Strategy: The FBM KLCI rose 5.01 points on a WoW basis to close at 1,711.29 last Friday. The index closed up on low market interest and volume ahead of GE13 on 5 May. Volume ranged from 0.73b to 0.79b shares traded.
Support: 1,664 to 1,711 Resistance: 1,713 to 1,718
The obvious support areas for the FBM KLCI are in the 1,664 to 1,711 zone. The key resistance levels of 1,713 and 1,718 will see some heavy liquidation activities. The index 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. 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, and 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 1,718.08 (on 26 Apr 2013) has obvious bearish divergence signals despite the index’s rise
to uncharted all-time highs.
Political uncertainty due to GE13 could cause investors to adopt a risk-off approach. The FBM KLCI is in overbought and bearish divergent territory; the EW count suggests a stalling uptrend towards 1,718.08. There are trading opportunities in the smaller and mid-cap stocks though.
Some BUY stocks are: AEON, AIRASIA, AIRPORT, AMBANK, ASTRO, BSTEAD, CARLSBG, CMSB, DAYANG, E&O, GAB, GENTING, GTRONIC, HLFG, HLCAP, HUNZPTY, INARI, JOBST, MAXIS, PBBANK, PESTECH, POS, SAB, TCHONG, TOMYPAK and UMW. Some SELL stocks are: ANNJOO, CSL, DUFU, KOBAY, NOTION and SAM.
by Maybank IB