Weekly Update

Dow (27,931)

After a strong surge on Tuesday, Dow started to move side way to lower in the next 3 following days indicating a possible short term correction. There are 3 possible degree of correction.

First possibility is a sub-wave iv correction.

Second possibility is a higher degree wave (vi) correction, assuming major wave 1 is going to have 9 waves.

The third possibility is a 10% major wave 2 pullback.

FBMKLCI (1,564)

KLCI failed to move higher last week. In fact the market went into panic selling on Wednesday triggered by the heavy selling of glove stocks after the announcement by Russian President Vladimir Putin the approval for use of a coronavirus vaccine.

With Wednesday's low creating a possible mini wave 3, KLCI appeared to form a bigger wave (ii) with an A-B-C formation. Last Friday's 11.8 points drop could be the first candlestick of mini wave 5 of C of (ii).

AT Systematization Bhd (Rm0.09)

AT's proposed new venture into glove manufacturing, has a powerful surge on Tuesday to an intra-day high of 17 sens with fantastic volume of 1.09 billion shares. Its stock price was also affected by President Putin's announcement. Its Tuesday surge turned out to be a wave B instead of an anticipated major wave 3's run-up.

On Balance Volume (OBV) of Focus (Rm1.88) and Fintec (Rm0.115)

Focus is a fantastic stock in term of its share price appreciation. From its 2016's low of 2.5 sens, it managed to move to Rm1.98 last Thursday, a 7,920% gain over 4 years. 

From July 15 to August 13, AT moved from Rm1.22 to Rm1.98 for a 62% gain but not with high volume. Average volume during this period was about 3 to 4 million a day. I suspect Focus has already been cornered, there is no much free floating shares in the market.

Looking at the OBV pattern, it is possible that the stock accumulation was started as early as 2011 when OBV was at -ve 300 million. 8 years later by 2019 when share price dropped to 9.5 sens before it started to run, it OBV has reach 1.7 billion. Plus the -ve 300 million, the net OBV was 2 billion. AT's total number of shares is 2.044 billion.

Fintec is holding 25.3% or 517 million Focus share worth Rm970 million at Friday closing price of Rm1.88. Fintec has a total of 1.356 billion share and another 664 million Fintec-PA that can be converted into 332 million Fintec share. After conversion, Fintec will have 1.688 billion shares. 

Going through the OBV of Fintec, there was no sign of stock accumulation until March 2020 when Fintec reached its low of 2.5 sen. Within 4 months by early August, OBV has reached 2 billion, very fast indeed when compared its 4 months to Focus's 8 years of accumulation to reach 1.7 billion.

My main question is whether Fintec has been cornered by now?

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