Apr 19, 2010

FBM KLCI - Elliot Wave Technical Analysis

Support: 1,292 to 1,330
Resistance: 1,332 to 1,372


Strategy: The FBM KLCI declined 1.21-points last week on further market profit taking activities. The FBM KLCI closed at 1,332.77, off the week’s high of 1,344.12. The market fell in the latter part of last week on local and foreign profit taking activities.

fbm-klci-wave  

The weaker support areas for the FBM KLCI are  located in the 1,292 to 1,330-zone. The key resistance areas of 1,332 and 1,372 will cap any  rebound activity. The FBM KLCI had previously consolidated in a tight range of 801 to 936 from Oct ‘08 to Apr ‘09, but broke above its previous resistance of 936.63 on 10 Apr ‘09 to surge to a fresh high of 1,347.61 on 7 April 2010.

In terms of Elliott Waves, the FBM KLCI traced a broad Wave 4A consolidation phase to the 936.63 high. Its Wave 4B low was 836.51. We have traced out a Wave 4C (Flat 3-3-5) rebound phase. Since the current rise of the KLCI is “Flat”, investors should not get caught at the end of this rebound move. After breaking above 1,248.34 (its key 62% retracement level), it surged to fresh highs of 1,308.52 (21 Jan 2010). Since then, the FBM KLCI’s next key swings were 1,224.37 (low), 1,334.34 (high) and 1,292.21 (low). The FBM KLCI may have stalled on its rise to its final Wave 5 of the “Flat” at 1,347.61 (7 April 2010). 

The local market appears weaker and poised to  break below the key 1,330 support level. This confirms the 1,347.61 high sighted  recently. Tactically, we advise clients to reduce their equity positions in view of the potential turbulencet emanating from USA on Goldman Sachs’ civil fraud news.

Some stocks that we advocate a “Sell” are:  AMMB, AXIATA, CIMB, CMSB, FABER, KNM, KYM, LATEXX, MEASAT, SAPCRES, SUPERMX, TANJONG, TOPGLOV and UNISEM.

Some “Buy” stocks that we like are: ATIS, TASCO, SUNCRN and ZHULIAN.

source: Maybank Investment Bank