Bank Negara cuts interest rate - GE is near

In a surprising move, Bank Negara cuts its key interest rate for the first time in seven years. The overnight policy rate is reduced by 25 basis points to 3.00%.

I guess this is another indication that a snap election is on the way.

Upon hearing the news at around 3.00pm, investors started to move into property stocks and that pushes the property index higher to close the day at 1169 for a 38 points gain (+3.4%).

FBMKLCI (1,660)

KLCI gained 6 points (+0.4%) at the close of today's trading.

I viewed the interest rate cut as the first step to push the markets by the BN government in preparation for a snap election. To make people feel good, KLCI must go up, the higher the merrier. The next thing I expect them to do is to strengthen the Ringgit. People will feel extremely good when prices of imported goods start to move lower.

Technically if KLCI can move up from here, it will have 5 mini waves in an up-trend direction forming the sub-wave i.

Then KLCI will have a chance to complete have a proper major wave 5 instead of a failure major wave 5 that I have mentioned earlier. Finally it is still possible for KLCI to move in tandem with the Dow despite of 1MDB's issue.

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