Bursa Malaysia Technical Analysis & Stock Trading: 2010

Tuesday, September 28, 2010

Airasia, XDL, Supermx

The KLCI broke above the 1370 level, and now heading to 1400 psychological resistance level. With the broad market trending up, many counters are also forming uptrend, some are breaking new highs. But should investors take profit now? Or should they continue to ride with the uptrend? Here are some case studies.

Airasia – 5099: 32 months new high.

Chart 1: Airasia – 5099 (28/04/2010～18/08/2010)

As shown on chart 1, price of Airasia rebounded from the 14, 21 ,31 EMA (Exponential Moving Average – EMA ) on the 13th of August, and later resumed its uptrend, breaking above the RM1.70 level, making a 32 months new high.

However, after breaking above the RM1.70 level, price of Airasia failed to continued its rally, and started to move sideways. But still, based on the analysis of chart 1, the uptrend of Airasia is still intact, with the 14, 21, 31 EMA still serving as the dynamic support. Therefore, it is a good idea to hold on the the position as long as the price of Airasia is above the 14, 21, 31 EMA, until price should break below the 14, 21, 31 EMA, it would be a signal to cut loss or to take profit.

As for investors whom are interested in taking up position, the ideal entry point would be a higher-low, above the 14, 21, 31 EMA with strong volume, and immediately after buying, he or she should apply the 14, 21, 31 EMA as a trailing stop reference. Nonetheless, resistance for Airasia is at RM1.72~RM1.75 level.

4 Q Rolling PER	6.8 times	Dividend Y ield	0%
Dividend		Dividend Yield	Net Profit Ratio
31/12/2009	0 sen	0 %	17.27 %
31/12/2008	0 sen	0 %	-17.87%
31/12/2007	0 sen	0 %	38.90 %
31/12/2006	0 sen	0 %	31.07 %
31/12/2005	0 sen	0 %	10.25 %

Table 1: Airasia – 5099, yearly dividend, dividend yield, and net profit ratio.

XDL – 5156: Correction during an uptrend.

Chart 2: XDL – 5156 (28/04/2010～ 18/08/2010)

As shown on chart 2, price of XDL formed an uptrend, marked T1, while continue being supported by the 14, 21, 31 EMA. Thus the 14, 21, 31 EMA is also serving as the dynamic support for XDL.

Despite price of XDL retreated after hitting a resistance at RM0.515, the uptrend remains unaffected, as long as price of XDL could remain above the 14, 21, 31 EMA or the T1 uptrend line. In fact, if price should rebound from the 14, 21, 31 EMA or the T1 line and form a higher-low, with volume, it would be another buy signal, for the uptrend is likely to continue. But immediately after buying, investors should apply the 14, 21, 31 EMA as the trailing stop reference.

However, on the other hand, if price should break below the 14, 21, 31 EMA or the T1 line after this technical correction, it means that the uptrend is violated, and therefore, is is a signal to take profit or the cut loss. This is to avoid being caught by the falling of price. Resistance for XDL is at RM0.515 while the support is at RM0.42.

Leading PER

2.69 times

Dividend

Yield

0.00%

Dividend

Dividend Yield

Net Profit Ratio

31/12/2009

0 sen

17.77 %

Table 2: XDL – 5156, yearly dividend, dividend yield, and net profit ratio.

Supermx – 7106: Breaking below long term uptrend.

Chart 3: Supermx – 7106 (28/04/2010～18/08/2010)

As shown on chart 3, price of Supermx was staying above the T1 line for quite a long time, gaining about RM5.80 or 860%. As indicated by A, price of Supermx broke below the T1 uptrend line, suggesting that the T1 uptrend is no-long valid. Meanwhile, price of Supermx also broke below the 14, 21, 31 EMA, thus the 14, 21, 31 EMA is now serving as the dynamic resistance, and the immediate technical outlook for Supermx is on the negative side.

Technically, as long as the price of Supermx is below the 14, 21, 31 EMA, the outlook shall expected to be bearish biased, despite the price is getting lower. It is important to know the high risk of trying to catch the bottom, or buying too early.

Investors are urge to identify the characteristic of an uptrend, which is higher-low and new high. But if price should stay in a downtrend, its characteristic would be a lower-high and new low. Therefore, a disciplined investors would only buy with the uptrend characteristic, not because of the relatively lower price. Nevertheless, support for Supermx is at RM5.22 while the resistance is at the 14, 21, 31 EMA dynamic resistance as well as the RM6.00 level.

4 Q Rolling PER	9.14 times	Dividend Yield	2%
Dividend		Dividend Yield	Net Profit Ratio
31/12/2009	11 sen	2.01 %	15.29%
31/12/2008	3.25 sen	4.06 %	5.58%
31/12/2007	1.9 sen	0.63 %	13.85%
31/12/2006	6.5 sen	1.56 %	10.49%
31/12/2005	6.5 sen	1.46 %	12.74%

Table 3: Supermx – 7106, yearly dividend, dividend yield, and net profit ratio.

Conclusion:
Even though the broad market is trending up, investors would still have to honor their trading plan for individual counters. When price breaks below an uptrend, a logic thing to do is to take profit or to cut loss, to avoid being caught by the downtrend. Remember, never try to catch the bottom thinking that it is the lowest price.

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Maybank, Genting, AMMB

Lead by selective heavy weighted blue chips, the FBM KLCI broke above the 1370 hurdle and now testing the 1400 psychological resistance level. Due to the quick rally of the KLCI, many counters are getting over-heated. As a result, when the KLCI is getting near the 1400 level, investors are cautiously taking profit. Let's study some counters with over-heated conditions.

Maybank - 1155: Over-heated.

Chart 1: Maybank - 1155 (28/04/2010 ~ 18/08/2010 )

As shown on chart 1, price of Maybank broke above the Bollinger Middle Band on the 16th of August, and had a sharp rally, touching the RM8.00 height, making a new high since the 5th of March. As circled at A, with price of Maybank breaking above the 20-day Bollinger Upper band, this suggests that the short term movement of Maybank is over-heated.

