FBM KLCI will plays catch down - weekly technical analysis
A matter of time before the FBM KLCI plays catch down
FBM KLCI – Global malaise will eventually affect the index.
CPO Futures – Plunging to RM3,000 & lower.
DJIA – It peaked at 12,885.92. On a big plunge if it breaks below 11,862.53.
PANAMY – Resilient stock in adversity which offers high yield.
Support: 1,536 to 1,563 Resistance: 1,564 to 1,576
Strategy: The FBM KLCI gained only 1.23-points and closed at 1,564.66 last Friday. The local market remained quite steady despite the Greek debt worries and bad US economic news (like the increased number of people seeking unemployment benefits). Local buying on some key local blue chips cushioned the global markets’ weakness.
The FBM KLCI had previously consolidated in a tight range of 801 to 936 from October 2008 to April 2009, but broke above its resistance level of 936.63 on 10 April 2009 and surged to an all-
ime high of 1,576.95 on 6 January 2011. In terms of Elliott Waves, the FBM KLCI traced a broad Wave a/B consolidation phase to the 936.63 high. Its Wave b/B low was 836.51. We have traced
out a Wave c/B (of Flat 3-3-5 variety) rebound phase. Bearish divergence signals are obvious on
the FBM KLCI’s indicators despite the index’s surge to its all-time high of 1,576.95 (c/B).
The obvious support areas for the FBM KLCI are located in the 1,536 to 1,563-zone. The firm resistance zone of 1,564 and 1,576 will see very heavy liquidation activities. The local market had
meandered in a very tight range since the beginning of 2011. We expect that the market would be
in further range-bound movements for the next few weeks, as market-moving local news flow appears to be quiet. Local buying by some funds will cause the index to inch up though, despite
the global malaise. However, it is a matter of time before this index plays catch-down.
Uptrend stocks that we like are: AIRASIA, BIMB, LAYHONG, LBS and SCABLE. Down-trend stocks that we advocate a sell are: CARLSBG, DIALOG, GENM and NOTION.
by Maybank Investment Bank Research