FBM KLCI – Key Bearish Engulfing high seen at 1,655.49. SELL!
Support: 1,582 to 1,619 Resistance: 1,623 to 1,655
Strategy: The FBM KLCI fell 19.25 points to close at 1,623.70 last Friday. The local market fell on fairly broad-based blue-chip selling activities, especially on Thursday. Volume remained low at 0.84b to 1.03b shares.
The weaker support areas for the FBM KLCI are in the 1,582 to 1,619 zone. The key resistance levels of 1,623 and 1,655 may see some heavy selling 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 Wa ve 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 Elliott Wave (EW) of the major Flat v/C/B-leg correction from the 801.27 low stalled at 1,655.49, with obvious bearish divergence signals. The index then fell to 1,601.31 and rebounded to 1,651.66 before weakening last week to 1,623.70.
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 territory and the EW count suggests a stalled uptrend at 1,655.39 (with a weekly Bearish Engulfing pattern). Hence, the Malaysian bourse could range trade between 1,601.31 and 1,655.49 before a clearer and weaker direction emerges. Some trading BUY stocks that we like are: COCOLND, IBHD and SCOMI. Some SELL stocks are: AFG, AIRASIA, ANNJOO, BKAWAN, CARLSBG, BIMB, CIMB, GENTING, HARTA, JTIASA, KLK, KULIM, MAHSING, MSM, NESTLE, PPB, SHELL, SKPETRO, SOP, SWKPLNT, TDM, TWSPLNT and UTDPL
by Maybank IB
