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FBM KLCI Weekly Technical Analysis 300412

Support: 1,509 to 1,562 Resistance: 1,567 to 1,609
Strategy:  The FBM KLCI tumbled 24.05 points to close near the week’s low (of 1,566.55) at 1,567.80  last  Friday.  The  local  market  fell  last  Monday,  followed  by  3  lacklustre  days  of  trading and plunged further last Friday. Volume shrank from 1.66b to 1.30b shares last week. There was obvious  penny  stock  liquidation  as  well  as  heavy  blue  chip  selling  on  worries  of  the  Bersih  3.0 rally held last Saturday.

 

below: FBM KLCI Weekly Chart (click to enlarge)

fbm klci weekly technical analysis 300412 

The  very  weak  support  areas  for  the  FBM  KLCI  are  in  the  1,509  to  1,562  zone.  The  next
resistance  levels  of  1,567  and  1,609  will  see  very  heavy  liquidation  activities.  The  FBM  KLCI consolidated in a range of 801 to 936 from Oct 2008 to Apr 2009, but broke above its resistance of  936.63  (Wave  a/B)  in  Apr 2009  and  surged  to  a  previous  all-time  high  of  1,597.08  on  11  Jul 2011. 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.

 

A temporary rebound extended wave (Wave V/B) took the shape of a Rising Wedge pattern. We have revised our Wave Count of a Wave iv/B correction to 1,310.53, and the extended Fifth Wave stalled at 1,609.33 of the major Flat v/C/B-leg correction from that 801.27  low.  Sell  on  every  rebound  rally,  as  the  has  index  peaked  with  ample  bearish  divergent signals  and  the  Rising Wedge  breakdown  on  20  Apr  2012  means  that  there  will  be  a  long  and sustained  Malaysian  market  correction/plunge  (similar  to  the  Jul-Sep  2011  decline).  SELL  ALL REBOUND RALLIES.

Some  stocks  we  like  are:  AEONCR,  CARLSBG,  JTINTER  and  TAKAFUL.  Some  stocks  on
which we advocate a “SELL” are: ARMADA, BAT, BSTEAD, CIMB, DLADY, GENM, GENTING, HLFG,  IOICORP,  KFC,  KLK,  MHB,  MISC,  MRCB,  NESTLE,  PCHEM,  RHBCAP,  SIME  and SPSETIA.

 

by Maybank IB