Update: KLCI, CI Futures & Plantation Index

1) KLCI is trending flat. Not much action & no major signals. Support remains at 931 & a breakdown below this will find support at the IHS neckline at 926. I expect the neckline to hold. Fundamentally, external forces may have an impact on the CI. Higher oil prices are a worry though the Dow & world markets seem to be holding steady so far. I will be more concerned when we head into September when the hurricane season starts in the US. If there is a bad one & some refineries are shut down we may really see a big spike in oil prices.


2) CI Futures - August futures started slowly Monday but rose strongly with a bullish engulfing pattern today. On this basis we will see it narrowing the band with the KLCI soon. Futures are bullish at this point with initial resistance at 921 & then 940.


3) Plantation Index is getting weaker. Prices are falling but volume is getting higher. This diversity is a concern. As mentioned earlier I expect the index to fall slightly and possibly hit the IHS neckline support at 3360. The only possibility of negating this is if the strong support at 3443 holds, then the index may bounce back up again. However, despite rising CPO prices, the general opinion is that plantation counters have risen beyond CPO fundamentals & a slight correction will be healthy. Due to fundamental demand for CPO this correction will not be severe & the index & plantation Co share prices should continue their uptrend again soon.