KUALA LUMPUR (Sept 14): The FBM KLCI is expected to pause today on the lack of fresh catalysts at the local market as well as investor jitters ahead of the Malaysia Day holiday on Wednesday with a dark cloud overhanging sentiment given the much touted “Red Shirt” rally that is being pushed by its organisers, which may likely keep retail investors on the sidelines.

Crude oil fell on Friday after Goldman Sachs slashed its price forecast through next year, while global equity markets traded mixed as investors assessed the economic outlook and a potential move by the Federal Reserve next week to raise interest rates, according to Reuters.

A drop in US consumer sentiment in September to its lowest in a year initially weighed on Wall Street, as the University of Michigan's preliminary reading for the month slid to 85.7, compared with the final reading of 91.9 in August and much lower than the median forecast of 91.2 of economists polled by Reuters, it said.

AllianceDBS Research in its evening edition last Friday said despite the day’s high up close at 1,614.02 in the preceding day, the FBM KLCI had on Sept 11 opened the day on a negative note to form an inside day bar as market participants chose not to stage an immediate follow through buying pressure.

The research house said that in the absence of buying interest, sellers with winning trades took advantage of the high market level to lock in their gains.

It said this pushed the benchmark index down to 1,602.54 before settling at near the day’s low 1,603.60 (down 10.42 points or  0.65%) ahead of weekend.

“In the broader market, gainers outnumbered losers with 462 stocks ending higher and 352 stocks finishing lower. That gave a market breadth of 1.31 indicating the bulls were in control,” it said.

AllianceDBS Research said the non-follow through buying on Sept 11 was not a surprise, because the last few minutes selective buying of blue chips on Sept 10 to settle the market at the day’s high was seen as a deliberate action by certain market participants to prop up the benchmark index in an attempt to simply pull the market far up from the 1,600 level.

“There was a vacuum between 1,605 and 1,615 on Sept 10 with not much trading activity taking place in those levels.

“Since the day’s high closing on Sept 10 did not reflect the presence of market strength, new buyers had chosen not to chase the game after the opening bell.

“This had led to a lower close as selling supply became overwhelming in the face of diminishing buying demand.

“Given the weak down close on Sept 11, the benchmark index is likely to move between 1,586 and 1,615 in the coming few days,” it said.

AllianceDBS Research said a crossover of 1,615 would see the market gearing towards the next resistance zone, 1,621 – 1,626.

“However, a fall below 1,586 could send the market down to the subsequent support zone, 1,567 – 1,576,” it said.  

The research house said indicator wise, the MACD was above the nine-day moving average line.

“The analysis of overall market action on Sept 11 revealed that buying power was weaker than selling pressure.

“As such, the FBM KLCI would likely trade below the 1,602.54 level on Sept 14,” said AllianceDBS Research.