Scomi: Strong technical rebound, could form an uptrend
Chart 1: Scomi (01/12/2009～31/03/2010)
As shown on the chart above, price of Scomi rebounded after finding its support at RM0.38, and later broke above the 14, 21, 31 EMA as indicated by A, with strong volume as indicated by B. This suggests that its has broken away from its downtrend and it could form an uptrend.
Ideally, the best uptrend would be a one with a formation of a higher-low. Therefore, if price should retreat and form a higher-low above the 14, 21, 21 EMA, it would be a characteristic of an ideal uptrend. But during a correction, volume should be relatively lower, for this would mean that the selling pressure is not too strong.
Technically, if price should form an higher-low and rebound from the 14, 21, 31 EMA, it would be a buy signal and best confirmed with strong volume. After buying, the 14, 21, 31 EMA would serve as the dynamic support as well as the trailing stop reference.
| Leading PER | 46.35 times | Dividend Yield | 0.56% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/12/2009 | 0 sen | 0% | 0.5% |
| 31/12/2009 | 0.5 sen | 1.49% | 5.53% |
| 31/12/2008 | 1.25sen | 1.10% | 3.58% |
| 31/12/2007 | 1.50 sen | 1.49% | 5.37% |
| 31/12/2006 | 1.2 sen | 1.20% | 16.19% |
Table 1: Scomi, yearly dividend, dividend yield, and net profit ratio.
L&G: Testing resistance.
Chart 2: L&G (01/12/2009～31/03/2010)
As shown on chart 2, price of L&G formed an Ascending Triangle, with L1 line being the dynamic support while the L2 (RM0.515) being the immediate resistance line. An Ascending Triangle implies some bullish biased for the price has already formed a higher-low but the upside room is still capped by the resistance line, thus limiting the upside movement.
As indicated by A, price of L&G breaks above the RM0.515 by margin, with increased of volume. This suggests that some inflow of fresh capital to off set the selling pressure. If price should stay above the RM0.515, it would be a valid bullish break out above the Ascending Triangle, thus a buy signal.
Meanwhile, the 14, 21, 31 EMA and the L1 line shall continue serving as the dynamic support as well as the trailing stop reference. Technically, provided that price should stay above these dynamic support, the uptrend shall remain intact. If price should break below the dynamic support, it would be a signal to take profit or to cut loss. Next resistance is seen at RM0.64 level while the support is at RM0.48.
| Leading PER | 11.11 times | Dividend Yield | 0% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/03/2009 | 0 sen | 0% | 40.34% |
| 31/03/2008 | 0 sen | 0% | 23.02% |
| 31/03/2007 | 0 sen | 0% | 7.78% |
| 31/03/2006 | 0 sen | 0% | 24.39% |
| 31/03/2005 | 0 sen | 0% | -79.53% |
Table 2: L&G, yearly dividend, dividend yield, and net profit ratio.
Revision of last week's Case Studies: E&O
Chart 3: E&O (5/1/2010～31/03/2010)
As shown on chart 3, price of E&O formed an Ascending Triangle, with price forming a higher-low above the 14, 21, 31 EMA and later, breaking above the RM 1.04 resistance line. As indicated by A, after breaking RM1.04, price retreated due to profit taking, but it managed to stay above the RM 1.04 level.
Technically, the 14, 21, 31 EMA is still serving as the dynamic support as well as the trailing reference. If price should stay above the 14, 21, 31 EMA, the uptrend shall remains intact, and if price should break below the 14, 21, 31 EMA, it would be a signal to cut loss of the take profit.
| Leading PER | 31.72 times | Dividend Yield | 0% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 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% |
| 31/03/2005 | 0 sen | 0% | 9.3% |
Table 3: E&O yearly dividend, dividend yield, and net profit ratio.
Conclusion:
In conclusion, an uptrend started with a technical rebound, and followed by a formation of a higher-low, with the confirmation of strong volume. However, a trader has to be very disciplined not to buy too early, and have to wait until price starts moving.
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