This article first appeared in The Edge Financial Daily, on October 30, 2015.

US equity markets rose on Wednesday as investors bought up shares after the US Federal Reserve left interest rates unchanged at its October Federal Open Market Committee meeting. The S&P 500 Index gained 24.46 points to 2,090.35 points, while the Dow surged 198.09 points to end at 17,779.52.

In Malaysia, the FBM KLCI Index moved in a weaker range of 48.97 points for the week with lower volumes of 1.89 billion to 2.17 billion shares traded. The index closed at 1,666.98 yesterday, down 19.53 points from the previous day as blue-chip stocks such as British American Tobacco (M) Bhd, CIMB Group Holdings Bhd, Genting (M) Bhd, Hong Leong Bank Bhd, Kuala Lumpur Kepong Bhd, and Petronas Dagangan Bhd caused the index to decline on liquidation activities. The ringgit was much weaker against the US dollar at 4.2960, despite Brent crude oil being firmer at US$46.55 per barrel.

The index rose on a rally from a low of 801.27 low (October 2008) to an all-time high of 1,896.23 (July 2014) and it represents an extended Elliott Wave “flat” rebound in a “pseudo-bull” rise completed. The next few months’ index price movements since July 2014 comprised key swings of 1,837.28 (low), 1,879.62 (high), 1,766.22 (low), 1,858.09 (high), 1,671.82 (low), 1,810.21 (high), 1,706.18 (low), 1,831.41 (high), 1,774.30 (low), 1,867.53 (high), 1,685.03 (low), 1,744.19 (high), 1,503.68 (low), 1,691.93 (high), 1,595.22 (low) and 1,727.41 (high).

The index’s daily signals have turned somewhat negative, with its CCI, DMI, MACD and stochastic indicators showing obvious “sell” signals. Its oscillator, however, depicts a marginally positive “buy” signal. As such, the index’s weaker support levels are seen at the 1,567, 1,595 and 1,660 levels, while profit-taking at the resistance areas of 1,666, 1,700 and 1,727 will cap the index’s advances.

The FBM KLCI’s 18-day and 40-day simple moving averages (SMA) depict a “neutral” trend for its short-term daily chart. The index’s price bars are now between the 50-day and 200-day SMA. This depicts a neutral phase for the FBM KLCI in the medium term.

The index had just broken a bearish “rising wedge” pattern, which has a medium-term downside target of 1,520. Despite the sluggish decline of about 10 points daily on Tuesday and Wednesday, we expect the FBM KLCI’s trend to accelerate towards the downside in the coming weeks.

Due to the softer tone for the FBM KLCI Index, we are recommending a chart “sell” on DiGi.Com Bhd (DiGi). A check on the Bloomberg consensus reveals that 31 research houses cover the stock, with seven “buy” calls, 12 “hold” calls and 12 “sell” calls.

Maybank Investment Bank Bhd’s analyst has a “hold” call on DiGi with a target price of RM5.40 as its third quarter of financial year 2015 (3QFY15) net profit of RM397 million brought the nine-month FY15 (9MFY15) net profit to RM1.34 billion, which was below market expectations. DiGi’s revenue was expected to rebound in 3QFY15 after the industry suffered from the twin effects of both the goods and services tax execution issues and intense price cuts in 2Q15. However, the service revenue remained flat, suppressed by intense prepaid competition. Margin pressure could persist in the next few quarters due to the weak ringgit.

DiGi’s chart trend on the daily and weekly time frames is very firmly down. Its share price made an obvious plunge since its major weekly Wave-5 high of RM6.44 in February 2015. Since that RM6.44 high, DiGi fell to its August 2015 recent low of RM4.86.

As prices broke above its recent key critical support levels of RM5.68 and RM5.62, look to “sell” DiGi on any rallies to its resistance areas as the moving averages depict a very firm short- to medium-term downtrend for this stock.

The daily and weekly indicators (like the CCI, DMI, Oscillator and Stochastic) have issued clear “sell” signals and now depict firm indications of DiGi’s eventual plunge toward lower levels. It would attract firm selling activities at the resistance levels of RM5.23, RM5.62 and RM5.68. We expect DiGi to witness weak buying at its support areas of RM4.86, RM4.95 and RM5.19. Its downside targets are located at RM4.92, RM4.57 and RM4.36.

Lee Cheng Hooi is the regional chartist at Maybank Kim Eng. The views expressed in the article are the opinions of the writer and should not be construed as investment advice. Please exercise your own judgment or seek professional advice for your investment decisions. Technical report appears every Wednesday and Friday.