This article first appeared in The Edge Financial Daily on March 20, 2019
The market started on a bearish note last week after a two-week decline but rebounded to close marginally higher on bargain hunting. The sentiment was also boosted by bullish global market performances. Local institutions were supporting the market amid continuous selling by foreign institutions. Banking stocks supported the market.
The FBM KLCI increased 0.6 point in a week after rebounding from a low of 1,664.3 points. The market inched higher this week and closed at 1,687.68 points yesterday.
The average daily trading volume increased to four billion shares last week compared with 3.1 billion in the previous week. The average daily trading value increased to only RM3 billion from RM2.7 billion. This indicated more lower-capped stocks, which are favoured among local retail investors, were being traded.
Foreign institutions remained net sellers last week but at a lower strength. Local retail participants were also net sellers. Net sells from foreign institutions and local retail investors were RM148.7 million and RM30.6 million respectively. Net buy from local was RM179.3 million.
For the KLCI, gainers marginally outpaced decliners 15 to 14. The top three gainers were Press Metal Aluminium Holdings Bhd (+6.5% in a week to RM4.60), RHB Bank Bhd (+4.3% to RM5.80) and AMMB Holdings Bhd (+2.2% to RM4.60). The top three decliners were Petronas Dagangan Bhd (-6.4% to RM24.80), Hartalega Holdings Bhd (-4.6% to RM4.76) and Maxis Bhd (-2.2% to RM5.24).
Market indices were generally bullish last week. The Hong Kong Hang Seng Index led the Asian markets with a 2.8% weekly increase while France CAC40 Index led the European markets with a 3% increase. US Dow Jones Industrial Average rose 1.6%.
The US dollar weakened against major currencies last week. The US Dollar Index fell to 96.5 points last Friday from 97.4 points in the previous week. The ringgit held firm against the US dollar at RM4.09 to a US dollar last Friday compared with the previous week.
Prices of major commodities gained last week. Price of gold (comex) increased for the second week, rising 0.2% in a week to US$1,300.90 (RM5,294.66) an ounce last Friday. Crude oil (Brent) also gained for the second week, increasing 2% to US$67.02 per barrel. However, crude palm oil (BMD) fell for the sixth week, declining 2.8% in a week to RM2,066 per tonne on high inventory.
The KLCI remained below the immediate technical resistance level at 1,700 points. Last week, the index revealed a support level at 1,665 points.
Technically, the KLCI is bearish according to both the short-term and long-term 30- and 200-day moving averages. The index fell into the Ichimoku Cloud indicator and this indicated uncertainty. Moving forward, the Cloud turned bearish.
Momentum indicators rebounded last week but still bearish. The Relative Strength Index and Momentum Oscillator remained below their mid levels and increasing. Furthermore, the Moving Average Convergence Divergence indicator remained below its moving average. This indicated that the bearish trend weakened.
The rebound in strong volume last week indicated support and hence the market may stage a technical rebound. However, the KLCI is still bearish as long as it stays below the immediate resistance level at 1,700 points. A breakout above 1,700 points could turn the FBM KLCI into a bullish trend.
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.