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)
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