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.
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