 pts to 18,098.94 pts on Thursday amid softer-thanexpected China trade balance for September. Despite buying support pushing the Dow higher to 18,138.38 pts (+39.44 pts) on Friday, the key index declined 102.11 pts on the weekly basis.

Despite a strong recovery in WTI crude oil prices, share prices on Bursa Malaysia were muted as traders were indecisive on the market direction amid the weaker Ringgit ahead of Budget 2017 this week. The FBM KLCI started with a flattish tone on Monday at 1,665.32 pts (-0.06 pts), followed by mild bargain hunting activities among oil and gas index heavyweights like SapuraKencana, that boosted the key index to end at 1,668.72 pts (+3.40 pts) on Tuesday.

However, tracking the negative performance on the overnight Dow amid the weaker-thananticipated corporate results, the FBM KLCI retested the 1,670 level before the bulls gave way to the bears; selling pressure gradually re-emerged over the week and the FBM KLCI slid 1.69 pts and 2.01 pts to 1,667.03 pts and 1,665.02 pts on Wednesday and Thursday respectively. Further selling pressure kicked-in and the FBM KLCI was pushed below the 1,660 level, declining 6.05 pts to 1,658.97 pts on Friday. Last week, the FBM KLCI lost 6.41 pts.

FBM KLCI Weekly Technical Readings

The weekly MACD Histogram extended another red bar and the weekly MACD Line is hovering below zero. The weekly RSI, however, is above 50

Meanwhile, the daily MACD Line is trending lower over the past two trading days. The daily RSI dipped below 50.

FBM KLCI Support & Resistance

The FBM KLCI retested the 1,670 level several times over the past three weeks and with the selling pressure picking up, the key index ended below the 1,660 level on Friday. With both the daily MACD and RSI indicators suggesting that the momentum is negative, the FBM KLCI may revisit the support near the 1,645 level, followed by the 1,610 level. Meanwhile, if the key index surges above the 1,670 level, the next resistance will be envisaged around 1,680-1,700.

Moving Forward

U.S. equities may trend in a volatile manner over the upcoming weeks ahead of the U.S. presidential election. If the Dow violates below the 18,000 level, further downside might be located around the 17,000 level. Meanwhile, share prices on Bursa Malaysia could be trending higher ahead of the Budget 2017, which will be held on Friday. In the meantime, traders may lookout for opportunities within the technology sector amid the weaker Ringgit.

Sector focus

The Technology index surged above the 22.88 level. The MACD Indicator has issued a “Buy” signal, while the RSI is trending above 50. The technology index may rally towards 23.30. Support will be set around 22.42.

Stocks to focus

KESM – Price experienced a consolidation breakout above the RM8.08 level with higherthan- average volumes. The MACD Indicator expanded positively above zero. The RSI, however, is overbought. Price may rally to RM9.50-RM10.00 after a short consolidation. Support will be pegged around RM7.70.

MPI – Price surged above the RM7.90 level with improved volumes. The MACD Indicator has issued a “Buy” signal, while the RSI has crossed above 50. Price target will be envisaged around RM8.50-RM9.00. Support will be located around the RM7.60 level.

Source: M+ Online Research - 17 Oct 2016