Support: 1,659 to 1,696 Resistance: 1,698 to 1,716
Strategy: The FBM KLCI rose 9.88 points on a WoW basis to close at 1,698.53 last Friday. The market closed up despite news of the nomination and polling days for GE13 last Wednesday. Fund buying was still obvious last week. Volume ranged from 1.07b to 1.13b shares traded.
The obvious support areas for the FBM KLCI are in the 1,659 to 1,696 zone. The key resistance levels of 1,698 and 1,716 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 1,716.47 (on 12 Apr 2013) has obvious bearish divergence signals despite the index’s rise to uncharted 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 at 1,716.47, with a daily Bearish Engulfing Pattern that appeared last Friday.
Some BUY stocks are: ALLIANZ, BOXPAK, BURSA, CARLSBG, E&O, GASMSIA, GUANCHG, LCAP, HUAYANG, HUNZPTY, KEURO, ORIENT, PCHEM, PERDANA, POS, SAB, SUCCESS, TCHONG and ZHULIAN. Some SELL stocks are: PARKSON, QL, SAM and YTLPOWR.
by Maybank IB