After new home sales fell 8.3% in August (its worst price plunge since 1970s), the market expects another rate cut in the pipeline. The US market ended at its highest since July. Dow was up 35pts while S&P500 added 6pts. A retest of the 14,000 mark again for the Dow seem likely now.
STI is at its new all time high. Should continue to see more upside today but gains would likely be capped by pre-weekend profit taking activities. Also note that, there is a slight divergence between the STI and the SESALL, the broad-based index for the Spore market.
The KLCI still lags the regional markets. It is now just trading slightly above the 76% Fibonacci retracement. Momentum indicators are starting to improving further. Yesterday's volume was decent enough to start a run. Could test 1,340-1,345 today. Also note, similar to Spore, the KLCI and FBM Emas index diverge slightly. However, the divergence is not as clear cut as Spore's.
Overall, I am not too convinced that the bull has started again but I could be wrong. It appears the index is approaching or already at its critical level. It the market continue to hold steady at current levels or higher, there is a very good chance that I am wrong in my forecast. I still expect the market to correct again, at least to about the 1,200 level.. BUT... only time will tell...
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