KUALA LUMPUR (March 16): The FBM KLCI is expected to trend range-bound today in cautious trade with 1,780-point still seen as the critical support level.

The dollar powered higher yet on Friday, pressuring stocks and commodities, on expectations of a Federal Reserve interest rate hike that could slow U.S. corporate profits, according to Reuters.

The dollar index was on track for a back-to-back weekly gain of more than 2 percent, setting up its strongest two-week performance in more than six years, it said.

Stocks fell on Wall Street, with the S&P 500 set to post its third straight negative week. The index is about 3 percent below its record high set this month. Energy stocks were among the biggest losers, falling along with a steep decline in crude oil, according to Reuters.

AllianceDBS Research in its evening edition last Friday said the FBM KLCI had on March 13 traded within previous day’s range to form an inside day bar as market participants decided not to stage an immediate follow through buying support.

It said that in the absence of stronger buying interest, the benchmark index held its position firm throughout most of the trading sessions before settling at the day’s low of 1,781.75 (-5.12 , -0.29%) in the last few minutes selling of selective blue chip stocks.

“In the broader market, losers outnumbered gainers with 471 stocks ending lower and 372 stocks finishing higher. That gave a market breadth of 0.79 indicating the bears were in control,” it said.

AllianceDBS Research said the market did not trade higher on March 13 despite the return of the benchmark index above the 1,780 level on March 12.

The research house said given the game play pattern in the last 2 days (March 12 & 13), it seemed clear that certain market participants wanted to contain the market sentiment by holding up the benchmark index above the 1,780 level.

However, it said the market was still expected to consolidate between 1,774 and 1,800.

AllianceDBS Research said a breakout would dictate the next immediate market direction.

It said the market settlement at 1,781.75 may have appeared on the weak side, but the benchmark index must still close below the 1,780 level for 3 consecutive days in order to see a much lower market level.

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

“The analysis of overall market action on March 13 revealed that buying power was weaker than selling pressure.

“As such, the FBM KLCI would likely trade below the 1,781.75 level on March 16,” said AllianceDBS Research.