Market Preview KLCI to extend gains, test resistance of 1,676

by **Cals** Tue 12 Jul 2016, 20:47

Market Preview

[size=28]KLCI to extend gains, test resistance of 1,676

By Surin Murugiah / theedgemarkets.com | July 12, 2016 : 5:59 AM MYT

KUALA LUMPUR (July 12): The FBM KLCI is expected to extend its positive run today in line with the overnight gains at most global markets and test its next resistance level of 1,676.

The U.S. benchmark S&P 500 stock index set record intraday and closing highs on Monday as last week's strong monthly U.S. jobs report worked its way into financial markets, and European shares rose as a single candidate emerged to succeed David Cameron as British prime minister, according to Reuters.

The S&P 500 ended at a record high of 2,137.16 after touching a record intraday high of 2,143.16. It overtook the previous highs touched in May 2015 as investors harbored greater optimism about the U.S. economy after last Friday's stronger-than-expected jobs report, it said.

AllianceDBS Research in its evening edition Monday said despite last Friday’s down close, the FBM KLCI had on July 11 traded higher to 1,656.49 as market participants changed their game play pattern to buying in anticipation of a higher market.

It said Under the persistent supportive buying interest, the benchmark index kept its position near the high end throughout the trading sessions before settling near the day’s high at 1,653.87 (up 9.33 points or 0.57%).

“In the broader market, gainers outnumbered losers with 439 stocks ending higher and 327 stocks finishing lower. That gave a market breadth of 1.34 indicating the bulls were in control,” it said.

AllianceDBS Research said the higher low on July 11 was unexpected, but it was good to see the benchmark index staying above the 1,641 level because the 1,641 level was the intersection point between the 20-day and 50-day MA lines.

“Many market participants would often expect the market to hold as a support level.

“So, the reversal of the market (higher low and higher high) indicated the significance of the 1,641 level.

“This kind of positive market setup seemed to suggest that certain traders and investors knew exactly what to do to take advantage of the opportunities that were presented,” it said.

The research house said following the up close on July 11, the market appears to be gearing up towards the immediate hurdle at 1,658.

It said a crossover of 1,658 should see a test of next resistance at 1,676, adding that the support is pegged at 1,641.

It said that indicator wise, the MACD is above the 9-day moving average line.

“The analysis of overall market action on July 11 revealed that buying power was than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,656.49 level on July 12,” said AllianceDBS Research.

Based on corporate announcements and news flow yesterday, companies that may be in focus today could include: KESM Industries Bhd, Press Metal Bhd, Borneo Oil Bhd, Southern Steel Bhd, GHL Systems Bhd, Reliance Pacific Bhd, Genting Bhd, DiGi.Com Bhd, LPI Capital Bhd, AirAsia X B Bhd and SapuraKencana Petroleum Bhd.
[/size]