FBM KLCI Weekly Technical 070812
Treading water in Malaysia, while global markets gyrate
FBM KLCI – Rise ended at 1.647.94. Why is Malaysia still treading water?
CPO Futures – Plunging towards MYR2,838 & MYR2,754
DJIA – A re-test of the 13,338.66 resistance
GENTING – Firm double daily and weekly downtrends
FBM KLCI Weekly Chart (click to enlarge)
Support: 1,591 to 1,629 Resistance: 1,635 to 1,647
Strategy: The FBM KLCI rose 10.10 points to close at 1,635.04 last Friday. The local market rose on minor blue chip nibbling activities last week. Volume remained range bound from 0.95b to 1.35b shares. Intra-day price action was boring and treaded water to minor positive closes. The obvious support areas for the FBM KLCI are in the 1,591 to 1,629 zone. The next resistance
levels of 1,635 and 1,647 will witness 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. We have revised our Wave Count of a Wave iv/B correction to 1,310.53, and the extended Fifth Wave stalled initially at 1,609.33 of the major Flat v/C/B-leg correction from the 801.27 low. From the 1,526.60 low, we have traced out an extended Wave V/V Flat pattern that stalled at 1,647.94, with abundant bearish divergence signals.
As Malaysia prepares for GE13 in the coming months, political uncertainty could cause investors
to adopt an eventual risk-off approach. The FBM KLCI index is in overbought and bearish divergent weekly territory and the Elliott Wave count suggests a stalled uptrend at 1,647.94. Local and foreign appetite for stocks has diminished after Malaysia’s third large IPO recently, IHH. However, if the index makes any rebounds, these are great opportunities to take profits on rallies. Some trading buy stocks that we like are: DIGI, DLADY, KLCCP, L&G, OLDTOWN, ORIENT, PADINI, PETDAG, PWROOT, SBCCORP and SHANG. Some stocks on which we advocate a SELL are: ARMADA, CYBERT, GENM, GENP, GENTING, HARVEST, JTIASA, KNM, MHB, MISC, MRCB, PATIMAS, PPB, RHBCAP, SIME, SUNWAY and YTL.
by Maybank IB