Weekly Recap

After a volatile trend in the previous six weeks, Wall Street trended sideways last week on expectations of slower interest rate rises and the U.S. presidential election (8th of Nov). The Dow slipped 51.98 pts to 18,086.40 pts on Monday led by healthcare and energy stocks – the latter slipped as crude oil price traded lower. However, the key index rebounded 75.54 pts and 40.68 pts to 18,161.94 pts and 18,202.62 pts over the next two trading days respectively on the back of better-than-expected corporate results from UnitedHealth Group and Goldman Sachs.

Nevertheless, the Dow’s gains took a pause as selling interest picked up on telco stocks like Verizon and Sprint on the back of weakerthan- expected results; the Dow declined 40.27 pts and 16.64 pts to 18,162.35 pts and 18,145.71 pts on Thursday and Friday respectively. Still, on a W.o.W basis, the Dow managed to eke out marginal gains of 7.33 pts.

Meanwhile, share prices on Bursa Malaysia, especially the government-linked companies, trended on a positive tone last week with anticipation that the announcements from Budget 2017 may boost the Malaysian economy. After the FBM KLCI declined 5.26 pts to 1,653.71 pts on Monday, led by the slowdown in crude oil price gains, the key index quickly rebounded strongly to close higher at 1,667.57 pts (+13.86 pts) on Tuesday led by Sime Darby on the back of stronger crude palm oil prices.

However, the FBM KLCI traded on a very narrow range between the 1,665-1,670 levels, indicating that the traders were cautious before Budget 2017 – the key index ended flattish at 1,668.27 pts (+0.70 pts) and 1,667.18 pts (-1.09 pts) over the next two trading days respectively. Despite a negative performance on the overnight Dow, buying interest were picking up on the FBM KLCI and it managed to eke out mild gains of 2.80 pts to 1,669.98 pts on Friday. On the weekly basis, the FBM KLCI rose 11.01 pts.

FBM KLCI Weekly Technical Readings

The weekly MACD Histogram has turned green, while the weekly MACD Line is near zero. The weekly RSI is hovering slightly above 50.

Meanwhile, the daily MACD Line is trending higher, approaching the zero level. The daily RSI has hooked above 50.

FBM KLCI Support & Resistance

Without any strong catalyst prior to Budget 2017, the FBM KLCI continues to trend sideways near the 1,670 level for the fifth consecutive week. However, as the daily indicators are turning positive, we may anticipate a short term breakout of the FBM KLCI to retest the resistance of 1,680. The next resistance is be envisaged around 1,700. Meanwhile, the support will be pegged around 1,645, followed by the 1,610 level.

Moving Forward

With the FOMC meeting and the U.S. presidential election taking place over the next two weeks, U.S. stockmarkets are likely to stay rangebound as investors and traders will be trading on a cautious mood. The Dow’s support will be located around the 18,000 level. Meanwhile, on the local front, the FBM KLCI is likely to trend sideways after Budget 2017 as the announcement is largely within the market’s expectation. However, traders may look into industrial products sector as it has been trending higher over the past week.

Sector focus

The Industrial Products index continues to trend positively above the EMA9 level. The MACD Indicator is trending positively above zero, but the RSI is overbought. Resistance will be pegged around the 150.9 level. Meanwhile, the support will be set around 145.40 pts.

Stocks to focus

HARTA – Price experienced a flag breakout above RM4.90. The MACD Histogram has turned green, but the RSI is overbought. Price may rally towards the RM5.25-RM5.50 levels after a mild consolidation. Support will be located around RM4.78.

KOSSAN – Price formed a BPC formation above the RM6.75 level. The MACD Indicator has issued a “Buy” signal. The RSI is trending positively above 50. Price may rally towards the RM7.50-RM7.70 levels. Support will be envisaged around RM6.70.

Source: M+ Online Research - 24 Oct 2016