Malaysia’s FBMKLCI appears “over-extended”, with so many free bars above the upper-band of the Keltner Channel. It is observed that there is some extent of negative divergence as per the modified MACD.

TA_KLCI_Jan18.jpeg

Statistically….

One may consider assessing whether an equity index is overstretched by benchmarking its current valuation multiple against its historical long term average multiple.

One may also consider inter-market analysis. I intend to undertake an updated regression analysis by comparing the FBMKLCI against the movements in MYRUSD and Brent (USD)

Three Graphs Comparison.png

Based on a simple desktop regression analysis, it appears that the FBMKLCI index (actual value: 1,803, as of 4 Jan 2018) is relatively over-extended if compared to its current forecast value of 1,739 but nevertheless, it is within its 95%-interval range of between 1,648 and 1,831.

KLCI_RegressionAnalysis

 

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