Further Downside As Significant High (1,697.37) Sighted
FBM KLCI – A very bad monthly close since the 1,679.37 high
CPO Futures – Further downside pressure building up
DJIA – Only a minor WoW gain in USA
CIMB – Daily & weekly downtrends. Sell!
Support: 1,554 to 1,590 Resistance: 1,610 to 1,679
Strategy: The FBM KLCI fell 3.49 points to close at 1,610.83 last Friday. The local market plunged on further liquidation of blue chips to a low of 1,590.67 before rebounding on some bargain hunting. Volume was heavier throughout the week at 0.89b to 1.21b shares.
The weaker support areas for the FBM KLCI are in the 1,554 to 1,590 zone. The key resistance levels of 1,610 and 1,679 will see some heavy liquidation act ivities. The FBM KLCI consolidated in a range of 801 to 936 from Oct 2008 to Apr 2009, but broke above 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 Elliott Wave (EW) of the major Flat v/C/B-leg correction from the 801.27 low to 1,679.37 on 29 Oct, with obvious bearish divergence signals.
As Malaysia prepares for GE13, political uncertainty could cause investors to adopt a risk-off approach. The FBM KLCI index is in overbought and bearish divergent territory and the EW count suggests a stalled uptrend at 1,679.37. The Malaysian bourse will witness selling around its resistance areas due to its weekly Bearish Engulfing pattern (with downside confirmation in the last four weeks), its monthly Nov Bearish Engulfing pattern and the “Rising Wedge” breakdown.
Some BUY stocks are: HUPSENG, IHH, KASSET, LATITUD, ORIENT, PETDAG, TAMBUN, TNLOGIS and WCT. Some SELL stocks are: APM, ARMADA, BAT, BJCORP, EVERGRN, FGV, GENM, GENTING, JCY, JTIASA, MAXIS, MISC, MRCB, MUDAJYA, NESTLE, PADINI, PCHEM, SIME, SPSETIA, TONGHER, TSH and TWS.