KLCI to trend higher, track overnight Wall Street gains

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KUALA LUMPUR (May 19): The FBM KLCI is expected to trend higher today and stay firmly above the 1,800-point level in line with the strong overnight gains at Wall Street.

Wall Street stocks rose on Monday to record highs on hopes the Federal Reserve will hold off raising interest rates, while the dollar rallied and Greek bond yields jumped on worries the nation will not be able to make its debt payments, according to Reuters.

Oil prices retreated, as supply worries triggered by advances by Islamic State militants in Iraq eased. U.S. Treasuries were weaker, it said.

AllianceDBS Research in its evening editiob Monday said that led by the up close in the preceding day, the FBM KLCI had on May 18 held its position in the area of 1,815 throughout most of the trading sessions before crossing over the 1,823 hurdle to settle at the day’s high of 1,823.50 (+11.58, 0.64%) in the last few minutes buying of selective blue chip stocks.

“In the broader market, gainers outnumbered losers with 459 stocks ending higher and 348 stocks finishing lower. That gave a market breadth of 1.31, indicating the bulls were in control,” said the research house.

AllianceDBS Research said the market saw follow through buying interest on April 18.

The research house said the crossover of 1,814 followed by another hurdle at 1,823 was seen “encouraging” as this could open up the path for the benchmark index to test higher level again.

“Following the up close on May 18, the benchmark index is expected to gear towards the next resistance at 1,830.

“However, the market is seen likely to pullback down below the 1,823 level in an attempt to further consolidate its position between 1,814 and 1,823 as the last few minutes buying of selective blue chip stocks was not convincing at all,” it said.  

The research house said that indicator wise, the MACD was still below the 9-day moving average line.

“The analysis of overall market action on May 18 revealed that buying power was stronger than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,823.50 level on May 19,” said AllianceDBS Research.