Global investors may SELL OFF as RISKS are OFF!
- FBM KLCI – High of 1,597.08. Low of 1,310.53. Rebound stalled at 1,493.28.
- CPO Futures – Bear market rebound stalled at RM3,270.
- DJIA – High at 12,876.00. Low of 10,404.49. Stalled rebound at 12,284.31.
- TENAGA – A weaker trend for this stock. Revisit of RM4.89 & lower.
Support: 1,380 to 1,424 Resistance: 1,431 to 1,493
Strategy: The FBM KLCI tumbled 22.85-points and closed at 1,431.55 last Friday. The local market remained lack luster and blue chip shares fell on further foreign liquidation activities. US stocks posted 7 straight sessions of losses by last Friday and ended the worst week in 2 months, as the lack of a credible solution to Europe's debt crisis kept investors away from risky assets.
Furthermore, investors were concerned too as S&P downgraded Belgium's credit rating to double-A from double-A-plus.
The weaker support areas for the FBM KLCI are in the 1,380 to 1,424-zone. The next resistance levels of 1,431 and 1,493 will see heavy liquidation activities. The local market had peaked on 11 July 2011 at the all-time high of 1,597.08 and a softer phase had emerged to the 1,310.53 low.
The FBM KLCI consolidated in a tight range of 801 to 936 from October 2008 to April 2009, but broke above its resistance level of 936.63 (Wave a/B) in April 2009 and surged to an all-time high of 1,597.08 on 11 July 2011. Its intermediate Wave b/B low was 836.51.
We traced out a Wave c/B (of Flat 3-3-5 variety) rebound phase to its all-time high of 1,597.08 (c/B). A downward “killer” large scale “Wave C” is now in place has only begun, with a temporary low formed at 1,310.53 (Wave a/C). A rebound move from that low is in place and has been contained above the 1,487.62 to 1,488.20 (62% retracement) levels at 1,493.28 on 31 October. (Wave b/C).
Although the tone of the global indices has improved, worries on high borrowing costs for the major EUROZONE governments could eventually put those countries into a downward “Grecian-like” spiral. Despite the US weekend retail sales rising to a record (this might be a temporary phenomena) and speculation that the EUROZONE leaders may do more to tame their debt crisis, one thing can be sure for this week and that is great price volatility.
by Maybank Investment Bank
