KLCI Weekly Technicals - Not wise to go against the downward US tide

FBM KLCI – Still wrapped within the second Rising Wedge.


Support: 1,562 to 1,600 Resistance: 1,603 to 1,609
Strategy:  The  FBM  KLCI  gained  4.25  points  to  close  at  1,603.12  last  Friday.  The  local  market moved uneventfully throughout the whole week. Volume shrank from 1.35b to 1.08b shares last week. 

klci weekly analysis

The obvious areas for the FBM KLCI are in the 1,562 to 1,600 zone. The next resistance levels of
1,603 and 1,609 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 a previous 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  (5/III/B).  A  downward  large-scale  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 now revised our Wave Count of an extended Wave IV/B correction to 1,310.53, and the current wave is an extended Fifth Wave of the major Flat C/B-leg correction from the 801.27 low. Trade cautiously, as the index may be peaking soon (despite inching to all-time highs) with ample bearish  divergent  signals.  The  global  volatility  could  affect  the  grossly  overbought  local  market (which stalled at its 1,609.33 all-time high on 3 April 2012) too.

Some stocks we like are: ARMADA, CANONE, CSL, CYPARK, GTRONIC, HIBISCS, HLBANK,
JCY, JTIASA, MHC, OLDTOWN, PADINI, PIE, SHCHAN,  SOP, TAANN, TDM, TENAGA, TSH
and YTL. 

 

by Maybank IB

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