FBMKLCI - At the tail end of major wave 4

FBMKLCI (1,765)

KLCI rebounded strongly today to form the mini wave iv of wave 5 of c of its major wave 4.

The final mini-wave v of 5 of c is always unpredictable, it can cut short its journey with a failure, it can also have a very damaging final shakeout.

If Dow can hold until 2016 as what Roubini has said, KLCI will have time to complete its major wave 5 next year or may stretch until year after next.

 

 The end of major wave 5 may also mark the end of mega wave (5).

Dow (17,533)

Dow Dropped another 268 points (-1.5%) to 17,533 on Wednesday.  At this point, Dow has the possibility of forming either sub-wave ii, wave (xiv), major wave (6) or mega wave 2.

Based on magnitude comparison, it is possible to rule out sub-wave ii. As I have illustrated previously, at the previous peak of 17,958, wave (xiii) has gained 11.4% which is about the same magnitude as wave (v) (+12%), (ix) (+12%) and (xi) (+11%). At that time I was assuming the mini wave 5 could complete its 5 minor waves of i, ii, iii, iv and v and I gave a projected level of 18,300 for wave (xiii) (+13.5%). But, due to strong downward momentum, wave (xiii) failed at minor wave iii with minor wave v missing.

If I ruled out sub-wave ii, at best, Dow is going for its wave (xiv) for an 8% drop to 16,500 level.

And if Dow goes for its major wave (6) correction, then it is going to be a 15% pullback to 15,250 level.

And of course, the worst case scenario is 'the bubble has burst', then, a minimum drop is about 40% to 10,600 level or a maximum drop of 63.5% to 6,547 level, which is the starting point of mega wave 1 for a 100% retracement.

My current wave count for FBMKLCI should be able to hold if Dow goes for its wave (xiv) correction. However if Dow is forming either its major wave (6) or its mega wave 2, I will have to revise my wave count for FBMKLCI.

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