Bursa Malaysia - No other choice except Bear.

FBMKLCI (1,719)

KLCI dropped 56 points today (-3.19%) to confirm the arrival of the bear. At best, we still have a last rebound, the wave (v).

Or it may choose to go all the way to the south with some technical rebound along the way.

If the current correction is a mega wave (6) correction, it will either have a shorter duration sharp 45% pullback to 1050 level or a longer duration but not so deep, say about 25% pullback to form the mega wave (6).

If it is a super wave II correction then it will have to drop to at least the mega wave (4) level.

Industrial Index (3,052)

The Industrial Index dropped 102 points (-3.23%) today. The most likely wave count is an overlapping wave (i)-(ii)-(iii)-(iv)-(v) major wave 5 formation. Similarly it is either forming its mega wave (6) or it is forming its super wave II corrective wave.

Similar to KLCI, its mega wave (6) can either be a shorter duration but bigger magnitude 37.5% pullback or a longer duration complex wave with about 20% pullback.

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Some of the Mega Projects Committed or Proposed

The 'One Belt One Road Initiative' (OBOR) refers to 'The Silk Road Economic Belt and the 21st Century Maritime Silk Road', which is a development strategy rolled out by the Chinese government.

Peninsular Malaysia with Strait of Malacca that handles almost half of the world's total annual seaborne trade tonnage, has a crucial role in this China's initiative.

Ever since China rolled out its OBOR initiative, many countries have received billions of dollars (loans from China) towards infrastructure development more to serve China's objective under the pretext of trade. 

What will China do if a country is unable to service its loan? 

Sri Lanka under such a situation, hands over the strategic Hambantota port (refer to the OBOR map for its location) to China on a 99-year lease in December 2017 when she failed to pay her debt. (China has learnt her Macau's and Hong Kong's lessons from the western power). 

The Najib administration that loved mega projects, took the opportunity to borrow money from China to pay China to build infrastructures to serve mainly China's objectives as well as his objectives. 

Projects related to OBOR committed by Najib so far include the ECRL (Rm54 billion that may finally exceed Rm100 billion), the Melaka Gateway (Rm27 billion), Kuala Linggi Port (Rm11 billion), Penang Port (Rm 5.6 billion) and Kuantan Port (Rm700 million). Yet to be committed is a proposed Carey Island project (Rm100 billion) in a China-MMC joint venture.

Other China projects and investments that are not related to OBOR are the Forest City (US$100 billion), Robotic Future City, Johor (US$3.46), Samalaju Steel Complex (US$3 billion), Land Reclamation Penang (US$540 million), Green Technology Park, Pahang (US$470 million), Methanol Plant, Sarawak (US$190 million) and The Shore, Sabah (US$130 million).

With the Singapore government is the Kuala Lumpur-Singapore High Speed Rail (Rm110 billion) which the PM Dr. Mahathir has announced its cancellation in order to reduce the federal debt that has gone beyond Rm1 trillion.

Bursa Malaysia - My optimistic wave count may end within a day or two

Bursa Malaysia has another bad day. FBMKLCI dropped 21 points (-1.20%) to 1775 and Industrial Index ended the day at 3154, dropping 58 points (-1.82%). Further drop from their respective level may end my optimistic wave counts for both of them.

FBMKLCI (1,775)

My last optimistic wave count for KLCI is as shown below assuming that KLCI is forming its major wave 5 with hopes of moving into uncharted territory

With today's 21 points drop, KLCI has moved very close to the lower trend line.

With another sharp drop tomorrow, I have no other option except to accept the fact that major wave 5 has ended. Next to expect is either a mega wave (6) formation or a higher degree super wave II formation.

Industrial Index (3,154)

At crucial moment, I always like to refer to the Industrial index for confirmation of the major trend for the market. Industrial Index is the oldest index for Kuala Lumpur Stock Exchange, the former name of Bursa Malaysia. The index was known as the 'Straits Times Industrial Index' in the 60's and early 70's. In 1974 it was renamed the 'New Straits Times Industrial Index'.

My long term wave count for the Industrial Index is slightly different from that of the KLCI. My optimistic option for the Industrial Index is still quite inline with that of the KLCI.

At this moment I am assuming that the Industrial Index is at the wave (ii) of its major wave 5.

With today's 58 points drop, the Industrial Index is moving very close to the acceptable 100% retracement for its wave (ii), only 61 points away.

Once it drops below the 3093 level, I will have to abandon this optimistic wave count. Similar to KLCI, there is this 'double top' formation. Just pray hard that the Industrial Index can hold above the 3093 level.

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FBMKLCI - Be very careful, very very careful.

Dow (24,753)

Dow has started its major wave 9. Need no worry at this stage that the market will collapse until Dow has reached the tail end of this major wave 9.

FBMKLCI (1,797)

Until the market closed on Friday, KLCI managed to stay above the lower trend line. If it can start to move higher next week to form its sub-wave v, there may not be any major correction until the major wave 5 is completed.

After the completion of the major wave 5, a not so damaging scenario is a 17% major wave 6 pullback if the mega wave (5) has 9 waves.

