Dow - 15% pullback in May ?

Dow (20,940)

Dow is likely to form its mini wave 5 next week. If sub-wave v has only five waves and wave (v) also has only five waves, then the end of mini wave 5 will mark the end of sub-wave v, wave (v) as well as the end of major wave 7. Major wave 8 correction is likely to have a 15% or 3,000 points pullback. From its current level of 20,940 to the target level of 21,500, Dow has another 2.3% or 500 points to go.

FBMKLCI (1,768)

If KLCI can move in tandem with Dow for another 2% up, that will bring the index to around 1,800 level before the 15% wave C takes place.

If one really believes that Dow is going to complete its major wave 7 in May and KLCI is going to move in tandem with Dow, the only logical thing to do is to get out slowly within the next two to three weeks.

Pray hard that your stocks in hand can have another surge, the last surge, for you to get out.

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Petrol Price - Ron 95

The price of Ron 95 has gone up for three consecutive weeks from Rm 2.13 a litre to Rm 2.16, to Rm 2.24 and to the current price of Rm 2.27.

Looking at the weekly candlestick chart of crude oil (WTI) price, in the previous week the price of crude oil dropped from US$53.18 a barrel to US$49.62 a barrel. I expect the price of Ron 95 to go lower at the coming Wednesday's announcement.

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Weekly Update

Dow (20,547)

Dow is forming its sub-wave v, which is expected to end in May. My target is 22,000.

If wave (v) has only five sub-waves and if major wave 7 also has only five waves, the next down wave will be the major wave 8.

FBMKLCI (1,756)

KLCI has started its sub-wave v. If wave (iii) has only five sub-waves, the next pullback will be the 15% wave (iv) correction.

EG Industries Bhd (Rm 0.875)

I have no doubt that EG is forming its major wave 5.

But I have been changing my wave count for EG in the last several weeks to take care of EG's latest behaviour. Hopefully my last modification is correct. Activity and volume is expected to pick up as this current run-up is the wave (iii) of 5.

Inari Amertron Bhd (Rm 2.09)

If my wave count for Inari is correct, Its volume should improve greatly next week for its sub-wave iii of wave (iii).

Insas Bhd (Rm 0.925)

Insas is on its way to complete its sub-wave v. My target is Rm 1.10 in May.

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Gadang - A revised wave count.

I need to revise my previous wave count for Gadang with its latest formation of 5 mini down waves. The long-term wave count remains the same - mega wave (1)-(2), major wave 1-2 and wave (i)-(ii)-(iii)-(iv). Since December last year Gadang has been forming its wave (v).

I have revised my wave count for the current wave (v). Under this revised wave count, Gadang has just completed its sub-wave iv and sub-wave v has just started and it is expected to last 3 to 4 weeks.

Another reason that has prompted the revision is the wave form of Gadang-WB.

It is an obvious i-ii-iii-iv formation that I have overlooked.

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US$ to Malaysian Ringgit

Since December 2016, Ringgit has improved slightly from Rm 4.48 to 1 US$ to Rm 4.40 to 1 US$

The exchange rate is expected to move to Rm 4.60 to 1 US$ to complete the sub-wave v as well as major wave 7 of B.

Technically speaking, after completing the wave B, the Ringgit should slowly improved to below Rm 2.90 to 1 UD$ over the next 5 to 10 years to form its wave C.

This is something quite hard to imagine in view of our current economical and political situations in Malaysia. May be, Donald Trump is going to mess up the US economy and the US$ or something great is going to happen in Malaysia with the magic of Mahathir. Don't forget, it was during his time that the Ringgit went as high as Rm 2.40 to 1 US$.

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Weekly Update

Dow (20,453)

The mini wave 1-2 that I mentioned last week turned out to be the wave d-e of sub-wave iv after the 138 points drop on Thursday. Hopefully Dow can start its sub-wave v next week.

FBMKLCI (1,730)

It is possible that KLCI has ended the wave c of its sub-wave iv. Hopefully KLCI can start its sub-wave v next week.

EG Industries Bhd (Rm 0.855)

EG dropped continuously for 5 days from Monday to Friday. With this drop, it becomes necessary to modify my wave count from a a-b-c-d-e major wave 4 to a a-b-c-d-e-X-a-b-c major wave 4 as shown below.

Its correction since mid-February becomes the wave (ii) and is likely to have been completed.

Gadang Holdings Bhd (Rm 1.26)

Gadang is either forming the sub-wave ii of its wave (v) currently

Or it already completed its wave (v) and also its major wave 3. The current correction is the major wave 4.

But personally I feel that this option is less likely because its wave (v) is rather short. But nothing is impossible in stock.

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Inari & Insas - Higher degree correction

Inari Amertron Bhd (Rm 1.97)

Inari has a long red candlestick today and it ruled out my mini wave 6. With this 8 sens down, Inari is either forming its sub-wave ii

OR it is forming its wave (iv).

Insas Bhd (Rm 0.90)

With 3 red candlesticks in a row, even though it is unacceptable technically to have the highest volume for wave b, but it is wave b and wave c of sub-wave iv is in progress.

