This article first appeared in The Edge Financial Daily on January 30, 2019
The FBM KLCI rose for the third week and climbed a fresh one-month high as market confidence is starting to see some traction especially from foreign institutions. The index increased 0.5% in a week to 1,701.03 points last Friday on firm volume. The index pulled back this week and closed at 1,690.41 points yesterday.
Trading volume was firm last week compared with the previous week. The average daily trading volume stayed at 2.6 billion, almost the same as the previous week. However, the average daily trading value increased to RM2.1 billion from RM1.9 billion. This indicated that more higher-capped stocks, which are favoured among the institutions, were the focus.
Foreign institutions continued to be net buyers on Bursa Malaysia. Net buy from foreign institutions was RM455.6 million. Meanwhile, net sells from local institutions and retail were RM417.8 million and RM37.8 million respectively.
For the KLCI, gainers beat decliners 19 to eight. The top three gainers were Hartalega Holdings Bhd (+8.3% in a week to RM5.74), Petronas Dagangan Bhd (+4.4% to RM26.10) and PPB Group Bhd (+2.8% to RM18.08). The top three decliners were Genting Malaysia Bhd (-3.6% to RM3.18), Press Metal Aluminium Holdings Bhd (-2.7% to RM4.33) and IHH Healthcare Bhd (-2.3% to RM5.57).
Markets were generally slightly bullish last week. In Asia, Hong Kong led the increase with a 1.8% weekly gain. However, Singapore declined marginally. The US market closed almost unchanged while European markets closed higher. However, London’s FTSE 100 fell 2.1% in a week.
The US dollar found weakness last week against major currencies. The US Dollar Index fell to 95.8 points last Friday from 96.4 points in the previous week. Hence, the ringgit weakened to RM4.12 against the US dollar compared with RM4.11.
Uncertainty in global equity market has pushed gold prices higher and continued its bullish rally after a pullback two weeks ago. Gold (Comex) increased 1.4% in a week to US$1,298.60 (RM5,337) an ounce last Friday. Crude oil (Brent) snapped a three-week gain and fell 1.8% to US$61.51 per barrel. Crude palm oil continued its bullish rally and increased 3.1% to RM2,292 per tonne last Friday.
The KLCI is now at the resistance level of 1,702 points. Immediate support level is at 1,667 points. A breakout above this level could bring the index to the next resistance level of 1,740 points.
Technically, the KLCI is bullish above the short-term 30-day moving average. The index remained in the Ichimoku Cloud indicator and a breakout above the upper band of the Cloud at 1,710 points indicates that the trend is bullish in the short term.
Momentum indicators continued to rise and this indicated that the bullish momentum was strengthening. The Relative Strength Index and momentum oscillator continued to climb to multi-week high and the moving average convergence divergence was turning strongly bullish as it climbed above its 0 line, which was also an indication of the 12-day exponential moving average (EMA) crossing over the 26-day EMA.
The bullish sentiment continued to be stronger. Bullish global markets and accumulation from foreign institutional investors boosted market confidence. Based on the current momentum, the index is likely to break above 1,702 points and climb towards the next resistance level of 1,740 points. This can happen if the index can stay above the new immediate support level at 1,680 points.
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 an investment advice or any form of recommendation. Should you need investment advice, please consult a licensed investment adviser.