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FBM KLCI Weekly Technical Analysis: Rising Wedge

Still within the second FBMKLCI Rising Wedge
  FBM KLCI – Sell at the upper band of the Rising Wedge.
  CPO Futures – To attack MYR3,465 & higher. 
  DJIA – Intra-week consolidation for the Dow.
  CRESNDO – A high yield (6.95%), low PE (5.3x) & 0.62 P/BV laggard stock. 

FBM KLCI Weekly Chart :

fbm klci technical analysis 

Support: 1,549 to 1,585  Resistance: 1,587 to 1,597

Strategy: The FBM KLCI gained 14.43 points to close at 1,585.83 last Friday. The local market rose in small daily spurts, with buying on some selective blue chips as well as obvious penny stock plays. Volume expanded from 1.81b to 3.59b shares last Friday. 

The obvious areas for the FBM KLCI are in the 1,549 to 1,585 zone. The next resistance levels of 1,587 and 1,597 may see heavy liquidation activities. The FBM KLCI consolidated in a tight range
of 801 to 936 from October 2008 to April 2009, but broke above its resistance level of 936.63 (Wave a/B) in April 2009 and surged to an all-time high of 1,597.08 on 11 July 2011. Its intermediate Wave b/B low was 836.51. We traced out a Wave c/B (of the Flat 3-3-5 variety) rebound phase to its all-time high of 1,597.08 (c/B). A downward “killer” large-scale “Wave C” is now in place and has only just begun, with a temporary low formed at 1,310.53 (Wave a/C).  A temporary rebound wave (Wave b/C) is underway and may take the shape of yet another Rising Wedge pattern (as shown on the chart above).

If the index breaks the second upper Rising Wedge trend line, we would revise our Wave Count of an extended A-B-C correction to 1,310.53, and the current wave would be an extended Fifth Wave of the major Flat correction from the 801.27 low. Trade cautiously, as the index  has temporarily peaked at 1,594.72 (short of  the 1,597.08 high). We  favour this second “overbought
scenario” for the index. A test of the 1,594.72 and 1,597.08 could be met with heavy selling. Some stocks we like are: AIRPORT, BAT, CRESNDO, GENTING, JCY, JTIASA, KMLOONG, MBL, MHC, TAANN, TAKAFUL, TENAGA, THPLANT, TM and YTL. 

 

by Maybank IB