Bullish momentum to continue
THE market was bullish on the European Central Bank pledge to a €60 billion per month (RM243.88 billion) bond-buying programme (similar to the United States’ last quantitative easing) with more than a trillion euro committed till September 2016. This has caused equity markets to jump including the local market. Furthermore, oil and gas stocks recovered as crude oil is finding some support. We were expecting the index to trade between 1,720 and 1,760 points but the index broke above 1,760 points. The FBM KLCI increased 3% in a week to 1,803.17 points yesterday.
Trading volume on Bursa Malaysia continued to increase as local institutions continue to support the market while foreign institutions eased their selling activity. However, more selling comes from local retail. The average daily trading volume in the past one week was 2.3 billion shares as compared with 1.9 billion shares in the previous week. The average daily trading value in the past one week increased to RM2.6 billion compared with RM2.1 billion in the previous week.
Net buying from local institutions was RM331.4 million (Monday to Friday last week). Net selling from foreign institutions was RM147.9 billion while local net selling was RM183.5 million. In the FBM KLCI, only two out of 30 counters declined. The decliners were CIMB Group Holdings Bhd ( Financial Dashboard) (-4.7% from last week) and Astro Malaysia Holdings Bhd ( Financial Dashboard) (-1.4%). The top three gainers were Petronas Chemicals Group Bhd ( Financial Dashboard) (+12.4), Felda Global Ventures Holdings Bhd ( Financial Dashboard) (+11.6%) and PPB Group Bhd ( Financial Dashboard) (+8.1%).
Asian markets were bullish. China’s Shanghai Stock Exchange Composite jumped 5.7% higher in a week to 3,354.66 points, near its five-year high. Japan’s Nikkei 225 rose 2.3% in a week to 17,768.30 points. Hong Kong’s Hang Seng Index increased 3.6% in a week to 24,807.28 points and Singapore’s Straits Times Index rose 2.3% to 3,412.20 points.
Germany’s continues to climb to record highs and the US rebounded. On Monday, the US Dow Jones Industrial Average increased 1% in a week to 17,678.70 points. London’s FTSE100 Index rose 4.1% in a week to 6,855.64 and Germany’s DAX Index jumped 5.4% to 10,798.33 points. The US dollar index continued to increase to its 12-year high at 95.11 points from 92.83 points a week ago. The ringgit slightly strengthened against the US dollar from RM3.61 to a US dollar a week ago to RM3.59.
Gold started to pull back after three weeks of gains while crude oil continued to decline. Commodity Exchange gold was almost unchanged from last week at US$1,281.30 an ounce. WTI crude declined 5.9% in a week to US$45.08 per barrel. Crude palm oil declined significantly on weak demand. Crude palm oil futures on Bursa Malaysia fell 5.9% in a week to RM2,184 per tonne.
The FBM KLCI remained bullish in the short term above the 30-day moving average (MA) it broke two weeks ago. Furthermore, it climbed above the immediate resistance level at 1,765 points and the Ichimoku Cloud indicator. This also shows that the market has turned bullish in the short term. However, the FBM KLCI is slightly below the longer-term 200-day MA and the down trend line at 1,830 points and 1,820 points respectively.
After breaking above their mid-levels two weeks ago, momentum indicators like RSI, MACD and Momentum Oscillator continued to climb higher indicating a strong bullish momentum. Furthermore, the index climbed above the top band of the Bollinger Bands indicator and this indicates a strong bullish momentum in the short term. However, after two weeks of increase, the market may attract sellers to book short-term profits and hence we may see some resistance.
The bullish momentum is expected to continue but the market may face some short-term resistance. Once the market corrects in the short term (which may take a few days), we expect the index to continue climbing higher with a possibility of the index testing the long-term 200-day MA. The chances would be higher for the FBM KLCI to continue its bullish momentum if it can stay above the broken resistance level at 1,765 points.
