FBM KLCI Daily Chart - Trade with a short-term time frame locally
The FBM KLCI declined by 11.37-points to close at 1,465.47 yesterday. Stocks that led the index down were CIMB, IOICORP, GENTING, BAT and TENAGA.
Technical Viewpoint: The FBM KLCI’s key swings are 936.63 (Wave 4A high) and 836.51 (Wave 4B low). An “A-B-C”-correction unfolded and we made a “Flat” Wave 5-move that stalled at 1,597.08 on (11 July 2011). A poor close in the last 3 months saw a “Monthly Dark Cloud Cover” candle pattern with downward confirmation to the 1,310.53 low (26 Sep). The current rebound phase surpassed 1,487.62 recently to stall at 1,493.28 on 31 October. Most of the index’s indicators have turned negative, which shows its current upward rebound action that had stalled at 1,493.28 (31 Oct). Due to the US markets’ very poor tone last night, we may see another downward day for the index.
We advise clients to trade with a short-term time frame locally. It is unwise to join the recent penny stock activity (e.g. HARVEST with its suspension, designation and second consecutive limit-down) as these stocks do not have any fundamentals and the companies are loss making. Sell these stocks swiftly if their trends turn down.
above: FBM KLCI Technical (Elliot Wave) Daily chart (click to enlarge)
by Maybank Investment Bank
