KLCI could edge up in cautious trade

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KUALA LUMPUR (Jan 12): The FBM KLCI could edge upward in cautious trade today despite the less than enouraging close last Friday at the US and most global markets.

Investors hope the lower gasoline cost is putting more money in consumers' wallets for spending on apparel and other retail goods. The next two weeks will indicate whether that's happening, according to Reuters.

The coming weeks, as the fourth-quarter earnings season gets underway, are among the more active periods of the year for retailers to issue earnings preannouncements. The fourth quarter includes the crucial holiday shopping season, it said.

AllianceDBS Research in its evening last Friday said that supported by the strong up close in the preceding day, the FBM KLCI had on Jan 9 traded higher to a high of 1,738.54 after opening the day on a positive note as market participants continued to play on the buying side in anticipation of a higher market.

However, it said weak follow through buying interest in the area of 1,738.54 prompted pre-weekend profit taking activity.

It said this pushed the benchmark index down to 1,725.81 before settling at 1,732.44 (+ 4.38, + 0.25%).

“In the broader market, gainers outnumbered losers with 424 stocks ending higher and 339 stocks finishing. That gave a market breadth of 1.25 indicating the bulls were in control,” it said.

AllianceDBS Research said the higher high on Jan 9 was within expectation.

However, it said the benchmark index gave up much of the early gains when the market could not find the supportive strength to sustain its position near the high end.

“In fact, market participants turned cautious in their game play as the market was approaching the 1,743 hurdle,” it said.

The research house said that judging from the way this market carried itself on Jan 9, market participants were seen unwilling to carry their stock positions overnight for fear of sudden downside risk.

It said the support zone was between 1,700 and 1,706.

“Indicator wise, the MACD is marginally above the 9-day moving average line.

“The analysis of overall market action on Jan 9 revealed that buying power was stronger than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,738.54 level on Jan 12,” said AllianceDBS Research.