‘Zero-sum game’ for FTSE Bursa Malaysia KLCI (.KLSE) amid COVID-19 fears

‘Zero-sum game’ for FTSE Bursa Malaysia KLCI (.KLSE) amid COVID-19 fears

‘Zero-sum game’ for FTSE Bursa Malaysia KLCI (.KLSE) amid COVID-19 fears

Malaysia’s equity market experienced a ‘zero-sum game’ last week as the outflow and inflow of funds were equal despite mounting fears over the COVID-19 pandemic that had triggered panic in the overseas markets.

The local market was well supported by buying activities from both local institutions and the retail sector, dominating 74.18 per cent of average participation during the first four days of the week.

Bank Islam Malaysia Bhd chief economist, Dr Mohd Afzanizam Abdul Rashid said local institutions remained as net buyers at RM967.3 million during the March 9-12 period, compared with RM650.67 million registered a week earlier.

He said the inflow of funds from local retailers doubled to RM461.8 million from RM228.9 million previously.

Regional equity markets, including Malaysia, were gravely affected on Friday the 13th as selling pressure intensified amid uncertainties due to the COVID-19 pandemic which had triggered travel bans and recession fears, coupled with lower oil prices.

Benchmark indices in Japan and India sank by as much as 10 per cent as investors reacted to WHO’s pandemic declaration.

Trading on the Stock Exchange of Thailand (SET) was halted temporarily on Friday after it hit the 10 per cent circuit breaker limit for the second consecutive day.

It ended the day 10.8 per cent lower at 1,114.91, its worst performance since 2006.

Meanwhile, trading on the Indonesia Stock Exchange was halted on Thursday, 30 minutes before the market was officially closed, after the Jakarta Composite Index fell by more than five per cent to 4,895.75.

The last time its trading was suspended was on Oct 8, 2008 after the barometer index dropped 10.38 per cent to 1,451.67 during the global financial crisis.

On a Friday-to-Friday basis, the benchmark index FBM KLCI erased 138.35 points or 9.33 per cent to 1,344.75, the lowest level since 2010, from 1,483.10 previously.

Weekly turnover expanded to 25.02 billion units worth RM17.67 billion from 15.85 billion units worth RM12.51 billion a week earlier.

Going forward, Mohd Afzanizam expects Malaysian investors to remain guarded next week and that the impact from COVID-19 outbreak would continue to be closely monitored by all investors.

He added that investors would also be waiting for more details on possible adjustments to the existing economic stimulus package. –

Technical Indicators

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

By the way, prices are vulnerable to a correction towards 1,519.97.

The projected upper bound is: 1,390.68.

The projected lower bound is: 1,288.51.

The projected closing price is: 1,339.59.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 20 white candles and 30 black candles for a net of 10 black 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 6 falling windows in the last 50 candles–this makes the current falling window even more bearish.

Momentum Indicators

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.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 19.4985. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 1 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 19.94. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 2 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 -237.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 7 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 14 period(s) ago.

Rex Takasugi – TD Profile

FTSE BURSA KLCI closed down -74.680 at 1,344.750. Volume was 253% above average (trending) and Bollinger Bands were 170% wider than normal.

Open     High      Low     Close     Volume___
1,363.7601,369.0001,320.9601,344.750 442,093,184
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 1,447.23 1,533.09 1,591.40
Volatility: 39 22 14
Volume: 225,204,848 151,178,992 118,566,024

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.

Summary

FTSE BURSA KLCI gapped down today (bearish) on heavy volume. Possibility of a Breakaway Gap which usually signifies the beginning of a major market move. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
FTSE BURSA KLCI is currently 15.5% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect moderate flows of volume out of .KLSE (mildly bearish). Our trend forecasting oscillators are currently bearish on .KLSE and have had this outlook for the last 34 periods. Our momentum oscillator is currently indicating that .KLSE is currently in an oversold condition.

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