Chart 1: DJI chart, from 27/3/2008 to 10/6/2009 with 200-day MA.
As indicated by A, the DJI rebounded strongly in March 2009, until now, it has gained about 2300 points or 35%. As the DJI rebound, markets across the globe also rebounded strongly. For example, the Hong Kong Hang Seng index up about 7000 points or 61%, Tokyo Nikkei 225 index up 2750 or 38%, while the KLCI up 230 points or 27%.
The strong rebound of the DJI has brought a mini bull run to Asian markets with the Hang Seng index, Nikkei 225 index, as well as the KLCI breaking above the 200-day MA. However, as indicated by B, the DJI is only testing the 200-day MA.
As the KLCI broke above 200-day MA, entering a mid term bull run (Study Chart2), many individual stocks also broke above 200-day MA, for instance, Genting, which we had mentioned earlier. (Study Chart 3).
Generally, the performance of the DJI has a great effect over the other markets across the globe. If the DJI should remained resisted by the 200-day MA and begin to retreat afterward, it would have a negative effect to the regional markets. Therefore, this is a crucial moment for the DJI; and many fund managers, analysts, and investors are watching the DJI testing its 200-day MA.
Chart 2: KLCI chart from 04/12/2008 to 11/06/09, with 200-day MA.
As indicated by A, the KLCI rebounded in March, 2009, in line with the DJI rebound, and broke above the 200-day MA on the 21st of April (Indicated by B), breaking away the downtrend which lasted for 14 months. Soon, the KLCI retreated due to profit taking activities but it managed to rebound from the 200-day MA, as indicated by C, and confirmed the break out of the 200-day MA, entering a mid term bull run. Although until now, the KLCI only gained 16% after breaking above 200-day MA, many individual counters has risen 30% level.
Chart 3: Genting [3182], chart from 07/01/2009 to 10/06/09, with 200-day MA.
As indicated by A, Genting rebounded from RM 3.08 level in March, gaining 31.8% and precisely resisted by the 200-day MA. After consolidating for about 1 week, it managed to break above the 200-day MA, gaining another RM 1.50 or 33%.
Current Case Study of 200-day MA : Pelikan
Chart 4: Pelikan [5231], from 21/10/2008 to 11/06/2009, with 200-day MA.
As shown on chart 4, Pelikan has rebounded RM 0.83 or 135% since March, and now testing the 200-day MA. As indicated by A, this is the first time Pelikan is testing its 200-day MA since November of 2007.
Because it is only a first day break out of the 200-day MA, the break out is yet to be confirmed. Generally, price pull back after breaking above a major resistance like 200-day MA. If price should remain supported by the 200-day MA after its pull back, then it would be a confirmation of a break out from the downtrend which lasted for 19 months. Next resistance for Pelikan is at RM 1.60 and RM 1.80 WinChart Automatic Fibonacci Retracement.
For those who are holding Pelikan shares, or those who are thinking of buying, the 14, 21, 31 EMA is still serving as the dynamic support, and investors can apply the 14, 21, 31 EMA as the trailing stop method. If price should break below 14, 21, 31 EMA, it would be a signal to take profit or to cut loss.
Here are some fundamental information of Pelikan:
Table 1:
Quarterly Earning per Share (Sen):
| 2007 | 2008 | 2009 | ||||||
| Quarter 1 | Quarter 2 | Quarter 3 | Quarter 4 | Quarter 1 | Quarter 2 | Quarter 3 | Quarter 4 | Quarter 1 |
| 14.81 | 15.24 | 7.98 | -3.62 | 8.32 | 15.26 | 5.43 | -13.44 | 2.36 |
Dividend and Dividend Yield:
| Dividend: | Dividend Yield | Net Profit Ratio | |
| 2008 | 2 sen | 2.06% | 3.15% |
| 2007 | 11 sen | 2.76% | 7.79% |
| 2006 | 15 sen | 4.08% | 11.73% |
| 2005 | 12 sen | 5.88% | 11.37% |
Based on the closing price of RM 1.44:
| Price Earning Ratio | 15.25 times | Dividend Yield | 1.39% |
Below are some counters which is testing the 200-day MA. If price should break above the 200-day MA, with substantial volume, it would be a buy signal, and the 14, 21, 31 EMA shall serve as the dynamic support and the Trailing Stop reference.
| Code | Name | Board / Sector |
| 2283 | ZELAN | Main Board / Construction (C.I. Component) |
| 0082 | GPACKET | Main Board / Technology |
| 1538 | BOLTON | Main Board / Properties |
| 0021 | GHLSYS | Main Board /Technology |
| 5274 | HLCap | Main Board / Finance |
Conclusion:
The performance of the DJI will inevitably affect the regional markets. Now fund managers, analysts are watching closely if the DJI could break above the 200-day MA successfully. Should the DJI failed to break above the 200-day MA and started to turn weak, it would eventually pull down the regional markets, including our local stocks.
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