Technically, it is not a good level to buy when the stock price is over-heated. This is because when a stock price rally is over-heated, there will be profit taking activities to pull down the price, called pull back effect, which is a form of a technical correction. However, this does not mean that the uptrend is over, it is merely a short term correction or a consolidation.

If price of Maybank should consolidate above the 14, 21, 31 EMA, or the Bollinger Middle Band, this suggests that the uptrend is still intact, and therefore, for investors who had bought their this share, it is a good idea to hold on to their position. As for investors who are interested to take up any position, the ideal entry point would be a formation of higher-low above the 14, 21, 31 EMA, with strong volume. However, immediately after buying, investors should apply the 14, 21, 31 EMA as a trailing stop reference. Immediate resistance for Maybank is at RM8.00 while the next resistance is seen at RM9.00.

4 Q Rolling PER	34 times	Dividend Yield	1%
Dividend		Dividend Yield	Net Profit Ratio
30/06/2009	8 sen	1.36 %	3.93%
30/06/2008	52.5 sen	7.45 %	18.13%
30/06/2007	80 sen	6.67 %	20.95 %
30/06/2006	85 sen	7.94 %	22.07 %
30/06/2005	102.5 sen	9.4 %	22.31 %

Table 1: Maybank - 1155, yearly dividend, dividend yield, and net profit ratio.

Genting – 3182: Expected a Pull-back effect.

Chart 2: Genting – 3182 (28/04/2010 ~ 18/08/2010)

As circled by A, price of Genting broke above the 20-day Bollinger Upper Band after 3 consecutive sharp rally. Technically, when a stock rallied, breaking above and entirely away of the 20-day Bollinger Upper band, it is a sign of an over-heated condition, thus implying that a pullback effect is likely to take place in the near future, as a form of a technical correction.

Although a pullback is expected, the uptrend of Genting is unaffected, as it is still supported by the 14, 21, 31 EMA dynamic support. In other words, for investors who had bought this share, it is a good idea to hold on the position provided that the stock price is still above the 14, 21, 31 EMA, until price should break below the 14, 21, 31 EMA, then it is a signal to cut loss or to take profit.

As for investors who are interested in taking up position on Genting, an ideal buy signal would be a formation of a higher-low after the pullback effect, and the higher lower formation should be above the 14, 21, 31 EMA, together with a strong volume. After buying, he or she shall apply the 14, 21, 31 EMA as the trailing stop reference immediately. Nonetheless, resistance for Genting is seen at RM 9.00 level.

4 Q Rolling PER	30.82 times	Dividend Yield	0.81 %
Dividend		Dividend Yield	Net Profit Ratio
31/12/2009	7.2 sen	1.14 %	11.74%
31/12/2008	7 sen	1.89 %	6.27%
31/12/2007	37 sen	0.98 %	12.15%
31/12/2006	32 sen	0.97%	21.66%
31/12/2005	29 sen	1.36 %	22.86%

Table 2: Genting – 3182, yearly dividend, dividend yield, and net profit ratio.

AMMB – 1015: Uptrend, over-heated.

Chart 3: AMMB – 1015 (28/04/2010 - 18/08/2010)

As circled at A, price of AMMB had a sharp rally, breaking above the 20-day Bollinger upper band, and signaled an over-heated condition, as the stock price of AMMB is totally away from the 20-day Bollinger Upper band. Generally, investors are likely to take profit and the profit taking activities could lower the stock price as a pullback effect.

Despite the over-heated condition, the uptrend of AMMB remains intact, and a pullback effect is only a form of technical correction, or a beginning of a consolidation. Provided that price of AMMB is still supported by the 14, 21, 31 EMA, with strong volume, the uptrend is expected to resume. However, if price of AMMB should break below the 14, 21, 31 EMA after the pullback effect, it would be a signal suggesting that the uptrend is violated. Nevertheless, resistance for AMMB is at RM5.50~RM5.55, while the support is at the 14, 21, 31 EMA dynamic support.

4 Q Rolling PER	14.69 times	Dividend Yield	1.91 %
Dividend		Dividend Yield	Net Profit Ratio
31/03/2009	10.5 sen	2.10 %	14.77%
31/03/2008	8 sen	3.07 %	14.69%
31/03/2007	6 sen	1.74 %	11.13%
31/03/2006	5 sen	1.33 %	-3.38%
31/03/2005	4 sen	1.77 %	7.34%

Table 3: AMMB – 1015, yearly dividend, dividend yield, and net profit ratio.

Conclusion:
Whenever a stock price breaks above the 20-day Bollinger Upper Band (especially for blue chip counters), it is a sign of an over-heated condition, suggesting that a pullback effect is likely to take place in the near future as a form of a technical correction. However, this does not mean that the uptrend will be violated. If the stock price should consolidate after the pullback or rebound from the dynamic support, the uptrend is still unaffected.

MYEG, TIMECOM, RANHILL

Whether the stock price is trending up or consolidating, investors must have a logic trading plan. When a stock price is consolidating sideways, it is usually better to monitor the consolidation with the Bollinger Bands, and when a stock is trending, the 14, 21, 31 EMA is more effective. Not only the trading will help investors reduce their trading risk, it also help preserve the trading profit by using trailing stop. Here are some case studies.

MYEG – 0138: Weakening after a consolidation.

Chart 1: MYEG – 0138 (21/04/2010～11/08/2010)

As shown on chart 1, price of Myeg entered a consolidation stage, with the Bollinger Bands contracting. Technically, when t he Bollinger Bands contract, it does not only suggests a consolidation but also implying that a new movement is being conceived, but only the Bollinger Bands should re-expand, then we shall identify the direction of the new movement.

