May 27, 2013

FBM KLCI Weekly Technical Analysis

Turbulence May Emerge At Current Lofty Levels

FBM KLCI – New high formed at 1,826.22. Some uncertainty to emerge

fbm klci

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.

by MIB