MARKET DEVELOPMENT
Sentiment Turned Bearish
Sentiment Turned Bearish
05/05/2015 (Borneo Post) - On April 30, markets started to pull back for a correction and the FBM KLCI declined last week after climbing to a seven-month high two weeks ago. The market sentiment was not boosted by rising crude oil prices and stronger ringgit.
Falling crude palm oil prices weighed down the market. The benchmark FBM KLCI did not managed to stay above the immediate resistance level at 1,856 points it broke two weeks ago and hence the chance of it climbing to historical highs has been stunted.
The FBM KLCI declined one per cent in a week to 1,842.93 points last Wednesday on lower volume
The average daily trading from Monday to Wednesday last week declined from 2.7 billion shares to two billion shares. However, the average daily trading volume fell to RM2.1 billion from 2.2 billion two weeks ago.
This shows that the market was dominated by institutions who favour higher priced stocks and retail took a break ahead of the long weekend holiday.
After weeks buying into the local market, foreign institution turned net sellers last week.
From Monday to Wednesday last week, net buying from local institutions was RM155.8 million. Foreign institutions net selling was RM155.8 million. The index was weighed down by plantation stocks and in the FBM KLCI, decliners trounced gainers 10 to three.
Top gainers in the FBM KLCI were British American Tobacco (M) Bhd (1.5 per cent from last Friday), IOI Properties Group Bhd (0.9 per cent) and AMMB Holdings Berhad (0.3 per cent). Top three decliners in the index were Sapura Kencana Petroleum Bhd (6.7 per cent), Digi.com Bhd (3.2 per cent) Hong Leong Financial Group Bhd (3.0 per cent).
Regional Indices
Global markets performances were mixed since last Friday. China’s Shanghai Stock Exchange Composite Index increased 1.9 per cent in a week to 4,476.62 points, near 7-year highs.
Hong Kong’s Hang Seng Index also traded at seven-year highs, rising 1.2 per cent to 28,400.34 points. However, Singapore’s Straits Times Index declined 0.7 per cent to 3,487.15 points. Japan market was closed last Wednesday for holidays.
Commodities
US dollar continued to weaken and US markets was weighed down. European markets fell into a correction. Dow Jones Industrial Average declined only 0.2 per cent from last Friday to 18,035.53 points on Wednesday. London’s FTSE100 fell 1.7 per cent to 6,950.79 points. Germany’s DAX Index fell 3.2 per cent to 11,432.72 points.
The US Dollar index declined from 97.10 points last Friday to 95.32 points, the lowest in two months. The Malaysian ringgit is expected to strengthen against the US dollar from RM3.57 per US dollar to RM3.54.
Gold rebounded on weak US dollar. COMEX gold increased two per cent from last Friday to US$1,204.10 an ounce on Wednesday. Crude oil continued to increase last week with the WTI crude increasing 1.9 per cent to US$58.53 from last Friday. Crude palm oil in Bursa Malaysia declined 3.4 per cent to RM2,081 per metric tonne, the lowest in seven months.
Observations
The FBM KLCI is technically bullish above the short and long term 30 and 200 day moving averages. The index is also above the Ichimoku Cloud indicator. However, the index has pulled back near the short term 30-day moving average at 1,837 points and the immediate support level is at 1,836 points.
A breakout below these levels could trigger more selling pressure and the next support level is at 1,830 points.
Momentum indicators are indicating that the market sentiment has turned bearish. The RSI and Momentum Oscillators are going to fall below their mid-levels.
Furthermore, the MACD indicator has already crossed below its moving average line and the index fell below the middle band of the Bollinger Bands indicator. Therefore, the bearish momentum is likely going to persist this week.
The index is expected to break below the 30-day moving average at 1,837 points and decline further. I have mentioned that the market still remains bullish if it can stay above 1,830 points. However, a breakout below this level could damage market confidence.
