Thursday 28 Mar 2024
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This article first appeared in The Edge Financial Daily on September 20, 2018

After a long holiday break last week, the market was volatile as it sought catalysts. It started with a bearish note as global markets were bearish and ended up higher in a week after markets rebounded strongly. The FBM KLCI closed 0.3% higher at 1,803.76 points in the short trading week but the trading range was between 1,777.45 and 1,822.68 points. There was not much movement this week and yesterday, the index closed at 1,800.71 points.

It may have been a short week last week but the average daily trading volume was slightly higher compared with the week before. The average daily trading volume increased to 2.5 billion from 2.4 billion shares in the previous week. The average daily trading value increased to RM2.6 billion from RM1.9 billion. This indicates more higher-capped counters were being traded.

Market participation on Bursa Malaysia was mixed. Net buying from local and foreign institutions were RM21 million and RM3 million respectively while net buying from local retailers was RM24 million.

Despite the FBM KLCI closing higher in a week, the index component stocks that declined outweighs gainers 17 to 12. The top three gainers were CIMB Group Holdings Bhd (+5.2% in a week to RM3.50), DiGi.Com Bhd (+3.7% to RM4.78) and Dialog Group Bhd (+2.9% to RM2.90). The top three decliners were Hartalega Holdings Bhd (-4.4% to RM6.68), IHH Healthcare Bhd (-4.0% to RM5.29) and Sime Darby Bhd (-3.7% to RM2.59).

Performances of most markets were generally bullish last week. In Asia, markets rebounded after Hong Kong’s Hang Seng Index fell to its lowest in a year two weeks ago and Singapore’s Straits Times Index was at its 16-month low. However, the Shanghai market remained bearish and was at its lowest level in four years. The US market rose to its highest level in seven months while markets in Europe including the UK rebounded after falling to multi-month lows two weeks ago.

The US dollar has weakened against major currencies. The US dollar index declined to 94.9 points last Friday from 95.3 points the week before. Hence, the ringgit held against the US dollar from the previous week, at RM4.14 to RM4.13 per US dollar last Friday.

Prices of major commodities ended up mixed. The Commodity Exchange gold price fell for the third week, declining 0.3% in a week to US$1,198.30 (RM4,965.99) an ounce last Friday. Crude oil (Brent) continued to increase and the price rose 1.3% to US$78.10 a barrel. In the local scene, crude palm oil futures fell 1.9% to close at RM2,222 per tonne on high inventory levels.

Trading range was almost 50 points last week but it remained above the bullish trend support level at 1,794.0 points. This shows that there is still support for the bullish trend. However, a new support level at 1,780 points was established from last week’s performance and also resistance at 1,820 points.

The FBM KLCI fell below its short- and long-term 30-day and 200-day moving averages but immediately climbed back above these levels. This indicates that the trend is still bullish. Furthermore, the index is above the Ichimoku Cloud indicates and the Cloud is at its crossover point to becoming bullish.

Momentum indicators show a weak trend. In other words, there is no clear direction. Momentum indicators like the Relative Strength Index and oscillator are at their middle levels. However, the moving average convergence divergence indicator remained below its moving average. The mixed indications from these indicators show a directionless market.

After a volatile week, the market is expected to consolidate. Technical indicators show that the market is directionless. However, the market still has a bullish bias as the index remained above the short- and long-term moving averages. The FBM KLCI is expected to consolidate between 1,780 and 1,820 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 investment advice or any form of recommendation. Should you need investment advice, please consult a licensed investment adviser.

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