FBM KLCI Weekly Technical Analysis 2304

World markets may reverse downwards soon
  FBM KLCI – Within the second Rising Wedge. A breakdown is imminent.
  CPO Futures – Stalled at MYR3,628. Correction phase emerging.
  DJIA – Key peak sighted at 13,297.11. Sell on rallies.
  MRCB – Take Profit on this stock.


Support: 1,540 to 1,586 Resistance: 1,591 to 1,609

Strategy: The FBM KLCI lost 11.27 points to close at the week’s low of 1,591.85 last Friday. The local  market  moved  unconvincingly  throughout  the  whole  week.  Volume  shrank  from 2.14b  to 1.05b  shares  last  week.  There  was  also  some  apparent  penny  stock  churning  activity. The weaker  support  areas  for  the  FBM  KLCI  are  in  the  1,540  to  1,586  zone.  The  next resistance levels of 1,591 and 1,609 may see heavy liquidation activities. 


fbm klci weekly technical analysis above: FBM KLCI Weekly Chart

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 a previous all-time high of 1,597.08 on 11 July 2011. Its intermediate Wave b/B low was 836.51. We are tracing
out a Wave c/B (of the Flat 3-3-5 variety) rebound phase) currently. A temporary low was formed at  1,310.53 (Wave  IV/B).  A temporary  rebound  extended  wave  (Wave  V/B) is underway  and is
taking the shape of a Rising Wedge pattern (as shown on the chart above). We have revised our
Wave Count of an extended Wave IV/B correction to 1,310.53, and the current wave  is an extended Fifth Wave (that  stalled at 1,609.33) of the major Flat C/B-leg correction from the 801.27 low. Trade cautiously, as the index has peaked with ample bearish divergent signals. The global volatility could affect the grossly overbought local market too. An imminent Rising Wedge breakdown may happen soon. 

Some  stocks  we  like  are:  AEONCR,  BONIA,  CARLSBG,  CBIP,  JTIASA,  OLDTOWN, SAPCRES, SUBUR, UTDPLT, and YHS. Some stocks that we advocate a “SELL” are: BURSA, CIMB, GENM, GENTING, MISC, MRCB, PCHEM, RHBCAP, SUNWAY, UEMLAND and WCT.


by Maybank IB

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