The market started on a bullish note last week but pulled back to close lower on a week-to-week basis. Sentiment was bearish on declining performances in the global markets and weaker commodities prices especially crude oil and crude palm oil. The FBM KLCI declined only 0.3 per cent in a week to 1,856.07 points last Friday.
Trading volume has increased last week. The average daily trading volume increased to three billion shares from 2.6 billion shares two weeks ago.
The average daily trading value increased to RM3.1 billion from RM2.5 billion. This indicate more higher-capped stocks were being traded. Higher-capped stocks are majority traded by institutional investors.
Foreign institutions remained as net buyers in Bursa Malaysia last week. Net buy from foreign institutions was RM161 million and net sell from local institutions was RM266 million. Therefore, net buy from local retail was RM105 million.
In the FBM KLCI, decliners beat gainers 17 to 12 last week. The top gainers for the week were Hong Leong Bank Bhd (seven per cent in a week to RM19.50), Hap Seng Consolidated Bhd (4.1 per cent to RM9.55) and Nestle (M) Bhd (2.4 per cent to RM125.90).
The top decliners were AMMB Holdings Bhd (9.1 per cent to RM4.10), Axiata Group Bhd (5.7 per cent to RM5.33) and Press Metal Bhd (4.9 per cent to RM5.47).
Global markets were generally bearish last week. The losses made last week pared gains made in the previous two weeks.
The bearish indices performances were led by Germany’s DAX index that fell to its lowest level in almost a year. London’s FTSE is also at its year’s low.
The US dollar Index was firm at 90.0 points last Friday as compared to the week before.
The Malaysian ringgit was slightly stronger against the US dollar at RM3.90 last Friday as compared to RM3.92 last Friday.
Price of commodities fell. Gold (COMEX futures) fell 0.5 per cent in a week to US$1,323.70 an ounce last Friday. Brent crude oil futures fell 4.1 per cent to close at US$64.56 per barrel. Crude palm oil futures declined 2.2 per cent in a week to close at RM2,469 per metric tonne.
The FBM KLCI snapped a two-week gain last week as it faced the immediate resistance level at 1,870 points. Support level is at 1,800 points.
The bullish momentum was disrupted by the bearish global markets performances.
Despite the resistance, the FBM KLCI remained bullish above the short and long term 30 and 200 day moving average. Furthermore, the index remained strong above the Ichimoku Cloud and the Cloud is expanding upwards.
However, momentum indicators like the RSI and Momentum Oscillator have started to decline. The index also fell from the top band of the Bollinger Bands indicator but still above the middle band.
This indicates that the bullish momentum has started to weaken. Furthermore, the MACD indicator has crossed below its moving average last Friday.
The bullish sentiment in the equity market has taken a back seat as markets globally turned bearish after two weeks of gains. However, the decline was minimal and this indicates that there is still support.
The resistance at 1,870 points has to be broken to renew market confidence. If it fails to do so, the index may pull back to the support level at 1,800 points.
Nevertheless, the market remains technically bullish if it can stay above the support level at 1,800 points.
The direction of the market should be dictated by earnings report which has already started and at this point of time seems to be promising.
The above commentary is solely used for educational purposes and is the contributor’s point of view using technical al analysis. The commentary should not be construed as an investment advice or any form of recommendation. Should you need investment advice, please consult a licensed investment advisor.