A break below the long term 200-day moving average at 1,818 points could turn the trend into a bearish one. Looks like the proverbial “Sell in May and go away” is taking place. Expect more uncertainties in the market in the short term.
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.
Falling crude palm oil prices weighed down the market. The benchmark FBM KLCI did not managed to stay above the immediate resistance level at 1,856 points it broke two weeks ago and hence the chance of it climbing to historical highs has been stunted.
The FBM KLCI declined one per cent in a week to 1,842.93 points last Wednesday on lower volume
The average daily trading from Monday to Wednesday last week declined from 2.7 billion shares to two billion shares. However, the average daily trading volume fell to RM2.1 billion from 2.2 billion two weeks ago.
This shows that the market was dominated by institutions who favour higher priced stocks and retail took a break ahead of the long weekend holiday.
After weeks buying into the local market, foreign institution turned net sellers last week.
From Monday to Wednesday last week, net buying from local institutions was RM155.8 million. Foreign institutions net selling was RM155.8 million. The index was weighed down by plantation stocks and in the FBM KLCI, decliners trounced gainers 10 to three.
Top gainers in the FBM KLCI were British American Tobacco (M) Bhd (1.5 per cent from last Friday), IOI Properties Group Bhd (0.9 per cent) and AMMB Holdings Berhad (0.3 per cent). Top three decliners in the index were Sapura Kencana Petroleum Bhd (6.7 per cent), Digi.com Bhd (3.2 per cent) Hong Leong Financial Group Bhd (3.0 per cent).
Regional Indices
Global markets performances were mixed since last Friday. China’s Shanghai Stock Exchange Composite Index increased 1.9 per cent in a week to 4,476.62 points, near 7-year highs.
Hong Kong’s Hang Seng Index also traded at seven-year highs, rising 1.2 per cent to 28,400.34 points. However, Singapore’s Straits Times Index declined 0.7 per cent to 3,487.15 points. Japan market was closed last Wednesday for holidays.
Commodities
US dollar continued to weaken and US markets was weighed down. European markets fell into a correction. Dow Jones Industrial Average declined only 0.2 per cent from last Friday to 18,035.53 points on Wednesday. London’s FTSE100 fell 1.7 per cent to 6,950.79 points. Germany’s DAX Index fell 3.2 per cent to 11,432.72 points.
The US Dollar index declined from 97.10 points last Friday to 95.32 points, the lowest in two months. The Malaysian ringgit is expected to strengthen against the US dollar from RM3.57 per US dollar to RM3.54.
Gold rebounded on weak US dollar. COMEX gold increased two per cent from last Friday to US$1,204.10 an ounce on Wednesday. Crude oil continued to increase last week with the WTI crude increasing 1.9 per cent to US$58.53 from last Friday. Crude palm oil in Bursa Malaysia declined 3.4 per cent to RM2,081 per metric tonne, the lowest in seven months.
Observations
The FBM KLCI is technically bullish above the short and long term 30 and 200 day moving averages. The index is also above the Ichimoku Cloud indicator. However, the index has pulled back near the short term 30-day moving average at 1,837 points and the immediate support level is at 1,836 points.
A breakout below these levels could trigger more selling pressure and the next support level is at 1,830 points.
Momentum indicators are indicating that the market sentiment has turned bearish. The RSI and Momentum Oscillators are going to fall below their mid-levels.
Furthermore, the MACD indicator has already crossed below its moving average line and the index fell below the middle band of the Bollinger Bands indicator. Therefore, the bearish momentum is likely going to persist this week.
The index is expected to break below the 30-day moving average at 1,837 points and decline further. I have mentioned that the market still remains bullish if it can stay above 1,830 points. However, a breakout below this level could damage market confidence.
A break below the long term 200-day moving average at 1,818 points could turn the trend into a bearish one. Looks like the proverbial “Sell in May and go away” is taking place. Expect more uncertainties in the market in the short term.
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.