FBM KLCI Weekly Technical - Is it wise to buck the US drop?
FBM KLCI – Low seen at 1,566.55. Bucks the US drop
Support: 1,540 to 1,588 Resistance: 1,591 to 1,609
Strategy: The FBM KLCI rebounded 23.24 points to close at the week’s high of 1,591.04 last Friday. The local market rose throughout last week on obvious bargain-hunting activities after the
sell-off before the Bersih 3.0 rally on 28 Apr. Volume shrank from 1.33b to 0.95b shares. The obvious support areas for the FBM KLCI are in the 1,540 to 1,588 zone. The next resistance levels of 1,591 and 1,609 will see very h eavy 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 W ave 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 the 801.27 low. Sell on every rebound rally, as the index has peaked with ample bearish divergent signals and the Rising Wedge breakdown on 20 Apr 2012 means that there will be an eventual Malaysian market correction. In the face of the US markets’ decline and EUROZONE adversity, it may not be wise for the Malaysian market to surge against a negative global backdrop.
Some stocks we like are: BENALEC, BIMB, CARLSBG, CBIP, CRESBLD, JTINTER, KPJ, MAYBULK, MBL, MHC, MPHB, PETDAG, PIE, TENAGA, TM, UMLAND, VS and WELLCAL. Some stocks on which we advocate a “SELL” are: ARMADA, BSTEAD, DLADY, KLK, MHB, MISC, MPI and NESTLE
by Maybank IB