As indicated by A, the Bollinger Bands re-expanded after contracted for a period, this suggested an end to the consolidation and a beginning of a new movement. Unfortunately, price of Myeg fell below the Bollinger Middle Band when the Bollinger Bands expands, thus giving a bearish signal. If the Bollinger Bands should continue to expand while the price is still below the Bollinger Middle Band, more downside movement is likely. Thus investors should take caution with this signal. Nevertheless, support for Myeg is at RM0.70 and the resistance are at the Bollinger Middle Band as well as RM0.80.

4 Q Rolling PER	22.97 times	Dividend Yield	2.48%
Dividend		Dividend Yield	Net Profit Ratio
30/06/2009	1.82 sen	4.18 %	32.77 %
30/06/2008	2 sen	2.21 %	29.99%
30/06/2007	0 sen	0 %	27.71 %
30/06/2006	0 sen	0 %	31.07 %

Table 1: MYEG – 0138, yearly dividend, dividend yield, and net profit ratio.

Timecom – 5031: Consolidating in an uptrend.

Chart 2: Timecom – 5031 (21/04/2010～ 11/08/2010)

As shown on chart 2, price of Timecom returned to its uptrend after breaking above the 14, 21, 31 EMA on the 9th of July. Until now, it has gained up to RM0.27 or 59%. During this rally, price was firmly supported by the 14, 21, 31 EMA, which serves as the dynamic support.

Although the uptrend is still intact, price retreated after it found a resistance at RM0.725. When price is having a correction, the target would be at the 14, 21, 31 EMA. If price could rebound from the 14, 21, 31 EMA again, then there is a good chance that the uptrend would resume by forming another higher-low, which is an important characteristic of an uptrend.

On the other hand, if price should break below the 14, 21, 31 EMA after this correction, it would break the uptrend, thus a signal to take profit. Nevertheless, due to the poor fundamental of Timecom, this counter is quite speculative in nature, thus not suitable for conservative and in-experienced investors. Support for Timecom remains at the 14, 21, 31 EMA, while the next support is at RM0.60.

4 Q Rolling PER	18.71 times	Dividend Yield	0.00%
Dividend		Dividend Yield	Net Profit Ratio
31/12/2009	0 sen	0%	11.54 %
31/12/2008	0 sen	0%	-331.43%
31/12/2007	0 sen	0%	-53.37 %
31/12/2006	0 sen	0%	-53.01%
31/12/2005	0 sen	0%	-51.94%

Table 2: Timecom – 5031, yearly dividend, dividend yield, and net profit ratio.

Revision of Last week's Case Study: Ranhill – 5030: Correction in an uptrend.

Chart 3: Ranhill – 5030 (21/04/2010～11/08/2010)

As shown on chart 3, price of Ranhill touched its recent high of RM0.875, but due to profit taking activities, price of Ranhill was pulled back, and now testing the 14, 21, 31 EMA dynamic, as indicated by A. This is an important support level.

If price could rebound from the 14, 21, 31 EMA, with strong volume, then there is a good chance that the uptrend could resume, and the 14, 21, 31 EMA shall continue serving as the dynamic support. Then, it is a good idea to hold on to this stock, provided that the uptrend is still intact.

On the other hand, if price should fall below the 14, 21, 31 EMA, then the uptrend would have been violated, and it would be a signal to take profit or to cut loss, so that investors could avoid being trapped by the downtrend. Support for Ranhill is at RM0.77 while the resistance is at RM0.875.

4 Q Rolling PER	1.81 times	Dividend Yield	1.28%
Dividend		Dividend Yield	Net Profit Ratio
30/6/2009	1 sen	1.10%	10.29%
30/6/2008	0 sen	0%	-36.75%
30/6/2007	0 sen	0%	7.92%
30/6/2006	1.5 sen	1.16%	-0.89%
30/6/2005	1.5 sen	1.19%	2.22%

Table 3: Ranhill – 5030, yearly dividend, dividend yield, and net profit ratio.

Conclusion:
The Bollinger Bands and the 14, 21, 31 EMA are both primary indicators, and it is used extensively for their reliability. However, investors should know their strength and weakness, and when to apply one or the other.

TGOFFS, SIME, KINSTEL

After being resisted by the 1370 level, the FBM KLCI pulled back gently, while mostly consolidating in a sideways manner. At the same time, total market volume started falling suggesting that most investors are being careful while waiting on the sidelines for a clearer market direction. As the broad market consolidates, many individual counters also had a correction. Technically, it is usually not a good time to buy during a technical correction, for one could very well be buying to the end of the uptrend. Therefore, the most idea entry point would be to wait until price rebound, and form a higher low, with strong volume.

TGOFFS – 7228: Testing 15 months new high.

Chart 1: TGOFFS – 7228 (21/04/2010 ~ 11/08/2010 )

As shown on chart 1, TGOFFS broke above the 14, 21, 31 EMA on the 31st of May, and since then, it has been trendind up, gaining up to RM0.65 or 60%. During this uptrend, the 14, 21, 31 EMA was firmly supporting price of TGOFFS and therefore, the 14, 21, 31 EMA is still the dynamic support as well as the trailing stop reference for TGOFFS.

Currently, price of TGOFFS is resisted by RM17.20 level, and this is also a peak on the 12th of June, 2009. Therefore, this is likely to be a strong resistance level, for the negative memory of this level for most investors are still intact.

Nevertheless, for investors who are holding and already making profit, it is a good idea to hold on to the position as long as price of TGOFFS is still supported by the 14, 21, 31 EMA. If price should break below the 14, 21, 31 EMA, it would be a signal to take profit or to cut loss. As for investors looking to take up new position, he or she would have to wait until a formation of a higher-low with strong volume, then if they should buy based on the above formation of higher-low, they should apply the 14, 21, 31 EMA as a trailing stop reference immediately.

