Due For Correction?

Malaysia’s FBMKLCI index has recently fallen in line with the overall global equity weakness (due to political uncertainties in the US). Is it due for correction?

On a daily chart, FBMKLCI appears to be on an overall uptrend, with multiple minor pullbacks. The likelihood for further correction or downtrend will be higher if the trend breaks below the support zone around 1,728 points.

day.jpeg

On a higher time frame (weekly), it appears that the downside risk may not be significant. Nevertheless, consistent with the lower time frame (daily), the support zone around 1,728 will be a test for FBMKLCI whether it can stay above that level.

weekly.jpeg

Fundamentally, FBMKLCI’s trailing P/E is more than 18 time mark, which represents the highest trading P/E  since Jan 11. Potential signal for overvaluation?

FBMKLCI PER.png

To sum up the observations, technically, the momentum uptrend for FBMKLCI may be intact but fundamentally, there may be risk of overvaluation. One should be aware for any potential “flash crash” resulting from global political uncertainties.

DISCLAIMER: THIS IS A PERSONAL BLOG AND SHALL NOT BE RELIED IN WHATSOEVER MANNER BY ANYONE. ALL ARTICLES CONTAINED IN THIS SITE ARE FOR INFORMATION AND ILLUSTRATIVE PURPOSES ONLY AND DOES NOT PURPORT TO SHOW ACTUAL RESULTS. IT IS NOT, AND SHOULD NOT BE REGARDED AS INVESTMENT ADVICE OR AS A RECOMMENDATION REGARDING ANY PARTICULAR SECURITY OR COURSE OF ACTION. SOURCES USED IN THIS SITE HAVE NOT BEEN INDEPENDENTLY VERIFIED FOR ACCURACY, COMPLETENESS AND TIMELINESS. YOU SHOULD SEEK INDEPENDENT AND PROFESSIONAL INVESTMENT ADVICE IN REGARD TO YOUR INVESTMENT DECISIONS. THE AUTHOR MAY HOLD POSITIONS IN THE SECURITIES MENTIONED IN THE ARTICLES.

Author: Ken Utau

Data Scientist, Markets Analyst and Food Lover

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