FTSE Bursa Malaysia KLCI (.KLSE) pares gains, tracks regional markets but CIMB shines
Bursa Malaysia’s blue chips gave up most of its gains on Monday as investor sentiment turned cautious in line with key Asian markets but CIMB Group managed to prop up the FBM KLCI.
Shayne Heffernan Trade Idea
“We remain no change to our views that the Malaysian stocks are increasingly toppish and warrant a consolidation. At the same time, the weakness on Wall Street, coupled with the slumping crude oil prices may add to further woes on the key index’s performance over the near term.”
Amid the increasingly challenging conditions, I believe a pullback may leave the key index to be supported at the 1,400 level.
“In the event, the aforementioned level fails to hold, the next support is located at the 1,370 level. On the contrary, the 1,420-1,455 levels serve as the resistances.
“At the same time, I believe that a pullback is also due for the lower liners and broader market shares to take a breather from their overbought position. A pullback will be a healthy move for investors to digest their recent gains before making move for further recovery.” Shayne Heffernan PhD in Economics
Why This Matters
Foreign investors continued to offload Malaysian equities last week, taking out a sum of RM456.09 million from Monday to Thursday as compared with a RM237.33 million outflow seen between March 6 and 9, as volatility persists.
Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said retail investors recorded net sales of RM97.75 million compared with net buying of RM229.56 million recorded in the previous week.
“Meanwhile, local institutions were the main buyers for the week with net purchases recorded at RM442.22 million. The equities market appears to be discarding the disappointing economic data coming out from the US.
“Plunging US retail sales in March, higher-than-expected unemployment claims last week, and free-fall in business sentiments in the recent survey all seemed to be at the back burner now.”
On the other hand, he said the grim outlook shared by the International Monetary Fund (IMF) on the state of the global economy and sharp decline in global oil demand estimates by the International Energy Agency (IEA) did not seem to suppress market sentiments.
“Perhaps, the decline in the number of new infection cases of COVID-19 are fuelling hope that the economy would be reopened soon. Nonetheless, the uncertainties are still visible.
“There is no vaccine or antibody yet for the virus. Health experts are also not too keen to reopen the economy prematurely. As such, foreign investors would continue to be cautious, preferring the safe-haven assets,” he added.
Mohd Afzanizam said the Malaysian Government Securities (MGS) yields had come down quite steeply this week.
“As of yesterday, the 10-year MGS yield has fallen by 31 basis points from last week’s level. The 10-year MGS yield was at 3.06 per cent on Thursday,” he said.
The local index extended its gains to end the week on a firm note, underpinned by persistent buying momentum in index-linked counters amid positive market sentiment brought about by reduced COVID-19 cases, signaling global economic recovery.
Overall, the bias in prices is: Downwards.
The projected upper bound is: 1,460.79.
The projected lower bound is: 1,305.29.
The projected closing price is: 1,383.04.
A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 26 white candles and 24 black candles for a net of 2 white candles.
A falling window occurred (where the bottom of the previous shadow is above the top of the current shadow). This usually implies a continuation of a bearish trend. There have been 8 falling windows in the last 50 candles–this makes the current falling window even more bearish.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 64.7987. This is not an overbought or oversold reading. The last signal was a sell 0 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 52.64. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 20 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 76. This is not a topping or bottoming area. The last signal was a sell 0 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 18 period(s) ago.
Rex Takasugi – TD Profile
FTSE BURSA KLCI closed down -26.780 at 1,386.340. Volume was 56% below average (consolidating) and Bollinger Bands were 19% narrower than normal.
Open High Low Close Volume 1,407.230 1,407.230 1,384.940 1,386.340 67,828,600
Technical Outlook Short Term: Neutral Intermediate Term: Bullish Long Term: Bearish
Moving Averages: 10-period 50-period 200-period Close: 1,379.75 1,405.33 1,548.16 Volatility: 19 37 20 Volume: 129,298,952 189,948,656 128,249,112
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
FTSE BURSA KLCI gapped down today (bearish) on light volume. Possibility of a Common Gap which usually coincides with a lack of interest in the security. Common Gaps are fairly irrelevent for forecasting purposes. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
FTSE BURSA KLCI is currently 10.5% below its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect moderate flows of volume into .KLSE (mildly bullish). Our trend forecasting oscillators are currently bullish on .KLSE and have had this outlook for the last 8 periods.
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