Leading PER	33.61 times	Dividend Yield	1.56%
Dividend		Dividend Yield	Net Profit Ratio
31/12/2009	0 sen	0 %	0.75%
31/12/2008	6 sen	6.52 %	5.57%
31/12/2007	0 sen	0 %	5.47 %
31/12/2006	3 sen	1.01 %	6.23 %
31/12/2005	3 sen	1.52 %	7.83 %

Table 1: TGOFFS – 7228, yearly dividend, dividend yield, and net profit ratio.

Sime – 4197: Downtrend, testing important support.

Chart 2: Sime – 4197 (21/04/2010 ~ 11/08/2010)

Despite the KLCI started picking its strength after the world cup, Sime, on the other hand, was trending lower. Currently, price of Sime is testing the RM7.50 support level. If price should break below this level, it would be making a 13 months new low, which means those investors who have bought Sime within this 13 months and are still holding their shares, would be making a loss, or turning their profit into losses, regardless of their entry level. Thus it would create more selling pressure as all these investors are making losses, with the intention to break-even.

Technically, provided that the price is below the 14, 21, 31 EMA, the technical outlook shall remains weak. An ideal buy signal would be a break out above the 14, 21, 31 EMA, and later forming a higher low above the 14, 21, 31 EMA with strong volume. Nonetheless, if price of Sime should break below RM7.50, the next support is at RM7.00.

4 Q Rolling PER	22.55 times	Dividend Yield	2.67 %
Dividend		Dividend Yield	Net Profit Ratio
30/06/2009	20.30sen	2.92 %	7.35%
30/06/2008	49.00 sen	5.30 %	10.32%
30/06/2007	30.20 sen	3.15 %	7.26%
30/06/2006	30.00 sen	5.45%	5.56%
30/06/2005	26.00 sen	4.48 %	4.30%

Table 2: Sime – 4197, yearly dividend, dividend yield, and net profit ratio.

Revision of last week's case study: Kinstel – 5060: Pullback and testing dynamic support.

Chart 3: Kinstel – 5060 (21/04/2010 - 11/08/2010)

As shown on chart 3, price of Kinstel broke above the RM0.865 resistance level on the 2nd of August, but it met its new resistance at RM0.935~RM0.93 level. Then, price retreated as investors took profit, and now testing the 14, 21, 31 EMA. Technically, if price could rebound from the 14, 21, 31 EMA, it would form a higher-low, thus the uptrend could resume.

During this correction, volume traded on Kinstel were lower, compared to its rally, thus suggesting that the profit taking was rather mild, and there were no panic selling activities. Investors should follow their trading plan by using the 14, 21, 31 EMA as a trailing stop reference, and if price should break below the 14, 21, 31 EMA, it would be a signal to take profit.

As for those who are interested in taking up new positions, an ideal buy signal would be a formation of a higher-low with strong volume, in which price should rebound above the 14, 21, 31 EMA. And upon buying, he or she should apply the 14, 21, 31 EMA as a trailing stop level.

4 Q Rolling PER	11.35 times	Dividend Yield	1.09 %
Dividend		Dividend Yield	Net Profit Ratio
31/12/2009	1 sen	1.01 %	0.95%
31/12/2008	1.7 sen	4 %	1.52%
31/12/2007	1.7 sen	1.27 %	6.38%
31/12/2006	7.5 sen	4.6 %	35.60%
31/12/2005	5 sen	5.49 %	3.57%

Table 3: Kinstel – 5060, yearly dividend, dividend yield, and net profit ratio.

Conclusion:
In conclusion, due to the technical correction of the KLCI, many counters were affected. However, to sustain a healthy uptrend, a reasonable correction is needed after a strong rally. This is because corrections will “wash out” selling pressure from profit taking and it will provide rooms for more upside gains.

Thursday, September 2, 2010

Airasia, Genting, Ranhill

After breaking above 1350 level, the KLCI had its high reaching its resistance at 1370. At this time, many individual counters gained strength, some breaking away from their downtrend, some extended their uptrend. We will show some of these examples in this week's case study.

Airasia – 5099: Uptrend consolidation.

Chart 1: Airasia – 5099 (14/04/2010～5/08/2010)

Ever since price returned to above the 14, 21, 31 EMA in July, it formed an uptrend, with the 14, 21, 31 EMA serving as the dynamic support.

Despite a couple times of having a correction, price of Airasia remained above the rising 14, 21, 31 EMA, thus the uptrend is still intact.

As shown on chart 1, immediate resistance for Airasia is at RM1.55 level, and after being resisted by the RM1.55 resistance, price did not react negatively but was only moving sideways, which suggests that the selling pressure was low, and generally, a positive sign.

If price should rebound from the 14, 21, 31 EMA, with strong volume, it would form another higher-low, which suggests a continuation of the uptrend, it would be a buy signal. If one should buy with this signal, he or she has to apply the 14, 21, 31 EMA as the trailing stop reference immediate after buying. And as long as price could stay above the 14, 21, 31 EMA, he or she should hold, until price should break below the 14, 21, 31 EMA, then it would be a signal to take profit or to cut loss. Next resistance for Airasia is seen at RM1.62～RM1.65.

4 Q Rolling PER	6.41 times	Dividend Yield	0%
Dividend		Dividend Yield	Net Profit Ratio
31/12/2009	0 sen	0 %	17.27 %
31/12/2008	0 sen	0 %	-17.87%
31/12/2007	0 sen	0 %	38.90 %
31/12/2006	0 sen	0 %	31.07 %
31/12/2005	0 sen	0 %	10.25 %

Table 1: Airasia – 5099, yearly dividend, dividend yield, and net profit ratio.

Genting – 3182: Uptrend remains.

Chart 2: Genting – 3182 (14/04/2010～ 05/08/2010)

Since breaking above the 14, 21, 31 EMA on the 31stof May, Genting resumed its uptrend, an until now, the uptrend is still intact, gaining about RM1.23 or 18%. As shown on chart 2, immediate resistance of Genting is at RM8.07, and despite a technical correction, the 14, 21, 31 EMA dynamic support remains intact.

