Chart 1: KLCI chart from 10/9/2009 to 7/1/22010.
As shown on the chart 1, the KLCI formed an L1 descending line in December, 2009, suggesting a weakening mid term movement. However, it failed to break below the 1257 support level, which suggests that the downtrend has not formed successfully. After rebounding many times from the 1257, the KLCI finally broke above the L1 line, breaking away from the bearish biased consolidation.
As indicated by A, after breaking the L1 line, the KLCI tested the 1288 resistance, with increased of total market volume, the KLCI later also broke above the 1288 level to test the 1300 psychological barrier. The increased of volume suggest an increased of in flow of fresh capital as new buying interests increases to off set the selling pressure, thus the share price could go higher. (Study B)
Nevertheless, as the KLCI is testing the 1300 level, it shows a sign of a consolidation, but provided that the KLCI should stay above the 14, 21, 31 EMA, the uptrend shall remains intact. As the broad market is entering a consolidation, many counters will be having their technical correction or consolidation as well. Technically speaking, it is not the best time to buy during a consolidation for no body knows if the rally would resume or not, unless a valid rebound above the dynamic support (either the 14, 21, 31 EMA or the Bollinger Middle Band), with substantial volume.
Chart 2: TA, chart from 16/09/2009 to 7/1/2010.
As shown on chart 2, price of TA rebounded from the RM0.67 support, breaking above the T1 downtrend line, breaking away from the mid term bearish trend. As price breaks above the T1 line, it also break above the 14, 21, 31 EMA, thus the 14, 21, 31 EMA is now serving as the dynamic support.
As indicated by A, price of TA was resisted by the RM0.79 resistance level, while the dynamic support remains intact. It is very normal for price to retreat after hitting a resistance, but as long as the price should rebound from the 14, 21, 31 EMA, with substantial volume, as indicated by B, there is a good chance that the rally shall resume and the next resistance is seen at RM 0.85 level. For those who followed the rebound signal above the 14, 21, 31 EMA and the break out of RM0.79 as a buy signal, the immediate support would be at RM 0.79, and if price should continue rising, the 14, 21, 31 EMA or the Bollinger Middle Band as the trailing stop reference.
On the contrary, if price should continue to retreat after hitting the resistance, and break below the 14, 21, 31 EMA, it would suggest that price movement is weakening. By that time, we shall consider if the overall market condition is still favorable, if not, investors should stay on the sidelines until a clearer signal.
| 4 Q Rolling PER | 20.70 times | Dividend Yield | 6.34% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/01/2009 | 4.5 sen | 7.32% | 16.94% |
| 31/01/2008 | 10 sen | 7.94% | 41.33% |
| 31/01/2007 | 7 sen | 7.95% | 36.94% |
| 31/01/2006 | 5 sen | 6.34% | 25.54% |
| 31/01/2005 | 4 sen | 6.98% | 41.08% |
Table 2: TA yearly Dividend, Dividend Yield, and Net Profit Ratio.
Chart 3: GENM, chart from 9/9/2009 to 6/1/2010.
As shown on chart 3, price of GENM formed a Rectangular Pattern trading range since September, 2009, with RM 2.72 as the resistance while the RM 2.93 as the support. This shows that there is no direction for the price movement yet, unless a valid break out above the RM 2.93 or below the RM2.72 .
As indicated by the L1 line, price of GENM might be forming an uptrend, because it has formed a higher-low on L1 line, while also breaking above the 14, 21, 31 EMA. However, as indicated by A, price of GENM is still resisted by the RM 2.93 level, and it had retreated since.
If price of GENM should stay above the 14, 21, 31 EMA or the L1, with increased of volume, there is a good chance that price of GENM would break above the RM2.93 level. Provided that the resistance is still intact, the upside room is capped at RM 2.93.
Nevertheless, if one should buy with the rebound signal above the L1, then the L1 or the 14, 21, 31 EMA shall continue serving as the dynamic support, and as long as the price is still supported by these dynamic support, one should hold his / her position. If price should break below the L1 or the 14, 21, 31 EMA, it would be a signal to take profit or cut-loss.
| 4 Q Rolling PER | 27.42 times | Dividend Yield | 1.97% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/12/2008 | 7 sen | 3.10% | 12.98% |
| 31/12/2007 | 6.48 sen | 1.67% | 35.74% |
| 31/12/2006 | 27 sen | 1.85% | 24.84% |
| 31/12/2005 | 24 sen | 2.14% | 26.80% |
| 31/12/2004 | 20 sen | 2.00% | 26.54% |
Table 3: GENM, Yearly Dividend, Dividend Yield, Net Profit Ratio.
Conclusion:
In conclusion, investors should always understand that importance of follow the broad market performance, and never trade against it. During a consolidation, avoid buying heavily, and only to buy when price should rebound from the dynamic support, which suggesting a continuation of uptrend.
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