FBM KLCI
The FBM KLCI ended the 2009 with some retreat but it managed to closed above the Bollinger Middle Band, thus suggesting that the immediate outlook for the KLCI was still on the positive side. On the first trading day of 2010, the Bollinger Bands expanded, with the KLCI above the Bollinger Middle Band, therefore, the KLCI continued its bullish biased movement. Let us look at two counter's case studies in line with the Chinese New Year rally.
Affin [5185]
Chart 1: Affin, chart from 9/9/2009 to 6/1/2010.
Affin continued its uptrend since March, 2009, and recently, it has tested the RM2.60 resistance level many times. As shown on chart 1, price of Affin broke above the RM 2.60 briefly on the 16/11/2009, but it failed to stay above the RM 2.60 level and retreated. Fortunately, price rebounded again and returned to above the Bollinger Middle Band, and tested the RM 2.60 level again.
As indicated by A, there is a sign that the Bollinger Bands might be expanding, thus a chance for a break out from the consolidation. With price above the Bollinger Middle Band, if the Bollinger Bands should expands, price would break above the RM 2.60 to resume its uptrend.
Technically speaking, the ideal break out signal above the RM 2.60 would be the increased of volume. As indicated by A, volume for Affin has been low, this suggests that investors were mostly staying on the sideline. The increased of volume suggests an inflow of fresh capital, as new buying interests can absorb the selling pressure, then only price could move higher above the RM 2.60.
Nevertheless, if investors should follow the bullish signal of the Bollinger Bands, the Bollinger Middle Band shall serve as the dynamic support as well as the trailing stop reference. If price of Affin should break below the Bollinger Middle Band, it would be a signal to take profit or cut-loss. Support for Affin is at RM 2.40 followed by the RM 2.26.
| 4 Q Rolling PER | 9.81 times | Dividend Yield | 1.97% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/12/2008 | 5 | 3.29% | 13.84% |
| 31/12/2007 | 5 | 1.93% | 11.52% |
| 31/12/2006 | 5 | 2.50% | 30.41% |
| 31/12/2005 | 4 | 2.55% | 28.82% |
| 31/12/2004 | 1 | 0.59% | 29.33% |
Table 1: Affin, yearly dividend, dividend yield, and Net profit ratio.
KNM [7164]
Chart 2: KNM, chart from 9/9/2009 to 6/1/2010.
KNM has been one of the most actively traded counters, with sufficient liquidity, and suitable for short term and trend trading. As shown on the chart 2, price of KNM broke above the L1 downtrend line, breaking away from the short term downtrend. When price breaks above the L1 line, it also breaks above the 14, 21, 31 EMA, thus the EMA is now serving as the dynamic support as well as the trailing stop reference.
Price of KNM is now resisted by the RM0.815 level, and it is having its technical correction. Technically speaking, it is normal to have a technical correction after a short rally. Provided that price of KNM could remain above the 14, 21, 31 EMA, there is still a chance for it to resume its uptrend. When price should rebound from the 14, 21, 31 EMA, it would be another buy signal, and as long as the price should stay above the 14, 21, 31 EMA, investors can hold on to the positions.
In the contrary, if price should break below the 14, 21, 31 EMA, the next support for KNM is seen at RM 0.71 level. RM 0.71 level is an important support level for KNM, if price should break below this level, it would be making a new low, thus a signal to cut-loss.
| 4 Q Rolling PER | 10.00 times | Dividend Yield | 1.97% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/12/2008 | 1.5 sen | 3.75% | 13.30% |
| 31/12/2007 | 4 sen | 0.63% | 15.31% |
| 31/12/2006 | 5 sen | 0.55% | 14.56% |
| 31/12/2005 | 5 sen | 1.36% | 11.97% |
| 31/12/2004 | 3 sen | 1.05% | 8.41% |
Table 2: KNM yearly Dividend, Dividend Yield, and Net Profit Ratio.
Conclusion:
The above two case studies show unconfirmed buy signal, but it is important to get ready by knowing the characteristics of a buy signal, so that investors can get ready and have a sound trading plan laid out.
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