If price should rebound from the 14, 21, 31 EMA with strong volume, there is a good chance for Genting to re-test or even to break above the RM8.07 resistance. If price should break above the RM8.07, it would be making a 32 months new high. As for investors who are holding this stock, it is a good idea to keep it as long as the price is still staying above the 14, 21, 31 EMA. If price should break below the 14, 21, 31 EMA, it would be a signal to take profit or to cut loss.

As for investors who are interested to buy, he or she has to wait for the next higher-low above the 14, 21, 31 EMA, preferably with strong volume. Then, immediately after buying, he or she shall apply the 14, 21, 31 EMA as the trailing stop reference. Next resistance for Genting is seen at RM8.50

4 Q Rolling PER	27.45 times	Dividend Yield	0.91%
Dividend		Dividend Yield	Net Profit Ratio
31/12/2009	7.20 sen	1.14 %	11.74 %
31/12/2008	7 sen	1.89 %	6.27 %
31/12/2007	37 sen	0.98 %	12.15 %
31/12/2006	32 sen	0.97 %	21.66%
31/12/2005	29 sen	1.36 %	22.86 %

Table 2: Genting – 3182, yearly dividend, dividend yield, net profit ratio.

Ranhill – 5030: forming an uptrend.

Chart 3: Ranhill – 5030 (14/04/2010～05/08/2010)

As shown on chart 3, price of Ranhill has been moving sideways for about 2 months. Due to the increased of volume, which suggested some increased of inflow of fresh capital, price break away from its sideways movement, and gained strength. Although after the rally, price pulled back, it managed to stay above the 14, 21, 3 1EMA, which is also rising, and serving as the dynamic support, thus Ranhill is likely to form an uptrend.

As indicated by A, price of Ranhill tested the RM0.82 level a few times, but as price retreat after being resisted by the MR0.82 level, volume was rather small, suggesting that the profit taking activities was mild. However, when price rebound from the 14, 21, 31 EMA, volume was strong, suggesting that the buying interests was strong. Therefore, if this buying interest should continue, price is expected to break above RM0.82, and continue its uptrend, with the 14, 21, 31 EMA continue serving as the dynamic support.

Generally, it is a good idea to keep this stock if price should continue staying above the 14, 21, 31 EMA, and if price should break below the 14, 21, 31 EMA, it would be a signal to take profit or to cut loss. Next resistance is seen at RM0.855 followed by RM0.915.

4 Q Rolling PER	1.91 times	Dividend Yield	1.22%
Dividend		Dividend Yield	Net Profit Ratio
30/6/2009	1 sen	1.10%	10.29%
30/6/2008	0 sen	0%	-36.75%
30/6/2007	0 sen	0%	7.92%
30/6/2006	1.5 sen	1.16%	-0.89%
30/6/2005	1.5 sen	1.19%	2.22%

Table 3: Ranhill – 5030, yearly dividend, dividend yield, and net profit ratio.

Conclusion:
Technically, the most ideal consolidation would be a low-fluctuation, sideways movement. When price is moving sideways, selling pressure is generally low, and therefore, it will have a positive effect in helping the continuation of the existing uptrend.

IOI, Kinstel, EO

Despite the KLCI upside movement was not impressive, many counters, on the other hand, had notable gains, especially those counters that had been falling in the previous months. This is mostly due to a consensus that most investors believe that these counters would have a bigger upside room to gain. Let's continue with this week's case studies.

IOIcorp – 1961: Preparing for a new movement.

Chart 1: IOIcorp – 1961 (14/04/2010 ~ 05/08/2010 )

As indicated by A, price of IOI has been moving sideways, in its consolidation stage. As it is moving sideways, the fluctuation is getting narrower, thus the Bollinger Bands contracted, confirming the consolidation signal. Other than showing a consolidation signal, the contraction of the Bollinger Bands also implies that IOI is now preparing for a new movement, and the direction of the new movement shall only be revealed once the Bollinger Bands re-expanded.

If the Bollinger Bands should re-expand, it would mark an end to the consolidation and a beginning of a new movement. If price of IOI should remain above the Bollinger Middle Band as the Bollinger Bands expands, it would be a bullish biased signal. Otherwise, if price of IOI should stay below the Bollinger Middle Band, as the Bollinger Bands expands, it would be a bearish biased signal. Thus a signal to cut loss. Nevertheless, immediate support for IOI is seen at RM5.00 while the resistance are at RM 5.40 followed by RM5.40.

4 Q Rolling PER	15.74 times	Dividend Yield	1.56%
Dividend		Dividend Yield	Net Profit Ratio
30/6/2009	8 sen	1.69 %	6.74 %
30/6/2008	17 sen	2.28 %	15.22%
30/6/2007	7 sen	1.35 %	16.55 %
30/6/2006	43.5 sen	3.04 %	13,81 %
30/6/2005	35 sen	3.33 %	14.86 %

Table 1: IOIcorp – 1961, yearly dividend, dividend yield, and net profit ratio.

Kinstel – 5060: Breakout from consolidation, might be forming an uptrend.

Chart 2: Kinstel – 5060 (14/04/2010 ~ 05/08/2010)

As shown on chart 2, price of Kinstel was consolidating below RM0.86 for about 2 months, with low volume, suggesting that the buying interests was low, until price broke above RM0.86 level, volume increased significantly, implying some increased of buying interests.

As indicated by A, as it break above RM0.86 resistance, breaking away from the consolidation, with strong volume, this suggests that new inflow of capital, with buyers taking selling price, thus giving a sign of an uptrend formation.

Although price pulled back soon after breaking above RM0.86, it is rather normal. Technically, as long as price should stay above the 14, 21, 31 EMA, the uptrend is still intact. With the price of Kinstel forming a higher-low, with strong volume, the uptrend is set to continue, if other external conditions are unchanged. Next resistance for Kinstel is seen at RM0.96 followed by RM 1.00.

