Turbulence May Emerge At Current Lofty Levels
FBM KLCI – New high formed at 1,826.22. Some uncertainty to emerge
above: FBMKLCI Weekly Chart (click to enlarge)
Support: 1,718 to 1,765 Resistance: 1,773 to 1,826
Strategy: The FBM KLCI inched up 3.90 points WoW to close at 1,773.06 last Friday. The index closed up on heavier volumes traded. Trading in regional markets was volatile (especially after the plunge in Japan last Thursday) but some blue-chip buying prevailed. Volume ranged from
2.15b to 2.97b shares traded.
The wider support areas for the FBM KLCI are in the 1,718 to 1,765 zone. The key resistance levels of 1,773 and 1,826 will see some 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 1,826.22 (on 6 May 2013) has obvious bearish divergence signals despite the index’s rise to all-time highs on a gap-up move after GE13.
The FBM KLCI is in overbought and bearish divergent territory and the EW count suggests a stalling uptrend towards 1,826.22. This could cause investors to continue to adopt a trading strategy and bargain-hunt for selective laggard stocks.
Some BUY stocks are: AEON, AHEALTH, BAT, CMSB, GAB, HLCAP, KEURO, KIMLUN, LMCEMNT, PADINI and VERSATL. Some SELL stocks are DIGI, HLBANK and KLK.