FBM KLCI – Stable and strong despite global volatility
above: FBM KLCI Weekly Elliot Wave Chart (click to enlarge)
Support: 1,718 to 1,775 Resistance: 1,778 to 1,826
Strategy: The FBM KLCI inched up 6.37 points WoW on local buying to close at 1,775.59 last Friday amid global and regional turbulence. Volume ranged from 1.58b to 2.31b shares traded. The wider support areas for the FBM KLCI are in the 1,718 to 1,775 zone. The key resistance levels of 1,778 and 1,826 will see some heavy liquidation activities. The index consolidated in a
range of 801 to 936 from Oct 2008 to Apr 2009, but broke above 936.63 (Wave a/B) in Apr 2009. Its intermediate Wave b/B low was 836.51. We have traced out a Wave C/B (of the Flat 3 -3-5 variety) rebound phase, and revised our Wave Count of a Wave iv/B correction to 1,310.53. The current extended Fifth Elliott Wave (EW) of the major Flat v/C/B-leg correction from the 801.27 low to 1,826.22 (on 6 May 2013) has obvious bearish divergence signals despite the index’s rise to all-time highs on a gap-up move after GE13. The FBM KLCI is in overbought and bearish divergent territory and the EW count suggests a stalling uptrend towards 1,826.22.
This could cause investors to continue to adopt a trading strategy and bargain-hunt for selective laggard stocks. Local investors will likely trade with a short-term time frame as they may need to react swiftly to potentially weaker and volatile world and regional markets. Some BUY stocks are: AMBANK, BAHVEST, CANONE, CENBOND, CENTURY, CMSB,DSONIC, FABER, FARMBES, GAB, GOB, HAPSENG, HLCAP, ILB, KIANJOO, KIMLUN,MMCCORP, MYEG, NHFATT, PESTECH, POS, PRESBHD, PRKCORP, PRLEXUS, PTARAS, RVIEW, SCIENTX, SUPER, TAKAFUL, TOPGLOV and UZMA. Some SELL stocks are BAT, HLFG, KLK, MHB and YTLE
research by MIB