Chart 1: KLCI as at 30/3/2011.
As indicated by A, after breaking above the 14, 21, 21 EMA, the KLCI also broke above 1525 WinChart Automatic Fibonacci Retracement, and the technical outlook for the KLCI is now positive. As for whether the KLCI could form an uptrend, it will have to first firm a higher-Low.
Meanwhile, as indicated by B, total market volume increased significantly, and breaking above the 40-day Volume Moving Average. This suggests some increased of capital inflow, and it will generally help lifting the market sentiment. Which, indirectly, a positive element for the performance of individual counters.
Revision of last week's case study: Pchem – 5183: Breaking new higher, continue its uptrend.
Chart 2: Pchem – 5183 as at 30/03/2011.
As indicated by A, price of Pchem broke above the RM 6.83 resistance, making a new high, and now price of Pchem is extending its uptrend. As price is rising, the 14, 21 ,31 EMA is also following, and therefore, for those whom are already in position, it is a good idea to continue to hold, as long as one should gradually lift the cut loss or profit taking level according to the 14, 21, 31 EMA. This way, it will gradually reduce trading risk, while maximizing the potential of the uptrend.
As for those whom are interested in taking up new position, an ideal buy signal would be a new formation of a higher-low, preferably with strong volume, and price remain above the 14, 21, 31 EMA, for if price should start rising again after the entry, one could immediately apply the trailing stop method by using the 14, 21, 31 EMA as a reference.
Tenaga – 5347: Remains in downtrend.
Chart 3: Tenaga – 5347 as at 30/03/2011.
Although the KLCI has broken away from the short term downtrend, price of Tenaga remains in a weakening trend. As shown on chart 3, price of Tenaga was supported by the RM 5.94~RM 6.05 for a few times and price rebounded from this support. However, despite the rebound, price of Tenaga as still resisted by the 14, 21, 31 EMA, which is still serving as the dynamic resistance, and this suggests that the technical outlook for Tenaga is still weak.
As indicated by A, price of Tenaga retreated on the 22nd of March, after being resisted by the 14, 21, 31 EMA, forming yet another lower-high, which is a sign of weakness. Technically, it has to break above the 14, 21, 31 EMA, in order to bring the technical outlook back to positive, and as for whether it could form an uptrend, it would have to form a higher-low, after the break out.
As a general rule, despite the improvement of the market sentiment in general, investors should still honor the rule of trading stocks in an uptrend, and avoid catching any falling stocks.
| 4 Q Rolling PER | 9.25 times | Dividend Yield | 4.29% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/08/2010 | 26 sen | 2.94% | 10.56% |
| 31/08/2009 | 17.77 sen | 2.22% | 3.19% |
| 31/08/2008 | 20 sen | 2.53% | 10.07% |
| 31/08/2007 | 36.30 sen | 3.65% | 17.41% |
| 31/08/2006 | 12 sen | 1.31% | 10.43% |
Table 1: Tenaga – 5347, yearly dividend, dividend yield, and net profit ratio.
Sozo – 5187: Short term weakness.
Chart 4: Sozo – 5187 as at 30/03/2011.
As shown on chart 4, after falling below the 14, 21, 31 EMA on the 10th of March, price of Sozo remained in a downtrend, with the 14, 21, 31 EMA serving as the dynamic resistance. Although there was a rebound from RM0.75 on the 17th of March, price of Sozo was still resisted by the 14, 21, 31 EMA, and retreated afterward. Technically, it is still showing weakness for Sozo right now.
As indicated by A, price of Sozo is now testing the RM0.75 support, and if price should rebound from here, it would have to re-test the dynamic resistance again. If it could break above the dynamic resistance, it would break away from this weakness short term trend. But it does not mean it would reverse and form an uptrend immediately.
On the other hand, if price should break below the RM0.75 support, it would be making a two and a half month new low, and the technical outlook shall remains negative. Next support for Sozo is seen at RM 0.64.
Conclusion:
The increased of volume as a whole implies that investors participation and confidence is improving. It will generally help lift the market sentiment, and the performance of individual counters. One should be able to benefit from the increased of volume provided the counters show signs of an uptrend. However, despite the improvement of market sentiment, if one is still buying a counter breaking new low or staying in a downtrend, he would most likely be left out because he is aiming at a wrong target.
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