KLCI to stay above 1,800 level

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KUALA LUMPUR (Jan 26): The FBM KLCI is expected to sustain its momentum in line with global markets and stay above tghe psychologically crucial 1,800-point level today.

European stocks hit seven-year highs on Friday, continuing a rally ignited by the European Central Bank's plan for massive regional economic stimuli that also knocked the euro to 11-year lows, according to Reuters.

Wall Street mostly fell on soft corporate earnings news after the S&P 500 rallied 1.5 percent on Thursday on the ECB's $1 trillion bond-buying announcement, it said.

AllianceDBS Research in its evening edition last Friday said that led by the crossover of 1,770 and strong up close in the preceding day, the FBM KLCI had on 23 Jan 2015 gapped up to reach a high of 1,809.33 as market participants continued to play on the buying side in anticipation of a higher market.

It said that under the persistent buying interest, the benchmark index held its position firm throughout the trading sessions before settling at 1,803.08 (+21.33, +1.20%) ahead of the weekend.

“In the broader market, gainers outnumbered losers with 535 stocks ending higher and 365 stocks finishing lower. That gave a market breadth of 1.46 indicating the bulls were in control,”it said.

AllianceDBS Research said the market saw impressive run up over the past 3 days with the benchmark index traded into the 1,800 zone on Jan 23 after spending 36 days between the 1,670 and 1,800 levels.

It ssid buyers were overwhelming with daily market volume surpassed the 2 billion mark in these 3 days.

The research house said given the up close on Jan 23, the market is believed to be in position to test the immediate resistance at 1,810.

It said the market support was at 1,787.

A fall below 1,787 could send the market down to the subsequent support at 1,760. Indicator wise, the MACD is above the 9-day moving average line.

“The analysis of overall market action on Jan 23 revealed that buying power was stronger than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,809.33 level on Jan 26,” said AllianceDBS Research.