4 Q Rolling PER	11.35 times	Dividend Yield	1.09 %
Dividend		Dividend Yield	Net Profit Ratio
31/12/2009	1 sen	1.01 %	0.95%
31/12/2008	1.7 sen	4 %	1.52%
31/12/2007	1.7 sen	1.27 %	6.38%
31/12/2006	7.5 sen	4.6 %	35.60%
31/12/2005	5 sen	5.49 %	3.57%

Table 2: Kinstel – 5060, Yearly dividend, dividend yield, and net profit ratio.

Revision of Last week's Case Study: E&O – 3417: Technical correction after over-heated.

Chart 3: E&O – 3417 (14/04/2010-05/08/2010)

As shown on chart 3, price of E&O touched RM1.29 last week, and that was the height since 20th of Oct, 2009. However, profit taking pushed the price down, as a form of technical correction. Fortunately, the retreat was rather mild and it is still still staying above the 14, 21, 31 EMA, dynamic support. This shows that the overall uptrend is still intact.

Technically, the most ideal correction is the low fluctuation, sideways movement. This is because when price is moving sideways, the selling pressure is not high and at the same time, it attracts new buyers. In short, if price should move sideways for a short period, it is usually a healthy correction.

If price should rebound from the 14, 21, 31 EMA, after the correction, and form another higher-low, with strong volume, it would be a buy signal. If investor should follow this buy signal, he or she shall take the 14, 21, 31 EMA as the trailing stop reference. If price should stay above the 14, 21, 31 EMA, it is a good idea to hold. But if price should break below 14, 21, 31 EMA, it would be a signal to take profit or to cut loss. Next resistance are found at RM1.29~RM1.30 followed by RM1.40~RM1.41.

4 Q Rolling PER	18.17 times	Dividend Yield	3.14%
Dividend		Dividend Yield	Net Profit Ratio
31/03/2010	3.8 sen	4.29%	20.12%
31/03/2009	0 sen	0%	-12.45%
31/03/2008	5 sen	2.78%	24.95%
31/03/2007	4 sen	1.84%	5.76%
31/03/2006	0 sen	0%	12.93%

Table 3: E&O – 3417, yearly dividend, dividend yield, and net profit ratio.

Conclusion:

It is perfectly normal to see a correction after a rally, but as long as the price could stay above the 14, 21, 31 EMA, the uptrend shall remains intact. Therefore, investors who wish to trend a trend, should take the 14, 21, 31 EMA as the trailing stop reference.

JCY, KPJ, Zelan

The KLCI resumed its uptrend, breaking above the 1350 level, making a 18 months new high. Concurrently, total market volume increased and stays firmly above the 40-day VMA level, suggesting an improvement of the market sentiment as a whole. However, there are still many counters staying in downtrend, some are even making new low. Therefore, investors should be careful in picking up stocks. Let's take a look at some case studies.

JCY – 5161: New Low.

Chart 1: JCY – 5161 (07/04/2010～28/07/2010)

As shown on chart 1, price of JCY fell below its lowest RM1.44 level, breaking a new low. As indicated by A, the 14, 21, 31 EMA is now serving as the dynamic resistance for JCY, it is in downtrend.

Technically, when price break new low, it means that all investors who had bought and are still holding their share are all making losses, even for those who bought at the lowest price. Therefore, with so many losers holding their shares, the emotion of fear is stronger, as most of these share holders wants to break even, thus the selling pressure for a new low stock is usually very high.

Nevertheless, since JCY is making a historical new low, we can't find a reliable support at the moment, until a valid rebound. But provided that price is still resisted by the 14, 21, 31 EMA, the downtrend remains intact, and the technical outlook remains bearish biased.

KPJ – 5878: Still in uptrend.

Chart 2: KPJ – 5878 (07/04/2010～28/07/2010)

As shown on chart 2, KPJ price has returned to above the 14, 21, 31 EMA since 27th of May, and until now, it is still trending in uptrend. Although, in the end of June, price retreated as a technical correction, it managed to rebound from the 14, 21, 31 EMA, and later resume its uptrend, even breaking above the RM3.45 resistance and marked a new high.

As indicated by A, it tested its high on the 23rd of July, at RM3.85. Generally, the first target of the correction is at the 14, 21, 31 EMA, and if price should rebound from the 14, 21, 31 EMA, it would resume its uptrend, and as long as the uptrend is still intact, it is a good idea to hold on the the positions.

As for investors who are looking for buy signal, an ideal entry signal would be the next higher-low, and after taking the position, it is crucial to apply the 14, 21, 31 EMA as a trailing stop reference. Nonetheless, the immediate resistance is at RM3.85.

4 Q Rolling PER	8.32 times	Dividend Yield	5.51%
Dividend		Dividend Yield	Net Profit Ratio
31/12/2009	20 sen	8.3 %	7.04 %
31/12/2008	7 sen	2.75 %	6.18 %
31/12/2007	19.59 sen	5.66 %	6.70 %
31/12/2006	14 sen	7 %	5.08 %
31/12/2005	8 sen	5.30 %	5.30 %

Table 2: KPJ – 5878, yearly dividend, dividend yield, and net profit ratio.

Revision of Last Week's Case Study: Zelan – 2283: Technical Correction.

Chart 3: Zelan – 2283 (07/04/2010～28/07/2010)

As shown on the chart 3, after breaking above 14, 21, 31 EMA in early July, price of Zelan has been trending up, even breaking above the L1 downtrend line, and formed an uptrend, with the 14, 21, 31 Ema serving as the dynamic support.

