KUALA LUMPUR (Oct 26): The FBM KLCI is in dire need of fresh catalysts to sustain its gains and position today above the 1,700-point level despite the rally at global markets last Friday.

Stock markets worldwide soared on Friday after China cut interest rates for the fourth time this year and several large-cap U.S. technology companies reported better-than-expected quarterly results, according to Reuters.

Shares across Asia, Europe and the Americas climbed, having already been boosted by Thursday's message from ECB chief Mario Draghi that the central bank was ready to adjust "the size, composition and duration" of its quantitative easing program, it said.

AllianceDBS Research in its evening edition last Friday said the FBM KLCI had on Oct 23 reached a high of 1,717.49 after a positive opening level.

However, the research house said non-follow through buying support in the area of 1,717.49 prompted pre-weekend profit taking activity which pushed the market down to 1,709.56 before settling near the day’s low at 1,710.93 (up 5.84 points or 0.34%).

“In the broader market, gainers outnumbered losers with 525 stocks ending higher and 318 stocks finishing lower. That gave a market breadth of 1.65 indicating the bulls were in control,” it said.

AllianceDBS Research said there was a rush by certain market participants to establish stock positions on the opening bell.

It said this could be seen from gap created between the opening level of 1,716.98 on Oct 23 and the previous day’s high of 1,711.39.

“However, selling supply chipped in as soon as the last buying order was filled at 1,717.49.

“This non-immediate follow through buying action after the opening bell indicated that many market participants were unwilling to take the risk of chasing up the market for fear of unexpected occurrence.

“Thus, the market is likely to stay between 1,717 and 1,695 first until we see a breakout to the upside or downside given what happened in the last 4 days,” it said.  

AllianceDBS Research said a crossover of 1,717 could send the market back up to the next hurdle at 1,730.

“Conversely, a fall below 1,695 would put pressure on the market down to the subsequent support at 1,680,” it said.  

The research house said indicator wise, the MACD was above the 9-day moving average line.

“The analysis of overall market action on Oct 23 revealed that buying power was weaker than selling pressure.

“As such, the FBM KLCI would likely trade below the 1,709.56 level on Oct 26,” said AllianceDBS Research.