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.
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
