This week's Case Studies:
Genting – 3182: Forming Double Top.
Chart 1: Genting 3182, chart from 18/02/2009 to 1/10/2009.
As shown on Chart 1, price of Genting has been moving in an uptrend since March of 2009, and until now, it has risen up to RM 4.00 or 125%. During its uptrend, there were a few corrections, but price managed to stay above the rising 14, 21, 31 EMA, and therefore, the uptrend is still intact.
Although price broke below the 14, 21, 31 EMA briefly on the 23/06, 13/07, and 17/08, it managed to rebound, and returned to above the 14, 21, 31 EMA on the next day, and even breaking new higher afterwards. This is a typical characteristic of a bullish uptrend.
As indicated by L1, price of Genting hit a resistance at RM 7.30 level, and this is the first time that Genting is forming a Double top since the uptrend started in March. It forms a Double Top because price hit RM7.30 resistance on the 8/09, and then price retreated. However, it was supported by the 14, 21, 31 EMA and price rebound and re-tested the RM7.30 level. Unfortunately, due to the lack of buying interest, price failed to break above RM 7.30 and resisted at that level again, and as profit taking takes place, price retreated again, forming a Double Top. In other words, a Double Top increased the memory of traders who lost money at RM7.30 level, thus it is likely to be a stronger resistance level.
Although price formed a Double Top, it does not mean that it will be forming a downtrend immediately. As indicated by A, price of Genting is still testing the 14, 21, 31 EMA, which is a long term uptrend line. If price should rebound from the 14, 21, 31 EMA, there is a chance of the uptrend to resume, and of course, the immediate resistance will be at RM 7.30.
Since the uptrend of Genting is still intact, investors might not want to take profit too soon. However, if investors should feel uncomfortable of holding, they should consider partial profit taking, by selling 1/3 of the position. This way, it will gradually reduce the risk of trading, and yet, not taking profit too early.
As for investors who are interested in buying Genting, they must wait for a formation of a high low. When price formed a higher low, with substantial volume, it is a buy signal, and investors can apply the 14, 21, 31 EMA as the dynamic support as well as the Trailing Stop reference. In case price of Genting should break below the 14, 21, 31 EMA, it means that the uptrend is no longer valid, and therefore, it is a signal to take profit.
Latest Financial Summary as at 30/6/2009：
| PER * | 97.36 times | Dividend Yield | 1.00% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31st of Dec, 2008 | 7 sen | 1.98% | 6.27% |
| 31st of Dec, 2007 | 37sen | 5.40% | 23.44% |
| 31st of Dec, 2006 | 32sen | 0.93% | 21.66% |
| 31st of Dec, 2005 | 29sen | 1.37% | 22.86% |
| 31st of Dec, 2004 | 24sen | 1.26% | 19.97% |
Table 1: Latest Financial Summary of Genting.
* Note：
Generally, a PE (Price earning ratio) is calculated using the current price and divided by the last financial year's earning per share. For this case, with the closing price of 1stof October, and divided by the total earning per share of the financial year of 2008. To better illustrate the earning performance, we had chosen to use the Rolling Price Earning Ratio, which calculate the ratio based on the latest 4 quarters earning per share.
E&O – 3417 : Testing its crucial support.
Chart 2: E&O 3417, chart from 18/20/2009 to 1/10/2009.
Since the beginning of a uptrend which started in March, price of E&O has gained RM1.17 or near 300%, and the 14, 21, 31 EMA is still serving as the dynamic support of the uptrend.
As shown on the chart, price of E&O hit its resistance at RM 1.58 level, and retreated. Now that price is testing the 14, 21, 31 EMA, it is a crucial support for the uptrend. If price should rebound, from the 14, 21, 31 EMA, it would be a buy signal, and the 14, 21, 31 EMA shall continue serving as the dynamic support and trailing stop reference.
On the other hand, if price of E&O should continue its correction, the next support is seen at RM 1.40 level. As long as price can stay above RM 1.40 level, investors who are still holding E&O share can choose to hold on to the positions, because the RM 1.40 level is also very closed to the 14, 21, 31 EMA. If price should rebound from RM 1.40 level, there is still a chance of the uptrend to resume. However, if price should break below RM 1.40, it would be a signal to suggest a profit taking or cut loss.
Latest Financial Summary as at 30/6/2009：
| PER** | 51.06 times | Dividend Yield | 0.00% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31st of March, 2009 | 0 sen | 0% | -12.45% |
| 31st of March, 2008 | 5sen | 3.16% | 24.95% |
| 31st of March, 2007 | 4sen | 1.83% | 5.76% |
| 0sen | 0% | 12.93% | |
| 30th of June, 2006 | 0sen | 0% | 9.30% |
Table 2: E&O, Financial Summary.
** Since the total earning per share of the 4 rolling quarters of E&O is negative, the Rolling PE and Normal PE is no longer applicable to study the earning performance of E&O. Therefore, we are using the Leading Price Earning Ratio to calculate the PE ratio. Leading PE is calculated based on the annualized current financial year's earning per share, and it reflects the PE based on current year's earning performance.
Conclusion:
There is always risk in trading, and the above two Case Study analysis is using a method which we had been discussing for over 30 weeks. Investors should never feel demoralized with the idea of cutting loss, for cutting loss is part of the trading game. Instead, investors should learn to how cut loss, and re-position themselves.
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。
