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.