KLCI set to trade range-bound

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KUALA LUMPUR (March 6): The FBM KLCI is set to trade range-bound today in line with the mixed sentiment at most global markets despite the higher overnight close at Wall Street, as traders await more data to be released in the US and local investors seek more clarity and corporate catalysts.

European stock prices rose to seven-year highs in advance of the ECB's latest effort to jump-start the struggling euro zone economy, while U.S. equities edged higher as investors awaited direction from the government's monthly labor report due out on Friday, according to Reuters.

AllianceDBS Research in its evening edition Thursday said despite the near day’s high up close in the preceding day, the FBM KLCI had on March 5 reversed its position to trade below the 1,810 level as market participants chose to play on the selling side in anticipation of a lower market.

It said the benchmark index subsequently reached a low of 1,805.80 in the absence of good supportive buying interest before settling near the day’s low at 1,806.09 (- 19.45 , - 1.07%).

“In the broader market, losers outnumbered gainers with 556 stocks ending lower and 288 stocks finishing higher. That gave a market breadth of 0.51 indicating the bears were in control,” it said.

AllianceDBS Research said the benchmark index went into a sell off mode on March 5.

It said a sudden reversal of the market to go below the 1,810 level suggested that there was a change of game play pattern to selling.

The research house said the weak down close coupled with a high market volume indicated the presence of selling pressure.

It said following the downside violation of the 1,810 level on March 5, the benchmark index was expected to trade lower again with immediate support at 1,800.

It said a fall below 1,800 could send the benchmark index down to the subsequent support zone, 1785 – 1,780, adding that the resistance selling zone is pegged between 1,818 and 1,826.

Indicator wise, the MACD is below the 9-day moving average line, it said.

“The analysis of overall market action on March 5 revealed that buying power was weaker than selling pressure.

“As such, the FBM KLCI would likely trade below the 1,805.80 level on March 6,” said AllianceDBS Research.