With the broader market moving higher, many individual counters have also moved up, many of them breaking new high, lilke Lionind, Gamuda, Kencana, to name a few. For this week, let's do a case study on two counters: Bjtoto and Ranhill.
Bjtoto 1562]:
(Chart 1) Bjtoto chart from 13/10/2008 to 8/5/2009.
As indicated by A, BJtoto price broke above the RM 4.80 resistance level, suggesting that it is breaking away from the RM 4.80 consolidation. As indicated by B, volume of Bjtoto also increased substantially during the price break out. After the breakout, profit taking activities (technical correction) took place as price retreated, however, it managed to find its support at RM 4.80, suggesting the immediate support is now at RM4.80. Meanwhile, while during the technical correction, volume was also lower, which suggests that the technical correction is a healthy one, suggesting the selling pressure was mild. (Refer to last week's article on healthy technical correction).
Currently, the Bollinger Band width for Bjtoto is not yet expanding, suggesting that the price of Bjtoto is still not moving in trend, but with the price above the Bollinger Middle Band, the immediate outlook is positive biased. If the Bollinger Band width should expand with the price of Bjtoto remains above the Bollinger Middle Band, it would be a positive signal suggesting an upside movement.
If the price of Bjtoto to move up together with the positive Bollinger Band signal, the Bollinger Middle Band shall serve as the dynamic support for Bjtoto, which is a refernce of a trailing stop method. On the other hand, if price of Bjtoto should break below RM 4.80 level, it would suggest that the break out of the consolidation stage has failed, thus investors should consider to cut loss and remain on the sidelines.
Table 1: Fundamental as at 31/01/09:
| Dividend | Dividend Yield | Net Profit Ratio | |
| 2008 | 25.90 sen | 5.26% | 10.64% |
| 2007 | 32.74 sen | 7.31% | 12.41% |
| 2006 | 25.50 sen | 5.23% | 15.81% |
| 2005 | 45.00 sen | 11.08% | 12.29% |
| 2004 | 28.00 sen | 6.39% | 5.57% |
Based on the current RM 4.84 calculation:
| Price Earning Ratio | 15.04 times | Dividend Yield | 5.35% |
Based on Table 1, we can see that Bjtoto has a consistent dividend yield of more than 5%, and it is considered as a high yield stock. This type of stocks is usually suitable for investors who prefer consistent dividend income or longer term investors, but less favorable for those who which to speculate in the short term. This is because the volatility of Bjtoto is usually lower.
Ranhill [5030]
(Chart 2) Ranhill from 23/12/2008 to 08/05/2009.
As indicated by A, price of Ranhill formed a higher low, and therefore, forming an uptrend line (L1). However, price of Ranhil failed to break new high, but instead forming a short downtrend (L2), as a result, it has formed a Symmetrical Triangle, suggesting a consolidation. The formationg of the Symmetrical Triangle also suggests that it is now preparing for a new trend. As indicated by B, while price of Ranhill was resisted by the L2 line, the OBVwas breaking new high, suggesting that during its consolidation stage, the buying interests are stronger than the selling pressure, this implied a positive biased signal.
As indicated by C, price broke above the L2 line, volume also increased significantly (study D), breaking away from the consolidation stage. Therefore, price of Ranhill resumed its L1 uptrend. This is viewed as a buy signal, as the right approach is to buy when price started moving in uptrend.
Despite the break out of the Symmetrical Triangle, price of Ranhill was resisted by RM0.95 level, suggesting the immediate resistance line is at RM 0.95 level. Support for Ranhill is a the 14, 21, 31 EMA and the L1 uptrend line. In other words, if price of Ranhill is still supported by the rising 14, 21, 31 EMA, the uptrend is likely to continue, and if price should break below 14, 21, 31EMA, it would be a signal to take profit or to cut loss.
Table 2: Fundamental as at 31/12/2008
| Dividend | Dividend Yield | Net Profit Ratio | |
| 2008 | 0 sen | 0% | -36.75% |
| 2007 | 0 sen | 0% | +7.92% |
| 2006 | 1.5 sen | 1.16% | -0.89% |
| 2005 | 1.5 sen | 1.19% | +2.22% |
| 2004 | 10 sen | 1.6% | +6.11% |
Based on the current price of RM0.940
| Price Earning Ratio | 78.33 times | Dividend Yield | 0 % |
From the fundamental view of Ranhill, it is not as good as Bjtoto. With inconsistency of dividend payout, and weaker Net Profit ratio, this is usually not suitable for conservative type, long term, nor high yield type of investors. Based on its price movement behavior, it is more suitable for aggressive investors who equipped with strong technical analysis skills. Therefore, before any one attempt to speculate on this counter, they must first map out a sound trading plan.
WinChart Way:
Making money from stock trading / investing is not easy, and certainly not "Automatic". Therefore, a tremendous amount of analysis and mental work is required before one could succeed. Nevertheless, there is a systematic way of doing analysis.
1. Study the Broad market:
This include Dow Jones Industrial Average, Nikkei 225 index, Hang Seng Index, as well as our KLCI.
2. Study the Fundamental of individual counter:
Using fundamental analysis, one can understand the back ground of any counter, and it is usually safe to avoid those companies with poor financial performance. By understanding the background of a company, investors would then have an idea whether a counter is suitable for long term or medium term investment, or just short term speculation.
3. Individual Technical Chart:
Understanding support and resistance, trends of a counter, to make appropriate trading plan. Using indicators such Bollinger Bands to determine if price is trending or consolidating or Moving Average as a reference of a Trailing stop method, and most importantly, follow the broad market trend.
4. Profit-taking / Cut-loss plan:
Apply a suitable Trailing Stop method as trading plan.
Conclusion:
There are many conditions in which one should consider before deciding to invest on any counters, like the condition of the broad market sentiment, individual counter's fundamental performances, charts and reversal patterns, etc. Further more, every stock has a different behavior, and therefore, one should never use a fixed method to analyze a stock movement. In short, a disciplined and smart investor should spend a considerable amount of time to study the behavior of a stock, and wait until all the conditions are favorable to him or her before deciding on buying a stock. There is certainly no short-cut in getting rich in the stock market, only hard work in analysis and a calm and logic trading mind.
Copyright © 2009 Straits Index (M) Sdn BhdImportant Disclaimer:These content provided by Straits Index (M) Sdn Bhd is solely for education and information purposes only, and do not suggest any investment advices. All information displayed are believed to be accurate and reliable. Interpretation of the data or analysis is at the reader's own risk. Straits Index (M) Sdn Bhd reserves the rights but obligations to update, admen, or even terminate the materials. 重要声明:以上的内容由海峡指数(马)私人有限公司提供,纯粹是教育性质, 并不是任何的投资忠告。所有资料显示认为是准确和可靠的。对数据或分析的解释和用途是在于用户自己的风险。海峡指数(马)有限公司持有保留及义务更新,甚 至终止材料的权利。
Source : WinChart, Straits Index (M) Sdn Bhd http://www.straitsindex.com/