As indicated by A, after breaking L1 downtrend, it hit its peak of RM0.71, and started to fall back as profit taking kicked in. Technically, it is rather normal, and the first target of the correction is at the 14, 1, 31 EMA. If price should rebound from the 14, 21, 31 EMA, it would form another higher low, thus a good chance to resume this uptrend. Of course, a strong volume is needed to confirm the uptrend. Therefore, it would be an ideal buy signal, with the 14, 21, 31 EMA as the trailing stop reference.

In other words, provided that the stock price is supported by the 14, 21, 31 EMA, it is a good idea to hold on to the positions, until which price should break below the 14, 21, 31 EMA, it would be a signal to take profit. Next resistance of Zelan is seen at RM0.81~RM0.82.

4 Q Rolling PER	0 times	Dividend Yield	0%
Dividend		Dividend Yield	Net Profit Ratio
31/3/2010	0 sen	0%	-24.77%
31/3/2009	5 sen	8.93%	-7.33%
31/3/2008	14 sen	6.76%	-1.30%
31/3/2007	15 sen	1.88%	12.60%
31/3/2006	10 sen	2.96%	14.47%

Table 3: Zelan – 2283, yearly dividend, dividend yield, and net profit ratio.

Conclusion:
The above case studies proved again, that buying on the uptrend is very important. However, most investors are still subscribed to the average idea, that buying a stock should be at a lower price, thus limiting themselves in choosing counters at very low price, or a counter in downtrend. In short, selling pressure is higher in a downtrend stock, thus the risk is higher.

Bjcorp, Axiata, EO

As the performance of the KLCI continues to improve, coupled with total market volume staying above the 40-day VMA level, the market sentiment is looking better. But, there are still counters failing to form an uptrend. Let's study some of the case studies.

BJcorp – 3395: Technical Rebound.

Chart 1: BJcorp – 3395 (06/04/2010 ~ 28/07/2010)

As indicated by A, price of Bjcorp rebounded on Wednesday, but it was only a technical rebound, for it is still resisted by the 14, 21, 31 EMA, which is still serving as the dynamic resistance. Therefore, the downtrend remains intact.

As shown on the chart above, there were many technical rebound during this course of downtrend, but each rebound failed to break above the dynamic resistance, and later formed a lower-high. Which is the characteristic of a downtrend.

If price should rebound but resisted by the 14, 21, 31 EMA again, it means that the downtrend is still in place, thus no buying signal yet. As for those who wanted to catch a rebound, do note that the risk is catching a rebound is high. If price should start falling again, and later break below RM0.995, itwoudl be making a new low.

Technically, the most ideal buy signal would be a valid break out above the 14, 21, 31 EMA, then followed by a mild retreat of price with thin volume, and then a rebound above the 14, 21, 31 EMA with strong volume, forming a higher-low. Nevertheless, support for Bjcorp is at RM 0.995 or RM1.00 while the resistance is still the 14, 21, 31 EMA.

4 Q Rolling PER	53.17 times	Dividend Yield	0.92%
Dividend		Dividend Yield	Net Profit Ratio
30/4/2010	1 sen	0.79 %	1.23 %
30/4/2009	3.35 sen	3.99 %	-0.83%
30/4/2008	9 sen	8.11 %	17.20 %
30/4/2007	0 sen	0 %	5.75 %
30/4/2006	0 sen	0 %	-24.33 %

Table 1: Bjcorp, yearly dividend, dividend yield and net profit ratio.

Axiata – 6888: Testing New High.

Chart 2: Axiata – 6888 (07/04/2010 ~ 28/07/2010)

After breaking above the RM3.80 resistance, it formed an uptrend, and at the same time staying above the 14, 21, 31 EMA. As shown on chart 2, it hit a high on the 14thof July, at RM4.20, and price retreated later with lesser volume. After the retreat, it managed to rebound again from the 14, 21, 31 EMA, as indicated by A, thus the uptrend is remains intact.

Currently, Axiata is about to test the RM4.20 resistance again, and if it could break above the RM4.20 it would be making a 20 months new high, and the uptrend shall continue. However, a strong volume is needed to confirm such breakout. If price should break out RM4.20 with thin volume, there is a risk of a false break out.

Nevertheless, if price should break above RM4.20, it would be a good idea to hold on to the position for those who are already in positions. As for those who are waiting to buy, an ideal buy signal would be at a higher-low. Next resistance is seen at RM5.00.

4 Q Rolling PER	13.83 times	Dividend Yield	0 %
Dividend		Dividend Yield	Net Profit Ratio
31/12/2009	0 sen	0 %	12.61%
31/12/2008	0 sen	0 %	4.39%

Table 2: Axiata – 6888, yearly dividend, dividend yield, and net profit ratio.

Revision of last week's Case Study: E&O – 3417: In uptrend.

Chart 3: E&O – 3417 (07/04/2010 ~ 28/07/2010)

As shown on chart 3, ever since breaking above the 14, 21, 31 EMA, E&O formed an uptrend, while supported by the 14, 21, 31 EMA. As indicated by A, after breaking above the L1 downtrend line, until now it has not had any correction yet, but instead, the rally speed up, with its price currently about 10% above the 14, 21, 31 EMA level. Therefore, as the rally speed up, it is a wiser move to tighten stop loss level. For the correction could be a sharp one.

Since the rally is speeding up, it might not be too practical to apply the 14, 21, 31 EMA as a trailing stop reference. Therefore, it would be more practical to apply “yesterday's low” as the trailing stop reference.

In short, if price should continue to rally, investors will continue to hold their share, but lift the stop loss level to yesterday's low. If price should retreat and break below yesterday's low, it would be a signal to take profit, or partial profit taking. Until the price should move sideways, then the 14, 21, 31 EMA trailing stop reference would resume.

4 Q Rolling PER	16.37 time	Dividend Yield	3.49%
Dividend		Dividend Yield	Net Profit Ratio
31/03/2010	3.8 sen	4.29%	20.12%
31/03/2009	0 sen	0%	-12.45%
31/03/2008	5 sen	2.78%	24.95%
31/03/2007	4 sen	1.84%	5.76%
31/03/2006	0 sen	0%	12.93%

Table 3: E&O – 3417, yearly dividend, dividend yield, and net profit ratio.