Benny Lee is chief market strategist for Jupiter Securities Sdn Bhd. Jupiter Securities is a participating broker in Bursa Malaysia. He can be contacted at bennylee.kl@gmail.com. The views expressed in the article are the opinions of the writer and should not be construed as investment advice. Please exercise your own judgement or seek professional advice for your investment decisions.
http://www.theedgemarkets.com
Trading volume on Bursa Malaysia continued to increase as local institutions continue to support the market while foreign institutions eased their selling activity. However, more selling comes from local retail. The average daily trading volume in the past one week was 2.3 billion shares as compared with 1.9 billion shares in the previous week. The average daily trading value in the past one week increased to RM2.6 billion compared with RM2.1 billion in the previous week.
Net buying from local institutions was RM331.4 million (Monday to Friday last week). Net selling from foreign institutions was RM147.9 billion while local net selling was RM183.5 million. In the FBM KLCI, only two out of 30 counters declined. The decliners were CIMB Group Holdings Bhd ( Financial Dashboard) (-4.7% from last week) and Astro Malaysia Holdings Bhd ( Financial Dashboard) (-1.4%). The top three gainers were Petronas Chemicals Group Bhd ( Financial Dashboard) (+12.4), Felda Global Ventures Holdings Bhd ( Financial Dashboard) (+11.6%) and PPB Group Bhd ( Financial Dashboard) (+8.1%).
Asian markets were bullish. China’s Shanghai Stock Exchange Composite jumped 5.7% higher in a week to 3,354.66 points, near its five-year high. Japan’s Nikkei 225 rose 2.3% in a week to 17,768.30 points. Hong Kong’s Hang Seng Index increased 3.6% in a week to 24,807.28 points and Singapore’s Straits Times Index rose 2.3% to 3,412.20 points.
Germany’s continues to climb to record highs and the US rebounded. On Monday, the US Dow Jones Industrial Average increased 1% in a week to 17,678.70 points. London’s FTSE100 Index rose 4.1% in a week to 6,855.64 and Germany’s DAX Index jumped 5.4% to 10,798.33 points. The US dollar index continued to increase to its 12-year high at 95.11 points from 92.83 points a week ago. The ringgit slightly strengthened against the US dollar from RM3.61 to a US dollar a week ago to RM3.59.
Gold started to pull back after three weeks of gains while crude oil continued to decline. Commodity Exchange gold was almost unchanged from last week at US$1,281.30 an ounce. WTI crude declined 5.9% in a week to US$45.08 per barrel. Crude palm oil declined significantly on weak demand. Crude palm oil futures on Bursa Malaysia fell 5.9% in a week to RM2,184 per tonne.
The FBM KLCI remained bullish in the short term above the 30-day moving average (MA) it broke two weeks ago. Furthermore, it climbed above the immediate resistance level at 1,765 points and the Ichimoku Cloud indicator. This also shows that the market has turned bullish in the short term. However, the FBM KLCI is slightly below the longer-term 200-day MA and the down trend line at 1,830 points and 1,820 points respectively.
After breaking above their mid-levels two weeks ago, momentum indicators like RSI, MACD and Momentum Oscillator continued to climb higher indicating a strong bullish momentum. Furthermore, the index climbed above the top band of the Bollinger Bands indicator and this indicates a strong bullish momentum in the short term. However, after two weeks of increase, the market may attract sellers to book short-term profits and hence we may see some resistance.
The bullish momentum is expected to continue but the market may face some short-term resistance. Once the market corrects in the short term (which may take a few days), we expect the index to continue climbing higher with a possibility of the index testing the long-term 200-day MA. The chances would be higher for the FBM KLCI to continue its bullish momentum if it can stay above the broken resistance level at 1,765 points.
Benny Lee is chief market strategist for Jupiter Securities Sdn Bhd. Jupiter Securities is a participating broker in Bursa Malaysia. He can be contacted at bennylee.kl@gmail.com. The views expressed in the article are the opinions of the writer and should not be construed as investment advice. Please exercise your own judgement or seek professional advice for your investment decisions.
http://www.theedgemarkets.com
