KLCI to trend up as buyers anticipate a higher market

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KUALA LUMPUR (Dec 22): The FBM KLCI is expected to trend upward to day as market participants are likely to establish stock positions in anticipation of a higher market on the back last Friday’s firm close at most global markets.

Equity markets worldwide extended the week's rally on Friday and oil prices rebounded from recent lows, as investors closed out the last full week of trading in 2014 on an upbeat note, according to Reuters.

Wall Street rose, and the S&P 500 came within a few points of its closing record high. The index has gained 5 percent since Wednesday for its best three-day stretch since 2011, it said.

AllianceDBS Research in ite evening edition last Friday said that led by the up close in the preceding day, the FBM KLCI had on Dec 19 again traded on a positive note with an upside gap as market participants rushed to establish stock positions in anticipation of a higher market.

It said under the strong supportive buying interest, the benchmark index held its position firm throughout the day before settling at 1,715.99 (+16.04, +0.94%).

“In the broader market, gainers outnumbered losers with 606 stocks ending higher and 257 stocks finishing lower. That gave a market breadth of 2.35 indicating the bulls were in control," it said.

AllianceDBS Research said the benchmark index went on to register another up close on Dec 19 with buyers in better control over the sellers.

However, it said market participants turned cautious in the area of 1,720 level.

“This can be seen from the non-follow through buying at the 1,720.13 level.

“Market participants apparently were unwilling to take the risk over the weekend for fear of unexpected external market shocks,” it said.  

The research house said given what was presented on the chart, it could not discount the possibility of new buying to carry the market higher in the coming few days, although the benchmark index had recovered 49 points (1,720 (19 Dec 2014) minus 1,671 (17 Dec 2014)) out of the 174 points lost (1,845 (27 Nov 2014) minus 1,671 (17 Dec 2014)).

It said thus, a crossover of 1,720 again should see attempts to fill the downside gap left behind on 15 Dec 2014.

Indicator wise, the MACD is still below the 9-day moving average line, it said.

“The analysis of overall market action on Dec 19 revealed that buying power was stronger than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,720.13 level on Dec 22,” said AllianceDBS Research.