KUALA LUMPUR (July 2); The FBM KLCI is expected to extend its gains today and stay above the 1,730-point level in line with the overnight uptick at global markets.
Stocks worldwide rose on Wednesday on signs a resolution of Greece's debt crisis appeared in hand, but U.S. stocks later dropped from earlier levels after the prime minister called on Greeks to reject a bailout deal with international creditors, according to Reuters.
Prime Minister Alexis Tsipras urged citizens to vote "No" in a referendum on Sunday on the bailout, in a defiant address that dispelled speculation he was dialing back his combative stance, it said.
AllianceDBS Research in its evening edition Wednesday said that supported by the up close in the preceding day, the FBM KLCI had on July 1 gapped up to reach a high of 1,737.67 as market participants continued to play on the buying side in anticipation of a higher market.
It said under the persistent buying interest, the benchmark index kept its position near the high end throughout the trading sessions before settling off the day’s high at 1,727.96 (up 21.32points or 1.25%).
“In the broader market, gainers outnumbered losers with 678 stocks ending higher and 192 stocks finishing lower. That gave a market breadth of 3.52, indicating the bulls were in control,” it said.
AllianceDBS Research said the upside gap indicated the urgency to establish stock positions.
It said this strong follow through buying support on July 1 has led to an upside penetration of the downward sloping resistance line extended from the high of 1,867 (April 27) to connect the other high of 1,819 (May 19).
“Given the strong rally in the last 2 days, the benchmark index is expected to ride on the positive momentum again with immediate hurdle seen at 1,735.
“A crossover of 1,735 should lift the market to the next resistance zone, 1,745 - 1,760,” it said.
AllianceDBS Research said the market support zone is pegged between 1,706 and 1,714, adding that indicator wise, the MACD was above the 9-day moving average line.
“The analysis of overall market action on July 1 revealed that buying power was stronger than selling pressure.
“As such, the FBM KLCI would likely trade above the 1,737.67 level on July 2,” said AllianceDBS Research.