KUALA LUMPUR (May 21): The FBM KLCI is expected to trade range bound today with immediate support at 1,840.
Wall Street's benchmark S&P 500 stock index dipped on Friday on persistent trade concerns, while U.S. 10-year Treasury yields declined from a near seven-year peak after a burst higher this week, according to Reuters.
In Europe, political uncertainty in Italy weighed on stocks and bonds as well as on the euro. The U.S. dollar rose for a fifth straight session against a basket of currencies, it said.
On Wall Street, the Dow Jones Industrial Average rose 1.11 points to 24,715.09, the S&P 500 lost 7.16 points, or 0.26 percent, to 2,712.97 and the Nasdaq Composite dropped 28.13 points, or 0.38 percent, to 7,354.34, said Reuters.
AllianceDBS Research in its evening edition last Friday said dampened by the down close in the preceding day, the FBM KLCI had on May 18 traded lower to 1,853.57 as market participants continued to play on the selling side in anticipation of a lower market.
However, it said non-follow through selling pressure in the area of 1,853.57 prompted supportive buying interest to chip in. This lifted the benchmark index to a high of 1,862.19 before settling near the day’s low at 1,854.50 (up 0.06 points or 0.003%).
“In the broader market, losers outnumbered gainers with 607 stocks ending lower and 380 stocks finishing higher. That gave a market breadth of 0.62 indicating the bears were in better control,” it said.
AllianceDBS Research said the market registered a lower low on May 18, but the benchmark index did not go far down which can be seen from the day’s low of 1,853.57.
It said this showed that market participants were unwilling to play an aggressive selling game.
“A study of the market behavioural pattern over the past 4 days revealed that the benchmark index was actually beating around the 50-day MA line (red) with one day up followed by another of down and vice versa.
“With no aggressive game play in sight, the benchmark index is expected to be locked between the 1,840 and 1,867 in the coming few days where buyers and sellers are expected to continue exchanging their stock positions until we see a breakout of the range,” it said.
The research house said following the weak up close on May 18, there should be selling attempt with immediate support at 1,840.
“The analysis of overall market action on May 18 revealed that buying power was weaker than selling pressure.
“As such, the FBM KLCI would likely trade below the 1,853.57 level on May 21,” said AllianceDBS Research.
Based on corporate announcements and news flow last Friday, companies in focus Monday may include the following: Minho (M) Bhd, Petronas Dagangan Bhd, Tan Chong Motor Holdings Bhd, IOI Properties Bhd, Kumpulan Perangsang Selangor Bhd, Ho Hup Construction Bhd, Kerjaya Prospek Group Bhd and UMW Holdings Bhd.