Chart 1: KLCI reversal characteristic.
Although the KLCI is showing some weakness with the possible lower-high formation, it is still too soon to call for a bear run for the KLCI remains above 1500. If the KLCI should stay above 1500, it would not be forming a downtrend. This is because when the KLCI or the market should fall but stay above 1500, it would only affect those investors who had entered their positions in the past 1 month, and if the KLCI should prolong its consolidation above 1500, the selling pressure or the negative memory of these losers will be neutralized by new inflow of fresh capital, big of small. Don't forget, those who had bought earlier or at a lower level, are basically unaffected yet, thus the selling pressure is not likely to be too strong.
However, the above explanation is only based on a theory. In reality, one should always be prepared for the worst. If the KLCI should continue to retreat and break below 1480~1500, it means that not only investors who bought in the last month are affected, those who had entered for the last 4 months, and even those whom are already in profit will be affected too, and if these investors start selling, one could only expect more selling pressure, and the KLCI or the market could go down further. This is why, when analyzing the market, one should not only analysis his own position, he has to understand others positions and memory of the losers as well, to better understand the market behavior.
Genting – 3182: Short term downtrend.
Chart 2: Genting – 3182 as at 09/02/2011.
As indicated by A on Chart 2, price of Genting ended lower as investors are taking profit, and the sellers are still dominant. Price of Genting broke below the 14, 21, 31 EMA dynamic support, and the technical outlook is now on the negative side. Trying to catch a rebound would be very riskly.
Technically, if price of Genting should stay below the 14, 21, 31 EMA, the technical outlook shall remain weak. If this short term downtrend shall persist, more investors will be affected, and the selling pressure will increase. Current support of Genting is at RM9.50 ~ RM 10.00. If price should break below this support, more downside movement is expected.
As for those whom are already in position much earlier at a lower price, it is crucial to monitor the long term weekly chart. As shown on Chart 2A, price of Genting is now testing the 14, 21, 31 Weekly EMA, and if price should break below this long term dynamic support, the long term uptrend would be affected, and investors are advised to take profit or to cut loss.
Chart 2A: Genting – 3182, weekly chart.
| 4 Q Rolling PER | 20.02 times | Dividend Yield | 0.67% |
| 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% | 21.65% |
| 31/12/2005 | 29 sen | 1.36% | 22.86% |
Table 1: Genting – 3182, yearly dividend, dividend yield, and net profit ratio.
KUB – 6874: Rebounding from the uptrend dynamic support.
Chart 3: KUB – 687 as at 9/02/2011.
During the recent correction of the KLCI, counters affected most are heavy weighted blue chips. As for non-blue chip counters, they are less affected, and some even remain in their uptrend. As shown on chart 3, price of KUB had a technical correction last two weeks, but price remains above the 14, 21, 31 EMA dynamic support, and this suggests that the uptrend is still intact.
As indicated by A, price of KUB rebounded from the 14, 21, 31 EMA, and price could re-test its peak of RM0.95. Technically, if price should stay above the 14, 21, 31 EMA, it is a good idea to hold, as long as investors could lift the cut loss level according to the 14, 21, 31 EMA, and this way, they could gradually reduce the trading risk. As for investors who are not feeling comfortable, an alternative options is to selling 1/3 of the position, while apply a trailing stop method for the remaining.| 4 Q Rolling PER | 13.27 times | Dividend Yield | 0.00% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/12/2009 | 0 sen | 0.00% | 5.62% |
| 31/12/2008 | 0 sen | 0.00% | 3.92% |
| 31/12/2007 | 0 sen | 0.00% | -14.43% |
| 31/12/2006 | 0 sen | 0.00% | -1.08% |
| 31/12/2005· | 0 sen | 0.00% | -4.77% |
Table 2: KUB – 6874, yearly dividend, dividend yield, and net profit ratio.
KLK - 2445: Long term uptrend, but temporary capped by a resistance.
Chart 4:KLK - 2445 as at 19/01/2011.
As shown on chart 4, price of KLK has been testing the RM 23 resistance a few times in 1 and a half month, but it is still being resisted by the RM23 level. Therefore, the uptrend is temporary capped, and the upside room is now limited. As indicated by A, price of KLK started to retreat after hitting its resistance at RM22.90, but it has not formed a downtrend, because it has not shown any signs of a lower-high formation.
If price of KLK should continue to retreat, then we shall watch out for the support at RM 20. If price should rebound from RM20 support, it would most likely be forming a trading range, and KLK could prolong its consolidation, without forming a downtrend.
As for investors whom had already entered their positions earlier at a lower level, it is important to monitor the long term weekly chart of KLK. As shown on chart 4A, the long term 14, 21, 31 weekly EMA is still serving as a healthy uptrend dynamic support for KLK, despite the recent consolidation. This suggests that the long term movement of KLK is still healthy, and therefore, long term investors could choose to hold.
Chart 4A: KLK - 2445 weekly chart.
| 4 Q Rolling PER | 23.73 times | Dividend Yield | 2.66% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 30/09/2010 | 60 sen | 3.00% | 13.51% |
| 30/09/2009 | 40 sen | 2.90% | 9.2% |
| 30/09/2008 | 70 sen | 7.29% | 13.25% |
| 30/09/2007 | 50 sen | 3.79% | 13.70% |
| 30/09/2006 | 50 sen | 4.59% | 11.06% |
Table 3: KLK - 2445, yearly dividend, dividend yield, and net profit ratio.
Conclusion:
The KLCI must stay above 1480~1500, or else, more the market sentiment would be further dampen by more selling pressure. As for individual investors, a prudent trading plan is always needed when following a trend. As for now, trying to catch a rebound would be a risky move.
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