Saturday, March 18, 2017

FBMKLCI -1820 Minimum target for wave (iii)

Dow (20,914)

Dow is forming its mini wave 5 of sub-wave iii.


FBMKLCI (1,745)

One more down and one more up to complete sub-wave iii.


If wave (iii) has the same magnitude (%) as wave (i), gaining 12.4%, wave (iii) can have a minimum target of 1,820.

However, if wave (iii) is the extended wave, it can gain 1.618x12.4%, which is 20%. Wave (iii) can go as high as 1950 before the next wave (iv) correction that can be quite sharp within short duration.


Gadang Holdings Bhd (Rm 1.30)

Gadang is likely to end its wave (v) at around Rm 1.60 level. At this moment it is on its minor wave v.


EG Industries Bhd (Rm 0.915)

EG is expected to move higher next week to complete its minor wave iii, iv and v of sub-wave v of wave (i).


Insas Bhd (Rm 0.92)

The two green candlesticks have ruled out the second scenario mentioned in my previous post. The very bullish first scenario is confirmed. Next week can witness the mini wave 2 correction. After that the next up can be very powerful, the mini wave 3 of sub-wave iii of wave (iii) of major wave 3.


With this confirmation of fist scenario, I noticed on Friday that investors have rushed into buying Insas Warrant-B as reflected in the high volume of 30 millions share as compared to the daily average of 2 millions. The warrant gained 13.2% (+3.5 sens) whereas Insas gained only 1.6% (+1.5 sens). Please remember that the warrant is still 'out of money' as the conversion price is Rm 1.00 and Insas price is only Rm 0.915 on Friday.

Why rushing into the warrant ?


Because once it is confirmed that Insas is on scenario 1, the ultimate minimum target for Insas is Rm 1.80. If conversion price for Warrant-B is Rm1.00, assuming a 10 sens premium (current premium is 38 sens), warrant price can reach 90 sens. From its current 30 sens, the gain will be 60 sens, which is +200%. Whereas for Insas, from its current price of 92 sens to Rm 1.80, the gain is 88 sens, which is only +95%.

With a capital of Rm9,200, investor can buy 10,000 Insas. On reaching Rm 1.80, the profit is Rm8,800. But the same Rm9,200 can buy 30,000 Warrant-B. When Insas is Rm1.80, assuming the price for Warrant-B is Rm0.90, the profit is Rm17,800.

Please remember, higher return means higher risk. When the unexpected happened and market collapsed, it is disastrous to hold warrant.

Lee Swee Kiat Group Bhd (Rm 0.335)

Leesk's long term chart looked very bullish. It has an inverted 'head & shoulder' formation with the 'head' forming a 'double bottom'. It has started to form its major wave 5.


With minimum target of 'one-length H' up, possible target is Rm 0.70.


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