KLCI likely to extend loss, support between 1,730-1,740

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KUALA LUMPUR (Dec 5): The FBM KLCI is expected to trend lower today with support at between the 1,730 to 1,740 levels as buying power continued to remain weaker at the local bourse.

U.S. stocks ended slightly lower on Thursday after European Central Bank President Mario Draghi brushed off pressure for more immediate monetary policy action but said the issue would be addressed early next year, according to Reuters.

The day's losses were slight but broad, with seven of the ten primary S&P 500 sectors ending in negative territory and no sector up more than 0.3 percent, it said.

AllianceDBS Research in its evening edtion Thursday said following the downside penetration of the 1,766 level in the preceding day, the FBM KLCI had on Dec 4 extended its fall.

It said the benchmark index fell to the lowest low of 1,743.62 since Sept 10, 2013.

It said that in the absence of good supportive buying interest, the benchmark index kept its position near the low end throughout most of the trading sessions before settling near the day’s low at 1,745.69 (- 12.46 , - 0.71%).

“In the broader market, losers outnumbered gainers with 519 stocks ending lower and 286 stocks finishing higher. That gave a market breadth of 0.55 indicating the bears were in control,” it said.

AllianceDBS Research said a buying attempt to lift the benchmark index above the 1,766 level was made after the opening bell on Dec4.

However, it said there was no strong follow through buying interest to carry the market beyond the 1,768.81 level.

“In fact, many market participants are still seeing a low probability of turning a long trade into a profitable one at this juncture.

“With the risk of losing higher than winning, it is thus common for market participants to take a cautious stance,” it said.  

The research house said the lower high and lower low on Dec 4 indicated that sellers were again in control over the buyers.

“Given the weak down close, the market is expected to trade down south in the coming few days with immediate support zone seen between 1,730 and 1,740,” it said.

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

“The analysis of overall market action on Dec 4 revealed that buying power was weaker than selling pressure.

“As such, the FBM KLCI would likely trade below the 1,743.62 level on Dec 5,” said AllianceDBS Research.