This article first appeared in The Edge Financial Daily on November 29, 2017

The market found support in the earlier part of the week last week and we expected the market to stage a technical rebound. However, the FBM KLCI failed to climb above the immediate resistance level at 1,733 points. The index only managed to climb as high as 1,728.18 points before pulling back to close 0.3% lower in a week to 1,717.23 points last Friday, the lowest in eight months. Yesterday, the index closed at 1,714.42 points.

Market sentiment was cautious and hence the trading volume was lower. The average daily trading volume fell from 2.6 billion shares two weeks ago to 2.2 billion shares last week. However, the average daily trading value fell from RM2.6 billion to RM2.5 billion and this was an indication of more higher-capped counters being focused.

Foreign institutions picked up shares from local market participants as the stronger ringgit helped offset losses in shares’ value with foreign exchange gain. Net buying from foreign institutions was RM89 million while net selling from local institutions and retailers was RM65 million and RM24 million respectively.

For the FBM KLCI, gainers pared decliners. The top gainers for the week were IJM Corp Bhd (+3.6% in a week to RM3.16), Genting Malaysia Bhd (+3.4% to RM5.11) and RHB Bank Bhd (+1.9% to RM4.91). The top decliners were DiGi.Com Bhd (-7% to RM4.41), British American Tobacco (Malaysia) Bhd (-3.9% to RM38.00) and Hong Leong Bank Bhd (-2.9% to RM15.32).

The local market bucked the generally bullish global market performances last week. The US Dow Jones Industrial Average rose to a historical high last week. Hong Kong’s Hang Seng Index continued to climb to a fresh 10-year high. European and Asian market indices (except for China) rebounded.

The US dollar continued to weaken against major currencies and the ringgit. The US dollar index, which measures the US dollar against major currencies, declined from 93.7 points to 92.8 points last Friday. The ringgit strengthened against the US dollar from RM4.16 to RM4.11 to a US dollar last Friday.

Crude oil prices rebounded after a pullback from its bullish trend two weeks ago and this showed that crude oil was set to continue its bullish trend. Brent crude oil increased 1.6% in a week to US$63.73 (RM261.93) per barrel last Friday. The Commodity Exchange gold price declined only 0.5% to US$1,288 an ounce despite the weaker US dollar. Locally, crude palm oil futures fell 3.2% to close at RM2,626 per tonne last Friday after India, the world’s largest consumer of palm oil, decided to increase import tax for edible oils.

The failure to climb above the immediate resistance level at 1,733 points indicated a weak bearish sentiment. Furthermore, the FBM KLCI closing at a fresh eight-month low may stage a continuation of a bearish trend.

Chart-wise, the index remained bearish below the 30- and 200-day moving averages. Furthermore, the index continued to stay below the Ichimoku Cloud indicator and moving forward, the cloud was expanding downwards. This indicated a strong and clear bearish trend.

The Relative Strength Index and momentum oscillator indicators were declining and this indicated a strong bearish momentum. Furthermore, the index was trading near the bottom band of the expanding Bollinger Bands indicator and the moving average convergence divergence indicator continued to decline. However, the FBM KLCI remained technically oversold based on these oscillators.

The above commentary is solely used for educational purposes and is the contributor’s point of view using technical analysis. The commentary should not be construed as investment advice or any form of recommendation. Should you need investment advice, please consult a licensed investment adviser.