Local Bourse Scripted For Showtime

Last Monday, we made a call that the FBM-KLCI will enter another phase of bullishness towards and above the 1,200 level, driven by property and CPO stocks. Since then, the KLCI has declined a minor 2%. However, with the S&P 500 and Dow Jones making new high, it seems likely that the highly correlated KLCI might be leaning towards fulfilling our bullish script this week.
POSITIVE : S&P and Dow Jones new high

Driven by a positive 7.2% jump in home resales data, the US Dow Jones and S&P 500 closed at a new high of 9,505.9 and 1,026.1 last Friday. The new highs in the US markets is a very important technical market development and will surely buoy our highly correlated (92%) local KLCI market upwards in the next few days.

POSITIVE : Strong crude oil and CPO prices

Crude oil prices recovered in the last few days to close strongly above the US$70 level. The strong recovery of oil prices has ignited a 44 pts rebound in the highly correlated CPO prices on Friday. A rebound and a bullish hammer reversal pattern in CPO prices will add some buoyancy to our CPO stock-heavy KLCI index.
Strategy : Maintain Positive
We maintain our positive short term, mid term and long term call on the FBM-KLCI and opine that the KLCI will surge strongly towards the 1,200 level in next 2 weeks.