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FBM Small Cap Index - Bulls Are Under Bearish Pressure

fbm smallcap index

The current market is weak as the bears are still in charge. Last Friday, the FBMSC rebounded by 61.86 pts to settle at 15,169.40 pts. It formed a white candle that pierced more than half of the prior black candle’s body. This usually signals that the positive momentum is revving up. Nevertheless, until we witness a solid bullish follow-through, we think that the index is merely taking a breather. This is a normal reaction, especially after the series of weak performances that breached firmly below the 50-day, 100-day and 200-day SMA lines in the last two weeks. Overall, our near-term negative outlook remains intact.
 
Currently, we see that that the FBSMC is situated at its lowest level since July. In the absence of a solid positive development, this indicates that the bears are still in dominance over the bulls. This is also supported by the fact that the 14-day RSI Indicator is below the 50-pt neutral level, which points towards a weak outlook.
 
We keep the immediate support at 15,113 pts, which was the low of 30 Jun’s low. The next support is seen at 14,983 pts, ie the high of 8 Jul. Meanwhile, our immediate resistance stays at 15,234 pts, or 3 Aug’s low. This is followed by the 15,484-pt critical mark, which was obtained from the high of 9 Jun’s “Doji” candle. 

source: RHB Research – 05/09/2016

Bursa Malaysia Shares: Stimulus Hopes and Oil Price to Underpin Sentiment

Bursa Malaysia shares managed to rebound from early decline in choppy trade Thursday, in line with most of the regional markets as weak trade data from Japan weighed on sentiment. The index inched up by 0.55 points to close at the day’s high of 1,694.87, off an early low of 1,690.44, as losers beat gainers 439 to 384 on turnover totaling 2.85bn shares worth RM1.99bn.

Support from Rising 10-day ma (1,682)
Hopes for further stimulus from Japan which reported weak trade data and oil output freeze from major producers which pushed WTI crude up to USD48.22 a barrel overnight should underpin local trading sentiment. Immediate support for the index remains at the rising 10-day moving average at 1,682, next will be the 100 and 200-day ma at 1,665, followed by the 50-day ma at 1,655. Immediate resistance stays at Tuesday’s high matching the 1,700 psychological level, with tougher resistance from the April peak of 1,729.

Take Profit on AMMB & CIMB
Weakening trend indicators on AMMB implies near-term correction potential towards the 50-day moving average (RM4.38), with better supports from the lower Bollinger band (RM4.26) and the low of 26/05/15 (RM4.17). Resistance is seen at 23.6%FR (RM4.68).

Likewise, CIMB could fall back for profit-taking correction from the recent rally, with better support from 10-day moving average (RM4.60) and 23.6%FR (RM4.43) and immediate resistance from upper Bollinger band (RM4.82).

Asian Markets Close Mixed On Weak Japanese Data
Asian market close mixed Thursday, with Japanese shares dragged lower by weak trade data and stronger yen. Japanese exports tumbled at their steepest pace in seven years as a stronger yen weighed on international shipments. Exports slid 14 percent on-year, as forecast by a Reuter’s poll of economists. This was the tenth month in a row that exports fell from a year earlier. Imports meanwhile tanked 24.7 percent on-year, worse than the 20.6 percent decline expected and the largest drop since 2009. Japan's Nikkei share average dropped to a near two-week low, as a strong yen soured investor risk appetite and dragged stocks lower across the board. That spurred declines in major exporters, with Toyota down 1.15 percent, Nissan down 1.95 percent and Mazda dropping 2.87 percent. The Nikkei fell 1.6 percent to 16,486.01, the lowest closing level since Aug. 5.

In Australia, the ASX 200 dropped 0.49 percent at 5,507.82, with the heavily-weighted financials sub-index declining 0.86 percent. China stocks also surrendered early gains and ended Thursday lower, as financial shares dropped while property plays pared sharp gains on profit-taking. The market was firm in morning trade, aided by a surge in the real estate sector, but selling pressure surfaced in the afternoon as some investors took profit. The bluechip CSI300 index fell 0.3 percent, to 3,364.49, while the Shanghai Composite Index lost 0.2 percent to 3,104.11 points.

 

Wall Street Notch Slight Gains as Oil Rallies
U.S. equities closed slightly higher Thursday, amid surging oil prices, as investors digested fresh economic data as well as upbeat outlook on Wal-Mart shares. West Texas Intermediate crude extended its longest advance in more than a year amid speculation major producers may act to curb output and as U.S. oil and gasoline inventories declined. WTI for September delivery rose 3.1 percent to settle at USD48.22 a barrel. The Organization of the Petroleum Exporting Countries is set to meet in late September, and leaders of both Saudi Arabia and Russia have expressed interest in revisiting a deal to limit production at that meeting.

On the data front, weekly jobless claims fell 4,000 to 262,000, while the August Philadelphia Fed business index came in line with expectations. Investors expect more insight on the rate outlook at an annual meeting of central bankers from around the world in Jackson Hole, Wyoming, next week. The energy sector led gains in the S&P 500. Investors also digested quarterly results from Dow component Wal-Mart, which reported better-than-expected earnings and revenue and raised its full-year guidance. Wal-Mart shares rose 1.88 percent in Thursday trade. The Dow Jones industrial average gained 23.76 points, or 0.13 percent, to 18,597.7, the S&P 500 added 4.8 points, or 0.22 percent, to 2,187.02 and the Nasdaq Composite rose 11.49 points, or 0.22 percent, to 5,240.15