FBM KLCI – New all-time high but caution prevails
Support: 1,659 to 1,692 Resistance: 1,696 to 1,699
Strategy: The FBM KLCI rose 11.25 points to close at 1,692.58 last Friday. The local market rose on further buying of selective blue chips in the new year. Volume increased throughout the week at 0.84b to 1.26b shares.
The firm support areas for the FBM KLCI are in the 1,659 to 1,692 zone. The key resistance levels of 1,692 and 1,699 may see some profit -taking activities. 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. The current extended Fifth Elliott Wave (EW) of the major Flat v/C/B-leg correction from the 801.27 low to 1,699.68 (on 4 Jan 2013), has obvious bearish divergence signals despite the index‟s price rise to uncharted levels.
As Malaysia prepares for GE13 over Jan-Jun 2013, 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 stalling uptrend towards 1,699.58. The Malaysian bourse will witness selling around its resistance areas and target levels (of 1,698 and 1,721).
Some BUY stocks are: AEON, AFFIN, AIRASIA, ALAM, ASTRO, BAT, BURSA, DKSH, EDEN, GENM, GENTING, GTRONIC, GWPLAST, HLFG, IHH, IJM, IOICORP, JCY, JOHOTIN, KRIS, MAS, MBSB, PADINI, PCHEM, PPB, SCIENTX, SCOMI, TCHONG, TIMECOM, TNLOGIS, UNISEM and YINSON.