Weekly FBM KLCI Technical Analysis
Test of 1,597.08 or a window-dressing decline?
FBM KLCI – May reverse near the key 1,597.08 all-time high.
Support: 1,562 to 1,581 Resistance: 1,596 to 1,597
Strategy: The FBM KLCI gained 10.50 points to close at 1,596.33 last Friday. The local market moved uneventfully until last Friday, when very obvious low-volume 1Q window-dressing activities emerged. Volume shrank from 1.94b to 1.25b shares last Friday.
above: FBM KLCi Weekly chart (click to enlarge)
The obvious areas for the FBM KLCI are in the 1,562 to 1,581 zone. The next resistance levels of
1,596 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
of an extended A-B-C correction to 1,310.53, and the current wave would be an extended Fifth Wave of the major Flat correction from the 801.27 low. Trade cautiously, as the index may be peaking soon with bearish divergent signals. We favour this second “overbought scenario” for the index. A test of the 1,597.08-resistance (and all-time high) could be met with heavy selling.
Some stocks we like are: AMMB, ARMADA, BAT, CRESNDO, CYPARK, DIGI, HLBANK, JTIASA, KLK, KMLOONG, LBS, MHC, SOP, TAANN, TAKAFUL, TM and YTL.
by Mayabnk IB