KLCI expected to start week on weaker note

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KUALA LUMPUR (Nov 10): The FBM KLCI is expected to kick start the weak on a tepid note today in line with the flat close at the global markets last Friday, as US stocks closed little changed.

At the world markets, the dollar slipped and global equity markets traded mostly flat on Friday after the U.S. jobs report for October trailed expectations even while showing solid growth, taking the edge off a months-long rally in both the greenback and stocks, according to Reuters.

It said U.S. stocks closed little changed on Friday, pressured by renewed uncertainty in healthcare stocks and by Disney shares, even as October payrolls data pointed to a resilient economy in the face of sluggish global growth.

The S&P 500 and Dow industrials closed at record highs and rose for a third consecutive week, said Reuters.

AllianceDBS Research in its evening edition last Friday said that dampened by the down close in the preceding day, the FBM KLCI had on Nov 7 wasted no time to break the 1,830 support on the opening bell.

It said that under the stronger selling pressure, the benchmark index settled at the day’s low of 1,824.19 (- 7.79, - 0.43%).   

“In the broader market, gainers outnumbered losers with 409 stocks ending higher and 392 stocks finishing lower.

“That gave a market breadth of 1.04 indicating the bulls were in control with the bears closely matched,” it said.

AllianceDBS Research said the benchmark index registered another day of lower low on Nov 7, and this placed the market on a losing streak for 5 straight days.

“In fact, a good buying attempt was made in the morning session to lift the market back up above the 1,840 level.

“However, non-follow through buying interest in the area of 1,841.40 prompted pre-weekend book squaring activity which sent the benchmark index down to close on a weak note,” it said.

The research house said given the down close, the benchmark index was vulnerable to further decline with.

It said the immediate support was pegged at 1,822 [this is a 38.2% retracement of the rise from 1,766 (17 Oct 2014) to 1,858 (3 Nov 2014)].

It said an ability of the benchmark index to stay supportive at 1,822 plus a trade above the 1,841 level would open up the path for a market turnaround to the upside.

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

“The analysis of overall market action on Nov 7 revealed that buying power was weaker than selling pressure.

“As such, the FBM KLCI would likely trade below the 1,824.19 level on Nov 10,”it said.