KUALA LUMPUR (Oct 16): The FBM KLCI is expected to trend higher today and test the 1,720-point level in line with the overnight gains at most global markets.

U.S. stocks rebounded from two days of losses to close higher on Thursday, helped by financial sector earnings, while stronger-than-expected economic data boosted the dollar and bond yields, according to Reuters.   

The dollar was up 0.5 percent after a three-day slide against a basket of currencies, on track for its biggest gain since Sept. 30. after a rise in September core U.S. consumer prices. The data also pushed up U.S. Treasuries yields slightly, as it renewed some hopes for a 2015 Federal Reserve interest rate hike, it said.

AllianceDBS Research in its evening edition Thursday said the FBM KLCI began on a weak note on Oct 15.

However, it said the benchmark index reversed its position to reach a high of 1,721.34 under supportive buying interest when the market could not go lower than the day’s low of 1,706.87.

It said that in the absence of stronger selling interest, the benchmark index was in the green throughout most of the trading sessions before settling at 1,713.25 (+2.11, +0.12%).

“In the broader market, gainers outnumbered losers with 476 stocks ending higher and 376 stocks finishing lower. That gave a market breadth of 1.26 indicating the bulls were in control,” it said.

AllianceDBS Research said the higher low and the higher high on Oct 15 was encouraging because the small upticks in the last 3 days (Oct 9 to Oct 13) suggested that the market was consolidating.

“There was a sudden change in the game play pattern today (Thursday) with some market participants taking the chance to play on the buying side in anticipation of a higher market.

“However, the benchmark index did not get far up after the crossing over of the 1,719 hurdle.

“Given the day’s high of 1,721.34 with an up close of 2.11 points gain on Oct 15, the benchmark index appears to be running into the resistance selling zone between 1,719 and 1,721 with support at 1,700,” it said.

The research house said a crossover of 1,721 should see a test of the next resistance zone of 1740 – 1,750.

However, it said a fall below 1,700 could see the market come under pressure to trade down to the subsequent support zone of 1,680 – 1,690, adding that indicator wise, the MACD was above the 9-day moving average line.

“The analysis of overall market action on Oct 15 revealed that buying power was stronger than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,721.34 level on Oct 16,” said AllianceDBS Research.