Conclusion:

Despite the KLCI is gaining strength, not all counters are moving in uptrend. Therefore, it is very important that one should pick stock carefully, and avoid stocks still trending in downtrend. As for taking up new position, it is crucial to set up an trading and cut loss plan.

Wednesday, August 25, 2010

Bjcorp, Gamuda, Zelan

As the total market volume breaks above the 40-day VMA level, the local market activity is picking up as investors returning to the equity market. Generally, if volume should stay above the 40-day VMA level, it would help lift the market sentiment. However, investors are advised to choose counters that are already in uptrend, or resuming their uptrend, or breaking away from their downtrend

BJCorp – 3395: Still in downtrend.

Chart 1: BJCorp – 3395 (30/03/2010～21/07/2010)

As indicated by chart 1, ever since breaking below the 14, 21, 31 EMA in April, price of Bjcorp has been staying below the L1 downtrend line as well as the 14, 21, 31 EMA, despite many technical rebound, the downtrend remains.

Please note that the characteristic of a downtrend, which is Lower-highs. It means that every time price rebound, its rebound peak is lower than the previous rebound peak.

Technically, as long as price staying below either the L1 line or the 14, 21, 31 EMA, it is not a good time to buy. Try think this, for those who bought during this downtrend, he or she must have thought that the day they bought was the lowest of the downtrend, or else, knowing that price could go lower, they won't dare to buy at all. However, how many people had guessed wrongly? Only to realize that they were buying too soon.

Nevertheless, support for Bjcorp is at RM1.00 psychological level, and there is a chance for price to rebound or consolidate at this level. However, a valid buy signal is only when price could successfully break away the L1 downtrend line, then a formation of a higher-low with strong volume.

4 Q Rolling PER	53.66 times	Dividend Yield	0.91 %
Dividend		Dividend Yield	Net Profit Ratio
30/4/2010	1 sen	0.79 %	1.23 %
30/4/2009	3.35 sen	3.99 %	-0.83 %
30/4/2008	9.00 sen	8.11 %	17.20 %
30/4/2007	0 sen	0 %	5.75 %
30/4/2006	0 sen	0 %	-24.33 %

Table 1: BJCorp – 3395, yearly dividend, dividend yield and net profit ratio

Gamuda – 5398: Still in uptrend.

Chart 2: Gamuda – 5398 (31/03/2010～21/07/2010)

As shown on chart 2, price of Gamuda broke above the 14, 21, 31EMA on the 4thof June, and since then, the uptrend is still intact. Despite a correction on the 29thof June, price of Gamuda remains above the 14, 21, 31 EMA, and volume also increased strongly when price rebound from the 14, 21, 31 EMA, suggesting more inflow of fresh buying interests to off set the selling pressure. Therefore, the uptrend resumed.

Technically, the 14, 21, 31 EMA is still the dynamic support for Gamuda, and provided that price of Gamuda is still supported by the 14, 21, 31 EMA, it is a good idea to hold on to the stocks, until price should break below the 14, 21, 31 EMA, then it would be a signal to take profit or to cut loss.

For the mean time, Gamuda is testing the RM3.44 resistance level, which is an important resistance for it is the peak of 2009. If price should break above this level, it would be making a 1 year new high. Next resistance is at RM4.00while the support is at 14, 21, 31 EMA.

4 Q Rolling PER	27.36 times	Dividend Yield	2.38 %
Dividend		Dividend Yield	Net Profit Ratio
31/7/2009	8 sen	2.38 %	7.10 %
31/7/2008	25 sen	9.26 %	13.52 %
31/7/2007	46 sen	5.90 %	12.23 %
31/7/2006	16 sen	4.57 %	13.74 %
31/7/2005	16 sen	3.43 %	17.26 %

Table 2: Gamuda – 5398, yearly dividend, dividend yield and net profit ratio

Review Last week's case study: Zelan – 2283: Break away downtrend.

Chart 3: Zelan – 2283 (27/10/2009～30/06/2010)

As indicated by A, price of Zelan breaks above the L1 downtrend line, breaking away from the downtrend. Therefore, the 14, 21, 31 EMA is now serving as the dynamic support for Zelan. Technically, provided that price is still above the EMA, the uptrend shall remains intact.

For a healthy uptrend, there must be healthy corrections, but volume during the correction should not be high, this way it suggests that the selling pressure is not huge. Lastly, after the correction, price has to rebound from the 14, 21, 31 EMA with strong volume, then it would form a higher-low, thus a good chance to resume its uptrend.

In other words, if price is still being supported by the 14, 21, 31 EMA, then it is a good idea to keep the stock, until price should break below the 14, 21, 31 EMA, then it would be a signal to cut loss or to take profit. Nevertheless, immediate resistance for Zelan is at RM0.685~ RM 0.69, next resistance is at RM0.81 level. 14, 21, 31 EMA is the current dynamic support.

4 Q Rolling PER	0 times	Dividend Yield	0%
Dividend		Dividend Yield	Net Profit Ratio
31/3/2010	0 sen	0%	-24.77%
31/3/2009	5 sen	8.93%	-7.33%
31/3/2008	14 sen	6.76%	-1.30%
31/3/2007	15 sen	1.88%	12.60%
31/3/2006	10 sen	2.96%	14.47%

Table 3: Zelan – 2283, yearly dividend, dividend yield and net profit ratio

Conclusion:
To buy only when price is rising, is a simple idea, which is to make sure that when buying, the stock is resuming its uptrend after a correction. However, it is hard to do, because the entry price is usually higher, and it makes most investors uncomfortable to buy stocks at a higher price. But remember, it is the price different that we want, and the direction, not the price.

Bursa Malaysia Technical Analysis & Stock Trading