Mar 15 2013, 10:18 AM
ada ka? anyone got realtime chart? mine is intraday
‘Right Shoulder’ formed at 1,664.39. Sell!
Business & Markets 2013
Written by Lee Cheng Hooi
Friday, 15 March 2013 09:57
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European leaders are loosening the economic shackles once demanded by Germany as the recession and mounting unemployment in southern Europe shoved aside the debt crisis as the eurozone’s biggest problem. The eurozone has seen bloc-wide unemployment at 12.2% in 2013, with joblessness as high as 27% in Greece and 26.9% in Spain. Pressure remains on France, Italy and the countries tapping emergency financial aid to make their economies more productive by reducing labour costs and de-regulating professions.
The European Commission, the Brussels-based enforcer of the budget rules fended off attacks from southern Europe that it has been too strict and parried warnings from northern Europe that it is becoming too lax. The Dow increased by 5.22 points on Wednesday on low volume after recording a new all-time high of 14,478.80 on March 2013.
The FBM KLCI traded in a downward and volatile range of 28.52 points with decreased volumes of 770 million to 930 million shares traded. The index closed at 1,640.74 yesterday, down 5.48 points from the previous day as blue chip stocks like BRITISH AMERICAN TOBACCO (M) [] Bhd, HONG LEONG FINANCIAL GROUP BHD [], PETRONAS GAS BHD [], PPB GROUP BHD [] and UMW HOLDINGS BHD [] caused the index to close lower on persistent profit-taking activities.
After the 1,590.67 November 2012 low, the KLCI had scaled up towards a fresh all-time high of 1,699.68 on Jan 4, 2013. The index broke its critical 1,682 support on Jan 16, 2013 and plunged further with a 40.81-point drop in late January to its recent low of 1,597.00 on Feb 7, 2013. The index’s rebound stalled at 1,664.39 (March 12, 2013) and has dropped off since that high. As such, the weaker support levels are seen at the 1,590-, 1,597- and 1,622-levels, whilst the resistance levels of 1,640, 1,664 and 1,699 will witness heavy liquidation activities on rallies.
The current rebound rally from the 1,597 low (of Feb 7, 2013) could have traced out a “Right Shoulder” of a “Head and Shoulder” (H&S) pattern which bears much resemblance to that of the index’s 2008 “H&S” formation. We advocated a selling on rebound strategy for the index on March 8, 2013, especially at the 1,660.46 (62%) retracement level. The price action of the index exceeded that 1,660.46 level to 1,664.39 on March 12, 2013. Since then, the index fell off 28.52 points from that 1,664.39 high, which we now think could be the basis of the said “Right Shoulder”.
For the longer term, the rise from the 801.27 low (October 2008) to the current all-time high of 1,699.68 represents an extended Elliott Wave “Flat” rebound in a ‘Pseudo-Bull’ rise. Tactically, investors will liquidate on rallies due to the index’s ample long-term bearish divergence signals. Continue to take profit on any price rallies, as the daily DMI and Stochastic are still negative. Its CCI, MACD and Oscillator are positive for now.
Due to the potentially lower tone of the KLCI, we are recommending a “sell” on YTL Corp Bhd. YTL reported a fourth quarter 2012 (4Q12) revenue and profit before tax (PBT) of RM5.12 billion and RM556.1 million, a decrease of 3.9% and 8.9% respectively compared with RM5.33 billion and RM610.1 million in the previous corresponding period. Its CONSTRUCTION [] division recorded a 21.8% drop to RM57.8 million from RM73.9 million in 4Q11 due to lower recognition of percentage of work done by its foreign subsidiary, YTL Construction (S) Pte Ltd.
Moving forward, the construction segment is expected to achieve satisfactory performance for the financial year ending June 30, 2013 as the construction contracts related mainly to the group’s property development and infrastructure works. Its utilities segment continues to strive for long-term sustainable growth despite the competitive environment.
Maybank-IB currently does not have fundamental coverage on YTL. A check on Bloomberg consensus reveals that there are six houses that have coverage on the stock, three of which have “buy” calls, two “hold” calls and one “sell” call. YTL is currently trading at a historical price-earnings ratio of 12.1 times with an indicative dividend yield of 0.93%.
YTL’s share price made an obvious surge since its daily Wave-5 high of RM1.90 on Dec 31, 2012. Since that high, YTL fell on a very firm Wave-3 move to its recent low of RM1.54, accompanied by heavier volumes traded.
Its chart has moved into daily and weekly downtrends to its recent low of RM1.54. As it broke below its recent key critical supports of RM1.78 and RM1.82, look to sell YTL on any rallies to its resistance areas as the moving averages depict very firm short-to-medium term downtrends for this stock.
The daily and weekly indicators (like the CCI and DMI) are firmly negative and now depict the obvious indications of YTL’s eventual decline to lower levels. We expect YTL to remain very weak towards its support levels of RM1.45, RM1.49 and RM1.54. It will attract major liquidation at the resistance levels of RM1.60, RM1.78 and RM1.90. Its downside targets are now located at RM1.25, RM1.38 and RM1.50.
Lee Cheng Hooi is head of retail research at Maybank Investment Bank. The views expressed in the article are the opinions of the writer and should not be construed as investment advice. Please exercise your own judgment or seek professional advice for your investment decisions. Technical report appears every Wednesday and Friday.
This article first appeared in The Edge Financial Daily, on March 15, 2013.
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