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Weekly Update

Crude Oil WTI (US$ 52.31)

From its weekly chart, it appeared to me that crude oil is going to have five waves for its wave c. Wave (iv) is going to end above US$ 60.00

Dow (20,656)

Dow is forming the sub-wave v of its wave (v). I expect Dow to complete this sub-wave v by late April or early May.

IF wave (v) has only five sub-waves (i-ii-iii-iv-v) and IF major wave 7 also has only five waves ((i)-(ii)-(iii)-(iv)-(v)), Dow is going to start its 15% pullback for its major wave 8 sometimes in May. All major world markets are expected to drop in tandem, including Bursa Malaysia, unless wave (v) or major wave 7 has more then five waves.

FBMKLCI (1,741)

As what I have mentioned previously, to tie in with Dow's 15% correction, it becomes possible that KLCI's current up-trend is the wave B of its mega wave (6). Wave C of mega wave (6) can have a similar 15% drop.

EG Industries Bhd (Rm 0.91)

Hopefully EG can complete its major wave 5 by early May.

Time is running out for EG, it has to complete its sub-wave iii, iv and v before KLCI starts its 15% correction.

Gadang Holdings Bhd (Rm 1.31)

Gadang is expected to complete its mini wave 3-4-5 within the next 3 to 4 weeks.

Inari Amertron Bhd (Rm 2.04)

Inari's current pullback is likely to be its mini wave 6. It still has mini wave 7, 8 and 9 to complete from now until May.

Insas Bhd (Rm 0.93)

Insas's candlestick and volume on Friday is a big disappointment to me. But it is still possible that Friday's candlestick is the minor wave iv.

But if Dow is going to drop 15% and KLCI is going to move in tandem with Dow, it is more likely that Insas is forming the wave b of its sub-wave iv even though it is not acceptable technically to have the highest volume for wave b.

With this wave count, Insas can move in tandem with the rest IF Dow and KLCI are going for a 15% correction.

BUT how sure are we that Dow is going for a 15% (3,000 points) drop in May?

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Insas Bhd (Rm 0.94) - It is minor wave iii

If the volume (11.4 million) is telling the truth, my bet is - Insas is forming its minor wave iii at the moment.

In technical analysis, we always believe that 'volume precedes price'. Today's volume of 11.4 million accompanied by an OBV breakout is a clear indication for minor wave iii. I have no doubt, BUT, in stock market, there is always this 'BUT' that always trouble me and keep me in suspense.

Earning Vs Price

I used to compile list of companies with good quarterly earnings and monitor their price movement with respect to each other. I arranged then in ascending order according to their latest earnings.

I started to buy using PE, NTA and chart pattern as a guide, and the one with my lowest ranking, JHM, is the star performer. What can I say. You still need player to play up the stock.

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Insas (Rm 0.93) - D-Day tomorrow

Insas continued to move higher today. At the close of the trading session it added another 2.5 sens with 5.90 million shares traded. The volume is much higher than yesterday's volume of 1.36 million.

Based on volume, it is more likely at this juncture that Insas is forming the minor wave iii of its mini wave 3 of sub-wave iii of wave (iii). I expect Insas to form a stronger candlestick tomorrow with volume of 8 to 10 million.

However, based on its current wave form, I still cannot rule out the possibility that it is forming the wave b of its sub-wave iv. Under this scenario, Insas is likely to touch 0.94 tomorrow in the morning, most likely at the opening bell, to be followed by steady decline with shrinking volume and is likely to close in the red.

But it really doesn't matter whether the short-term movement is minor wave iii or wave b of sub-wave iv if we are looking for the completion of its mega wave (5). With a similar 200% gain as mega wave (1) and (3), the target is Rm 1.80 for Insas and Rm 0.80 to Rm 0.90 for Insas-WB. The conversion price for Insas-WB is Rm 1.00.

But, wait for a minute, according to Elliott wave principle, one of the advancing waves has to be an extended wave. If mega wave (1) and (3) gained a more or less similar 210%, it is possible that mega wave (5) is the extended wave. Using Fibonacci ration of 1.618, mega wave (5)'s gain can be 1.618x200% = say 320%.

Then the theoretical target for Insas becomes Rm 2.50 and for Insas-WB the target becomes Rm 1.50, without any premium.

But, please don't get carried away, it is always wise to keep a cool mind. As I have said before, anything can happen in stock market. Insas can have a failure mega wave (5), if Dow started to plunge. Insas can also have a U-turn anytime for any reason or no reason just like Dow that opened Wednesday's trading strongly with close to 200 points gain but had a U-turn in the afternoon and closed with 41 points in the red after FOMC Minutes mentioned that some Fed officials were worried about high equity valuations.

There is another possible wave form for Insas that I did not mention all these while, because I considered it as unlikely. A wave B of mega wave (4) formation.

Unlikely because, with this form, mega wave (4) is out of proportion with mega wave (2) in both duration and magnitude. A failure mega wave (5) corresponding to a plunge in Dow is more acceptable to me.


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