This article first appeared in The Edge Financial Daily on April 10, 2019
The market bucked global market performances and remained slightly bearish last week. Sentiment was weak on bearish export figures for February and the weaker ringgit. The FBM KLCI fell 0.1% in a week to 1,641.81 points last Friday. The market is directionless this week and the index closed at 1,641.94 points yesterday.
The average daily trading volume increased to 2.9 billion shares last week. However, the average daily trading value slightly increased to RM2 billion from RM1.9 billion. This indicated that more lower-capped stocks, which are generally favoured by local retail investors, were being traded.
For the KLCI, decliners once again beat gainers 18 to 11. The top three gainers were DiGi.Com Bhd (+3.3% in a week to RM4.70), Hartalega Holdings Bhd (+3% to RM4.77), and Maxis Bhd (+2.4% to RM5.49). The top three decliners were IHH Healthcare Bhd (-3% to RM5.60), AMMB Holdings Bhd (-2.9% to RM4.43), and Malaysia Airports Holdings Bhd (-1.8% to RM7.11).
Global market indices were bullish across the globe. China’s Shanghai Stock Exchange Composite Index led the Asian markets with a 5% increase. In Europe, Germany’s DAX led the market with an increase of 4.3%. The US and UK markets were up.
The US dollar held firm against major currencies. The US Dollar Index, which measures the US dollar against a basket of major currencies, increased to 97.4 points last Friday from 97.2 points in the previous week. The ringgit weakened against the US dollar at RM4.09 per dollar last Friday compared with RM4.08 the previous Friday.
Comex gold futures fell 0.1% in a week to US$1,295.90 (RM5,300.23) an ounce last Friday. However, Crude oil (Brent) gained for the fourth week to its highest in six months, increasing 4.3% to US$70.50 per barrel. In the local market, crude palm oil (BMD) jumped 5.6% higher in a week to RM2,221 per tonne on higher unexpected demand.
The KLCI remained below the immediate resistance level of 1,665 points after testing and rebounding from the immediate support level of 1,630 points last week.
Trend-wise, the KLCI is bearish below both the short-term and long-term 30- and 200-day moving averages. The index is also below the Ichimoku Cloud indicator and the Cloud is getting bearish.
Momentum indicators continued to decline last week after increasing in the earlier part of the week. This indicated that the bearish trend momentum was strong. The Relative Strength Index (RSI) and Momentum Oscillator declined and the Moving Average Convergence Divergence indicator remained below its moving average. However, the RSI indicator was near its oversold level and hence might attract some buying.
The KLCI may stage a rebound this week but with resistance at 1,665 points. If the index fails to climb above this level, then the bearish trend may resume and possibly break below the immediate support level of 1,630 points to the next support level of 1,600 points. The short-term trend may turn bullish only if the index is able to climb above 1,665 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.