Weekly Recap

The U.S. stockmarkets maintained its sideways trending mode between the narrow range of 18,000-18,250 levels over the past week with a positive start as traders were positive on AT&T acquiring Time Warner – the Dow gained 77.32 pts to 18,223.03 pts on Monday. However, as the Consumer Confidence Index retreated in the month of October – the Dow slipped 53.76 pts to 18,169.27 pts on Tuesday.

Market sentiments continue to trade on a mixed note - the Dow recouping some of the losses as buying interest regained momentum in the previous session, boosting the key index higher by 30.06 pts to 18,199.33 pts, but the S&P 500 fell 6.39 pts on Wednesday. Selling activities further intensified as crude oil prices extended its retracement phase below the US$50 level and the Dow slipped 29.65 pts and 8.49 pts to 18,169.68 pts and 18,161.19 pts over the next two trading days respectively. Still, on a W.o.W basis, the Dow advanced 23.97 pts.

Meanwhile, share prices on Bursa Malaysia trended higher after Budget 2017 as traders continue to focus on the construction sector over the week. After trending below the 1,670 level over the past month, the FBM KLCI finally surged 7.78 pts to 1,677.76 pts on Monday, led by selected banking heavyweights like CIMB and Maybank. However, the key index took a pause, ended flat at 1,677.43 pts (-0.33 pts) on Tuesday as traders were locking in profits and shifted their focus on small and mid-cap stocks after a special fund of RM3.0 bln were allocated. Selling pressure intensified and the FBM KLCI declined 3.51 pts and 4.89 pts to 1,673.92 pts and 1,669.03 pts on Wednesday and Thursday respectively as WTI crude oil prices dropped below the US$50 per barrel mark.

Nevertheless, bargain hunting activities regained traction and the FBM KLCI rebounded off the 1,666 level, inching higher by 1.24 pts to 1,670.27 pts on Friday. Last week, the FBM KLCI gained 0.29 pts.

FBM KLCI Weekly Technical Readings

The weekly MACD Histogram extended another green bar, while the MACD Line is approaching zero. The weekly RSI has rebounded off the 50 level.

Meanwhile, the daily MACD Line is hovering above zero and the daily RSI is trending positively above the 50 level.

FBM KLCI Support & Resistance

With the FBM KLCI trended higher above the 1,670 level after Budget 2017, coupled with both the daily indicators turning positive; we may expect a short term follow-through buying interest towards the resistance of 1,680 level, followed by the 1,700 level. Meanwhile, if the FBM KLCI violates below the 1,660 level, the next support will be set around the 1,645 level.

Moving Forward

Wall Street may extend its sideways move as traders will be taking a cautious path ahead of the FOMC meeting this week. Also, the trading theme for the traders is likely to stay within the defensive stocks ahead of the U.S. Presidential election. Meanwhile, share prices on Bursa Malaysia may see some short term buying interest after rebounding off the EMA120 level. Traders may look for opportunities within small and mid-cap stocks and among the construction stocks after the Budget 2017.

Sector focus

The Construction sector continues to stay above the EMA9 over the week. The MACD Line is above zero, while the RSI is suggesting that the momentum is positive. The next resistance will be pegged around 295-300. Support will be set around 290.

Stocks to focus

ECONBHD – Price experienced a resistance breakout above the RM1.84 level with higher volumes. The MACD Indicator has expanded positively above zero. The RSI, however, is slightly overbought. Price may rally towards the RM2.00 level after a short consolidation. Support will be pegged around RM1.80 level.

WCT – Price has rebounded off the RM1.66 level and experienced a breakout above the RM1.70 level with high volumes. The MACD Histogram extended another green bar. The RSI has crossed above 50. Price target will be envisaged around the RM1.90-RM2.00 levels. Support will be anchored around RM1.63.

Source: M+ Online Research - 31 Oct 2016