Bullish sentiment building up

TheEdge Wed, Feb 20, 2019 10:43am - 5 years View Original


The local market was directionless last week despite global market indices closing higher. Despite an increase in trading volume, there was no direction. The market was cautious ahead of the gross domestic product data. The benchmark FBM KLCI increased only 0.1% in a week to 1,688.83 points last Friday. The market climbed higher this week and the index closed at 1,706.56 points.

After having low volume a week before and after Chinese New Year, market participation increased last week. The average daily trading volume last week was three billion shares compared with 1.7 billion in the previous week. The average daily trading value increased to RM2 billion from RM1.5 billion. This indicated more lower-capped stocks were being traded.

For the KLCI, gainers outpaced decliners 16 to 11. The top three gainers were Axiata Group Bhd (+5.6% in a week to RM3.94), Dialog Group Bhd (+5% to RM3.15) and Petronas Dagangan Bhd (+1.7% to RM26.56). The top three decliners were Press Metal Aluminium Holdings Bhd (-3.3% to RM4.10), AMMB Holdings Bhd (-1.6% to RM4.43) and Hartalega Holdings Bhd (-1.3% to RM5.43).

Global market performances were bullish. Market indices in Asia closed higher in a week except for Hong Kong. Market indices in Europe including the UK were strongly bullish. The US market also closed higher.

The US dollar continued its strength against major currencies last week. The US Dollar Index increased to 96.9 points from 96.6 points. Hence, the ringgit was slightly weaker against the US dollar. The ringgit was at 4.08 per US dollar last Friday compared with 4.07 in the previous week.

Price of gold slightly declined but crude oil soared. Price of gold (Comex) increased marginally at US$1,325 (RM5,419.25) an ounce last Friday. Crude oil (Brent) declined 6.9% to US$66.39 per barrel. Crude palm oil (BMD) fell 1.6% in a week to RM2,253 per tonne last Friday.

The KLCI continued to stay between the immediate support level of 1,680 and the resistance level of 1,702 points. This indicated that the market was directionless.

Technically, the KLCI trend was flat as the short-term 30-day moving average was flat. The index climbed above the Ichimoku Cloud indicator. However, the index was above a thin cloud, indicating a weak bullish trend. On a bigger picture, the KLCI remained directionless.

Momentum indicators remained flat. The Relative Strength Index and Momentum Oscillator continued to stay slightly above their mid levels and the moving average convergence divergence was below its moving average. This indicated that the market trend was directionless. However, the movement this week shows that the bullish sentiment is building up.

As long as the index stays between the immediate support and resistance levels of 1,680 and 1,702 points, the market is directionless. A breakout above 1,702 points indicates that the bullish trend is set to continue but if it fails to climb above this level, further correction is expected. Judging from the performance this week, there is a higher chance for the index to climb higher.


The above commentary is solely used for educational purposes and is the contributor’s point of view using technical 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 adviser.

The content is a snapshot from Publisher. Refer to the original content for accurate info. Contact us for any changes.






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