Case Study Review:CIMB-1023: Consolidating with weakness.
Chart 1: CIMB-1023 (31/12/2009～28/04/2010)
Let's review last week's Case Study of CIMB. As shown on chart 1, price of CIMB has broken below the L1 line of the Ascending Wedge, suggesting that the L1 uptrend line is no long valid. However, as indicated by A, price of CIMB remains supported by the 31-day EMA, thus prolonging its sideways consolidation.
As indicated by the dotted line, there is a risk of a lower-high formation, as this is an early sign of a weakening trend. Therefore, if price of CIMB should break below the 31-day EMA, it would form a downtrend, unless price of CIMB could break above the dotted line with strong volume. Nevertheless, next support for CIMB is at RM13.70 while the resistance is at RM 14.82 WinChart Automatic Fibonacci Retracement.
| 4 Q Rolling PER | 17.93 times | Dividend Yield | 1.30% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/12/2009 | 18.50 sen | 1.46% | 26.31% |
| 31/12/2008 | 25.00 sen | 4.27% | 25.22% |
| 31/12/2007 | 25.00 sen | 2.27% | 31.00% |
| 31/12/2006 | 15.00 sen | 1.94% | 23.53% |
| 31/12/2005 | 15.00 sen | 2.63% | 17.51% |
Table 1: CIMB-1023, yearly dividend, dividend yield, and net profit ratio.
Supermx-7106: Weakening trend
Chart 2: Supermx-7106 (31/12/2009～28/04/2010)
Even since moving in its uptrend in March, 2009, price of Supermx has increased upto RM6.60 or 780%. As shown on the chart, the uptrend has been firmly supported by the 14, 21, 31 EMA, with two exception, that price was temporary below the 14, 21, 31 EMA, but managed to return to above the 14, 21, 31 EMA in short term, (which was the end of September, 2009 and early February, 2010). Therefore, the 14, 21, 31 EMA, is still the long term uptrend dynamic support for Supermx.
As shown on chart 2, price of Supermx retreated as profit taking take place, forming an L1 short term downtrend line, as well as a Lower-high. Technically, this is an early sign of a weakening trend. However, as indicated by A, it has not broken below the 31-day EMA, thus the longer term outlook is still holding up, implying that it might only be consolidating for the moment.
Nevertheless, the current consolidation of Supermx is similar to the effect of a Descending Triangle with the L1 line together with the 31-day EMA. Therefore, if price should rebound and break above the L1 line with strong volume, the 14, 21, 31 EMA would resume its role as a dynamic support, thus the long term uptrend remains intact. On the contrary, if price should break below the 31-day EMA, the L1 downtrend line would remain intact, thus the immediate technical outlook would remain weak. Therefore, it would be a signal to take profit.
| 4 Q Rolling PER | 11.47 times | Dividend Yield | 1.59% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/12/2009 | 11 sen | 2.01% | 15.92% |
| 31/12/2008 | 3.25 sen | 4.06% | 5.58% |
| 31/12/2007 | 1.90 sen | 0.63% | 13.85% |
| 31/12/2006 | 6.50 sen | 1.56% | 10.49% |
| 31/12/2005 | 6.50 sen | 1.46% | 12.74% |
Table 2:Supermx-7106, yearly dividend, dividend yield, and net profit ratio.
BJCORP-3395: Sign of weakening trend.
Chart 3: BJCORP-3395 (31/12/2009～28/04/2010)
As shown on Chart 3, price of Bjcorp retreated after hitting the RM1.87 level, but it managed to rebound from the 14, 21, 31 EMA, thus it has not formed a downtrend yet. However, after the rebound from the 14, 21, 31 EMA, price failed to break new high, and therefore, it forms a Lower-high, with an L1 short term downtrend line. This suggests that currently, price of Bjcorp is consolidating with bearish biased.
Technically, with price forming a Lower-high, it is an early sigh of a downtrend formation. But since price of Bjcorp is still supported by the 14, 21, 31 EMA, it is now temporary consolidating. And the support is at RM 1.65, which is the similar level of the 31-day EMA, as indicated by A.
If price should remain supported by the 31-day EMA, there is a chance that the consolidation would prolong. However, if price should break below the 31-day EMA, then the L1 downtrend shall remain intact, thus the downtrend will form, with negative technical outlook. If price should break away from the negative biased movement, it has to break above the L1 line with strong volume.
| Leading PER | -83.33 Times | Dividend Yield | 1.97% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 30/04/2009 | 3.35 sen | 3.99% | -0.83% |
| 30/04/2008 | 9.00 sen | 8.11% | 17.20% |
| 30/04/2007 | 0 sen | 0% | 5.72% |
| 30/04/2006 | 0 sen | 0% | -24.33% |
| 30/04/2005 | 0 sen | 0% | -3.03% |
Table 3: BJCORP-3395, yearly dividend, dividend yield, and net profit ratio.
Conclusion:
When a stock is having its consolidation and testing its dynamic support, it is the critical moment between resuming its uptrend or a reversal. Therefore, a trader has to be absolutely clear with his trading plan and follow his plan with an undisturbed mind.
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