This article first appeared in The Edge Financial Daily, on March 4, 2016.

US equity markets inched up on Wednesday, paced by banking and energy stocks, extending their eight-week highs as better data supported optimism about the economy. Stocks rose for a second day as crude oil’s recovery underpinned energy-share gains. The S&P 500 Index rose 8.1 points to 1,986.45, while the Dow gained 34.24 points to end at 16,899.32.

The FBM KLCI moved in a wider range of 48.41 points for the week with lower volumes of 1.67 billion to 1.87 billion shares traded. The index closed at 1,688.20 yesterday, down 2.83 points from the previous day as blue-chip stocks like AMMB Holdings Bhd, British American Tobacco (Malaysia) Bhd, CIMB Group Holdings Bhd, Genting Bhd, Maxis Bhd and Petronas Dagangan Bhd caused the index to decline on profit-taking activities. The ringgit firmed against the US dollar at 4.1335 as Brent crude oil rose to US$36.35 (RM150.13) per barrel.

The index rose on a rally from the 801.27 low (October 2008) to its 1,896.23 all-time high (July 2014) and it represents an extended Elliott Wave “flat” rebound in a “pseudo-bull” rise completed. The next few months’ index price movements since July 2014 comprised key swings of 1,671.82 (low), 1,867.53 (high), 1,503.68 (low) and 1,727.41 (high).

The index’s decline from 1,867.53 (April 2015) to 1,503.68 (August 2015) was in a perfect 1.62 ratio of the initial down-thrust from the high of 1,896.23 (July 2014) to the 1,671.82 low (December 2014). The subsequent rebound from the 1,503.68 low stalled at the 1,727.41 high, which was also a perfect upward 62% retracement of the 1,867.53 to 1,503.68 move.

The index’s next two minor swings comprised a minor low of 1,622.84, which then stalled at the 1,706.25 minor high on Dec 30, 2015. Its persistent weaker price action in January 2016 was in tandem with the softer tone for global markets and the index troughed at 1,600.92 on Jan 21, 2016. The index’s next rebound from the 1,600.92 low surged to a new recent high of 1,699.96 yesterday.

The index’s daily signals are all positive, with its Commodity Channel Index (CCI), Directional Movement Index (DMI), oscillator, stochastic and moving average convergence divergence (MACD) indicators showing chart buy signals. As such, the index’s firm support levels are seen at 1,600, 1,651 and 1,688, while obvious profit-taking at the resistance areas of 1,699, 1,727 and 1,744 may cap any index rebound.

The FBM KLCI’s 18-day and 40-day simple moving averages (SMA) depict an emerging trend for its short-term daily chart. The index’s price bars are finally above the 50-day and 200-day SMA and this depicts a better upward phase for the FBM KLCI in the medium to longer term too.

Due to the upbeat tone for the FBM KLCI, we are recommending a chart “buy” on NTPM Holdings Bhd. A check on the Bloomberg consensus reveals that two research houses cover this stock with hold” calls. NTPM manufactures and trades tissue papers, toilet rolls, serviettes and paper-related products.

Maybank Investment Bank Bhd does not cover NTPM fundamentally. However, we initiated some technical buy coverage at 96 sen on Feb 19 and 22. NTPM currently trades at marginally elevated historical price-earnings ratio of 19.8 times and price-to-book ratio at 2.88 times. Its return-on-equity ratio stood at a decent 15.4%.

NTPM’s chart trend on the daily, weekly and monthly time frames is firmly up. Its share price has made an obvious surge since its major weekly Wave-2 low of 62 sen in August 2015. Since that 62 sen low, NTPM rose to its recent all-time high of RM1.02 this month.

As its price broke above its recent key critical resistance levels of 88 sen and 93 sen, look to buy NTPM on any dip to its support areas as the moving averages depict a very firm short- to long-term uptrends for this stock. The daily, weekly and monthly indicators (like the CCI, DMI, MACD, Oscillator and Stochastic) have issued clear buy signals and now show firm and obvious indications of NTPM’s eventual rise towards much higher level.

It would attract firm buying activities at the support levels of 88 sen, 93 sen and 99.5 sen. We expect NTPM to witness some mild profit-taking activities at its resistance level and all-time high of RM1.02. Its clear upside targets are located at RM1.14, RM1.29, RM1.41 and RM1.58.

Lee Cheng Hooi is the regional chartist at Maybank Kim Eng. The views expressed in the article are the opinions of the writer and should not be construed as investment advice. Please exercise your own judgment or seek professional advice for your investment decisions. Technical report appears every Wednesday and Friday.