But if the mega wave (5) has only 5 waves, then the higher degree mega wave (6) correction can be very damaging, it is going to be a 45% pullback.

Going back to the 5-year chart.

If KLCI instead of moving higher next week, for some reasons, it punches through the lower trend line and continues to move lower and lower breaking the 1,720 level, very likely the major wave 5 as well as the mega wave (5) have ended. The best outcome that it can have is a mega wave (6) correction with a 45% pullback.

It is a 'double-top' reversal. With major wave 5 at the same level as its major wave 3, it can not have a major wave 6 (-17%) correction.

FBMKLCI (1,775) - What's next

KLCI dropped another 28 points on Thursday and has punched through the 1792 level that I mentioned yesterday and it has another 5 points to go before dropping below the last line of defence, the lower trend line.

If it can hold above 1770 level, it is still possible that KLCI is on its sub-wave iv correction that I mentioned yesterday.

However if KLCI were to have another sharp drop tomorrow, I would say, major wave 5 as well as the mega wave (5) have ended.

Under this circumstances, the best that I can hope for is a mega wave (6) correction of around 45% to 1050 level.

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FBMKLCI plunged 40 points (-2.2%)

How not to plunged?

Can KLCI hold above the top of sub-wave i at around 1792 level?

If can hold, KLCI is on its sub-wave iv. KLCI is half way through its major wave 5.

If  KLCI goes below 1792 level I will have to see what are the other possible options.

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Crude Oil WTI (US$ 72.19) - Heading for US$ 85.00

Crude oil WTI continues with its wave D formation.

It is likely to hit US$85.00 before turning south to complete its wave E. When WTI reaches US$85.00, brent crude is likely to reach US$95.00.

Miscellaneous

I guess he was talking about BN.

"It looks like me and sounds like me"

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Dow gained 298 points to 25,013

Dow moved up strongly on Monday when the US and China came to an agreement to drop their tariff threats.

The close to 1.2% gain has practically shorten both the duration and magnitude of its sub-wave ii. Or can this be a lower degree correction?

By assuming that sub-wave ii has ended, Dow has formed the first candlestick of its sub-wave iii.

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Weekly Update

Dow (24,715)

Dow continues with its major wave 9 formation.

FBMKLCI (1,854)

As I have explained in my early posting, very likely KLCI is forming its sub-wave iv.

Insas Bhd (Rm 0.855)

Insas has started its major wave 5 formation.

EG Industries Bhd (Rm 0.51)

EG is forming its wave iv of C.

Priceworth International Bhd (Rm 0.275)

Pworth has completed its major wave 2 with an intraday low of 15 sens on the first trading day after the GE14. It is forming its major wave 3 at the moment.

Pworth will be having its EGM on next Tuesday (22/5/2018) to approve the proposed acquisition of Rumpun Capaian Snd Bhd  and the proposed Rights (2 for 1 @ 5 sens each) and Bonus Issue (1 for 2 rights subscribed).

Miscellaneous

It appeared to me that this gentleman is still don't understand why his party has lost the GE14.

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What is Malay Mail up to ?

Another dirty work from the Malay Mail.

At a glance, it gives the readers the impression that those words were from Dr. Wan Azizah. But the details from the reports on what Dr. Wan Azizah has actually said was more on what they are going to do, what they are doing and what they have done in the last few days.

Click 'Malay Mail Reports' for the original reports.

Can she sue the Malay Mail?

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Latest development

The 'Institutional Reforms Committee' was set up to help bring about the badly needed institutional reform.

I feel good.

I have been feeling so nice, relaxing and wonderful since May 10. Why? No more living under the 'rule' of UMNO dude 😄.

Hopefully the new government will be fair, clean and transparent. Hopefully no more leakage and this should be good for the ringgit, economy and the stock market in longer term. Who know ringgit might ultimately go back to those good old days of Rm2.50 to 1 USD.

Dow (24,831)

Dow managed to break the upper channel line on last Wednesday and continued to move high in the following two trading days.

Wave E is usually highly unpredictable. It can either 'fall short' or 'over shoot'. In this case it has chosen the 'fall short' to end its major wave 8. A weak major wave 9 is likely to reach the minimum target of 26,600 to form a 'double-top' reversal pattern. Dow can also end its major wave 9 with an euphoric run-up to unprecedented territory before the bubble burst.

FBMKLCI (1,846)

KLCI can be  'easily manipulated' by moving the prices of a few 'heavy weights'. You might have observed that quite often the index could be moving higher but there were more losers than gainers and vice versa.

By comparing the last 6 months FBMKLCI chart with the Industrial Index, you can see that something is not right.

At this moment KLCI is slightly lower than its record high and yet there are many stocks that have dropped more than 50% from their heights.

Now, for the first time since independence (1957), the BN/UMNO has collapsed and Pakatan Harapan under the leadership of Dr. Mahathir has taken over Putra Jaya. I expect a volatile market in the short term. But under the Pakatan Harapan, I expect both the currency and the economy to improve in longer term.

I have a few possible wave counts for KLCI that I have mentioned two months ago. At this moment I tend to go for the more bullish option - KLCI has not yet completed its major wave 5.

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