This article first appeared in The Edge Financial Daily on December 19, 2018
The FBM KLCI remained bearish last week as sentiment remained bearish on generally bearish market performances regionally. There were no positive catalysts last week but a weaker ringgit and falling crude oil prices affected the market negatively. The index fell to its lowest since January 2017 last Wednesday before rebounding.
The benchmark FBM KLCI eventually fell 1.1% in a week to 1,661.96 points last Friday. The market continued to fall this week and the index settled at 1,635.31 points yesterday.
Trading volume fell significantly last week as the holiday season started. The average daily trading volume declined to 1.9 billion shares from 2.3 billion in the previous week and the average daily trading value fell to RM1.7 billion from RM2.1 billion.
For the FBM KLCI, decliners beat gainers five to two. Top gainers were Hap Seng Consolidated Bhd (+1.7% in a week to RM9.88), Petronas Dagangan Bhd (+1.2% in a week to RM25.60), and Malaysia Airports Holdings Bhd (+0.8% to RM7.87). The top three decliners were Tenaga Nasional Bhd (-3.2% to RM13.26), DiGi.Com Bhd (-3.1% to RM4.35), and Genting Bhd (-3.0% to RM6.07).
Markets were mixed. In Asia, market indices generally closed lower except for Hong Kong’s Hang Seng Index. European markets including the UK closed higher while the US market fell.
US dollar strengthened against major currencies. The US Dollar Index rose to 97.4 points last Friday from 96.5 points the week before. The ringgit continued to strengthen against the greenback at RM4.18 to a US dollar compared with RM4.16 in the previous week.
The rebound in crude oil prices two weeks ago failed to trigger a rally. Crude oil (Brent Crude) declined 1.9% in a week to US$60.25 (RM251.85) per barrel last Friday. Gold (Commodity Exchange) pulled back from a bullish trend and declined 0.9% from the previous week at US$1,242.30 an ounce. Locally, crude palm oil (Bursa Malaysia Derivatives) rebounded and increased 3.5% to RM2,068 last Friday.
The FBM KLCI broke below the immediate support level of 1,670 points last week and this preliminary indicates that the bearish trend is set to continue. The current immediate resistance is at 1,702 points. Next support level for the index is at 1,620 points.
There is not much change in the current trend from the past two weeks. Technically, the FBM KLCI trend remained bearish below the short-term 30-day moving average and the long term 200-day moving average. The index remained below the Ichimoku Cloud indicator and the expanding Cloud indicator downwards indicates that the bearish momentum continues to gain strength.
The Relative Strength Index and Momentum Oscillator remained below their mid-levels and this indicates that the market’s sentiment is still bearish in the short term. These indicators have rebounded and this indicates that the bearish momentum is weak. However, the moving average convergence divergence has fallen below its trigger line and this indicates that the bearish momentum is building up.
As mentioned earlier, the breakout of the support level indicates that the bearish trend is set to continue. Technical indicators are showing signs of stronger bearish momentum and therefore, the index may trend downwards towards the next support level of 1,620 points if it continues to stay below 1,702 points.
The above commentary is solely used for educational purposes and is the writer’s point of view using technical 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 adviser.