KUALA LUMPUR (March 24): The FBM KLCI is likely to extend its losses today, but hover nearer to its psychologically-crucial 1,800-points level.
The dollar fell further on Monday on views a Federal Reserve interest rate hike will come later rather than sooner, and the decline helped boost oil prices, according to Reuters.
U.S. stocks gave up gains and closed slightly lower, it said.
U.S. energy shares initially were among the biggest gainers on Wall Street as crude prices rebounded on the weak dollar. The euro rose more than 1 percent and the dollar index, a gauge of the greenback against six major currencies, lost almost as much, said Reuters.
AllianceDBS Research in its evening edition Monday said the FBM KLCI had on March 23 traded higher to 1,811.08 as market participants chose to play on the buying side in anticipation of a higher market.
However, it said non-follow through buying support in the area of 1,811.08 prompted profit taking activity.
It said this pulled the benchmark index down to settle at the day’s low of 1,795.85 (- 7.80, - 0.43%).
“In the broader market, losers outnumbered gainers with 436 stocks ending lower and 373 stocks finishing higher. That gave a market breadth of 0.85 indicating the bears were in control,” it said.
AllianceDBS Research said the higher high followed by the lower low on March 23 indicated that sellers were in better control over the buyers.
It said despite the market settlement above the 1,800 level on March 19 and 20, the benchmark index failed to register another close above the 1,800 level on March 23.
The research house said the inability of the market to close above the 1,800 level for 3 consecutive days suggested that market participants were not ready to make a stronger buying commitment at this juncture.
It said following the weak down close, the market was expected to trade lower again with immediate support seen at 1,788.
The research house said a fall below 1,788 would put pressure on the market down to the subsequent support zone, 1770 – 1,774.
It said the overhead resistance zone is pegged between 1,815 and 1,819.
Indicator wise, the MACD is still below the 9-day moving average line, it said.
“The analysis of overall market action on March 23 revealed that buying power was weaker than selling pressure.
“As such, the FBM KLCI would likely trade below the 1,795.85 level on March 24,” said AllianceDBS Research.