The FBM KLCI inched up 2.35 points WoW to close at 1,868.46, as some minor nibbling activities led the index up after the previous week’s sell-off. Volume fell from 3.00b to 2.52b shares last week.
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 Wave b/B low was 836.51. We traced out a Wave C/B (of the Flat 3-3-5 variety) rebound phase, and the current extended Fifth Elliott Wave (EW) of the major Flat v/C/B-leg correction from the 801.27 low to 1,896.23 (its 8 July 2014 peak) with obvious bearish divergence signals. After its recent low of 1,802.88, heavy selling activities below 1,896.23 caused the index to fall to 1,837.28. Its next rebound stalled at 1,879.62.
below: FBM KLCI Weekly Chart
What is our Strategy
With the volatile price action that emerged from the 1,896.23 to the low of 1,837.28, we advise clients to take profit at the resistance areas of 1,868 to 1,896. The support levels of 1,802 and 1,860 may see weak buying activities. With the recent sell-off from 1,896.23 to 1,837.28, we advise clients to trade this recent price range. Small and mid-cap stocks as well as lower liners may continue to see profit taking. Most speculative issues may remain very volatile for this week.