KUALA LUMPUR (March 13): The FBM KLCI looks set to test the 1,800-point level today, taking the cue from the improved overnight performance at Wall Street.

Stocks on major markets rose on Thursday as the dollar softened the most in a month against major currencies after surprisingly weak U.S. data, according to Reuters.

The U.S. currency retraced its gains after earlier hitting a 12-year high versus the euro, pressured by a third-straight decline in monthly U.S. retail sales. However, the data was not weak enough to alter a recent shift in views that the Federal Reserve is getting closer to raising rates, it said.

Stocks on Wall Street posted their biggest gains since early February. Bank shares were among the leaders after the Federal Reserve approved most of their capital plans, triggering an avalanche of buy-back and dividend hike announcements, said Reuters.

AllianceDBS Research in its evening edition Thursday said despite the close below the 1,780 level in the preceding day, the FBM KLCI had on March 12 recaptured the 1,780 level to reach a high of 1,789.92 as market participants changed their game play to the buying side.

It said that under the persistent buying support, the benchmark index kept its position near the high end throughout the trading sessions before settling at 1,786.87 (+8.71, +0.49%).

 “In the broader market, gainers outnumbered losers with 537 stocks ending higher and 313 stocks finishing lower. That gave a market breadth of 1.71, indicating the bulls were in control,” it said.

AllianceDBS Research said the return of the benchmark index above the 1,780 level on March 12 was a surprise because the downside gap coupled with the settlement below the 1,780 level registered on March 11 was supposed to have induced a follow through selling pressure in the next day (March 12).

Nonetheless, the research house said the change of game play from selling (March 11) to buying (March 12) suggested that market participants did not want to see the benchmark index to register a second close below the 1,780 level for fear of sentiment deterioration.

It said a “confirmed” warning market weakness is warranted if the benchmark index were to close below the 1,780 level for 3 consecutive days.

It said given the upswing and downswing around the 1,780 level, a volatile game play could be expected in the coming few days.

“The analysis of overall market action on March 12 revealed that buying power was stronger than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,789.92 level on March 13,” said AllianceDBS Research.