Drift Down From The 1,699.68 Peak May Accelerate
FBM KLCI – New all-time high of 1,699.68. Sell!
CPO Futures – Minor rebound to MYR2,400. Downtrends persist.
DJIA – A re-test of 13,661.87 is on the cards.
TM – Wave 5 high at MYR6.04. Daily and weekly downtrend.
below: FBM KLCI Weekly Chart (click to enlarge)
Support: 1,632 to 1,674 Resistance: 1,676 to 1,699
Strategy: The FBM KLCI fell 6.26 points to close at 1,676.44 last Friday. The local market fell on consistent selling of selective blue chips (like TM and SIME). Volume increased throughout the week at 1.10b to 1.49b shares.
The weak support areas for the FBM KLCI are in the 1,632 to 1,674 zone.
The key resistance levels of 1,676 and 1,699 will see some heavy 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 Feb-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 at 1,699.68. The Malaysian bourse will witness selling around its resistance areas indicated.
Some BUY stocks are: BURSA, DAYANG, FABER, GENTING, GUOCO, HDBS, HLCAP, HLFG, KNM, MEDIAC, MISC, TEBRAU and UOADEV. Some SELL stocks are: AEONCR, AMBANK, ASTRO, BAT, BENALEC, BPURI, CARLSBG, CIMB, CMSB, DLADY, FGV, HLBANK, IJM, KASSETS, MAS, MEDIA, MHB, NESTLE, SIME and TM.