KUALA LUMPUR (Oct 13): The FBM KLCI is expected to trend sideways and defend its 1,700-point level today, in line with the slightly higher overnight close at most global markets.

Any advance may be limited by some mild profit taking as the local index has notched up impressive gains in recent days.

Crude oil futures tumbled on Monday on profit-taking and a report of higher OPEC production, while pressure lingered on the U.S. dollar as markets priced the possibility that the Federal Reserve would not begin a tightening cycle this year, according to Reuters.

U.S. stocks edged up, led by utilities, while commodity-related stocks accounted for the bulk of the losses on the S&P 500, it said.

AllianceDBS Research in its evening edition Monday said that supported by last Friday’s up close, the FBM KLCI had on Oct 12 traded higher to 1,719.90.

However, it said weak follow through buying interest in the area of 1,719.90 prompted profit taking activity to kick in.

It said this pushed the benchmark index down to 1,700.65 before settling off the day’s low at 1,709.86 (up 3.32 points or 0.19%).

“In the broader market, gainers outnumbered losers with 430 stocks ending higher and 404 stocks finishing lower. That gave a market breadth of 1.06 indicating the bulls were in control,” it said.

AllianceDBS Research said the higher high followed by a lower low with a small gain on Oct 12 indicated the presence of supportive buying interest.

“However, many market participants were believed to be feeling wary about the market’s upside potential after the recent strong run up of 124 points measuring from the low of 1,595 (Sept 29) to the high of 1,719 (Oct 12.

“This can be seen from the size of the upwards movement in the last 2 days.

“There was an imbalance between buying and selling sentiment over the past 9 days with 7 up days and 2 down days but we view that an establishment of an equilibrium level is seen shaping up,” it said.

The research house said the upside hurdle and support are pegged at 1,710 and 1,680 respectively, adding that a crossover of 1,710 on a close basis should see a test of the next resistance zone of 1,740 – 1,750.

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

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

“As such, the FBM KLCI would likely trade above the 1,719.90 level on Oct 13,” said AllianceDBS Research.