Market to stay directionless
The market started on a bearish note last Tuesday after the Chinese New Year holidays but rebounded to recover the earlier losses.
Stronger ringgit boosted market sentiment to bargain hunt after Tuesday’s fall.
The FBM KLCI declined marginally lower in a short three-day week, falling only 1.2 points to 1,685.01 points last Friday.
The average daily trading volume increased from 1.4 billion two weeks ago to 1.7 billion shares last week.
The average daily trading increased from RM1.9 billion to RM2.1 billion. The total market valuation increased RM4 billion from the previous week to RM1,718 billion last Friday.
In the short trading week, foreign institutions were net sellers in Bursa Malaysia despite firm ringgit.
Net sell from foreign institutions was RM136 million. Net buys from local institutions and local retail were RM85 million and RM51 respectively. The ringgit was firm from the previous week at RM4.43 to a US dollar last Friday.
In the FBM KLCI, decliners beat gainers four to three. The top gainers for the week were IOI Corporation Bhd (2.7 per cent in a week to RM4.62), Maxis Bhd (2.5 per cent to RM6.11) and Digi.com Bhd (2.4 per cent to RM5.05).
The top decliners were British American Tobacco Bhd (4.6 per cent to RM45.32), Sime Darby Bhd (2.1 per cent to RM9.04) and AMMB Holdings Bhd (0.8 per cent to RM4.53).
Global markets mostly ended lower last week despite rebounds towards the end of the week. However, the London FTSE100 index managed to end higher.
After a pull back early last week, the US DOW managed to climb back above the historical 20,000 points mark. Germany’s DAX index pulled back for a correction after climbing to historical highs two weeks ago.
Crude oil prices rebounded last week after three weeks of being directionless. The price rose to its highest level in 4 weeks at US$56.81 last Friday.
The US dollar index fell for the sixth week from 100.5 points a week ago to 99.9 points last Friday. In the local market, crude palm oil declined for the second week.
The FBM KLCI broke below the support level at 1,680 points early last week but rebounded to close above last Friday. This indicates that the market is still being bullish.
Next resistance level is at 1,700 points and the support level below 1,680 points is at 1,659 points, where the 30 and 200-day moving averages currently are.
Trend-wise, the index is bullish above both the short and long term 30 and 200 day moving averages.
The index also maintained above the Ichimoku Cloud indicator. The rising Cloud indicates that the index should be climbing higher at least in the next one month.
Momentum indicators like the RSI and Momentum Oscillator were above their mid-levels but declined. This indicates that the bullish sentiment is weak.
The MACD indicator was has fallen below its moving average last week. The Bollinger Bands indicator is also starting to tighten. The market trend is bullish but the chart also shows that the bullish trend is weak. The market is current being cautious as new US president Donald Trump are making executive decisions that made the world worry.
However, the US decision not to raise interest rates boosted equity markets. We expect uncertainty to remain and the FBM KLCI to continue trading sideways with the index trading between 1,675 and 1,695 points.
The above commentary is solely used for educational purposes and is the contributor’s point of view using technical al 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 advisor.