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FBM KLCI Weekly Technical Analysis

A possible re-test of 1,597.08 
*  FBM KLCI – May try to re-test 1,597.08. 

below: FBM KLCI Weekly Chart (click to enlarge)

fbm klci chart

 

Support: 1,530 to 1,583
Resistance: 1,587 to 1,597
Strategy:  The FBM KLCI gained 25.01 points and closed at 1,583.78 last Friday. The local market firmed up in active trading on selective and key blue-chip stocks. Smaller local volumes of between 1.62b to 1.94b shares were registered. 

The obvious support areas for the FBM KLCI are in the 1,530 to 1,583 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 to an extended A-B-C correction to 1,310.53 and  the  current wave  (accompanied with bearish divergence) would be an extended Fifth Wave of the major Flat correction from the 801.27 low.
Trade cautiously even if the index surpasses 1,597.08, as there is ample bearish divergence. Some stocks we like are: AMMB, DIALOG, KHSB, KMLOONG, PADINI, PUNCAK, RHBCAP, SENDAI, SUNWAY, TENAGA, TIMECOM, UTDPLT and YTL.

 

by Maybank IB