KUALA LUMPUR (April 15): The FBM KLCI is set to continue on its cautious trend today in the absence of fresh domestic catalysts as well as ahead of crucial economic data from China.
The U.S. dollar fell sharply on Tuesday, weighed by mixed retail sales data and economic growth predictions, while crude rose after a surprise drop in forecasts for U.S. shale oil production, according to Reuters.
Energy shares buoyed stocks on Wall Street, with investors also focused on U.S. corporate earnings and the data miss. A lower full-year earnings forecast from Johnson & Johnson due to the impact of dollar strength kept gains in check, it said.
AllianceDBS Research in its evening edition Tuesday said the FBM KLCI had on April 14 traded lower to a day’s low of 1,837.25 as market participants continued to play a selling game in anticipation of a lower market.
It said that under the stronger selling pressure, the benchmark index was near the low end throughout the trading sessions before settling near the day’s low at 1,839.61 (- 2.47 , - 0.13%).
“In the broader market, losers outnumbered gainers with 459 stocks ending lower and 359 stocks finishing higher. That gave a market breadth of 0.78 indicating the bears were in control,” it said.
AllianceDBS Research said the benchmark continued to be in a losing streak with lower lows for 4 consecutive days (8 Apr 2015 - 13 Apr 2015).
The research house said the lower low indicated that sellers were in better control over the buyers.
It said following weak down close, the benchmark index is likely to come under pressure again to test the 1,837.
“A fall below 1,837 would put pressure on the market down to the subsequent support at 1,830.
“The hurdle is at 1,850,” it said.
The research house said that indicator wise, the MACD is still marginally above the 9-day moving average line.
“The analysis of overall market action on April 14 revealed that buying power was weaker than selling pressure.
“As such, the FBM KLCI would likely trade below the 1,837.25 level on April 15,” said AllianceDBS Research.