Chart 1: KLCI, from 15/10/2009 to 10/03/2010.
As lead by heavy weighted banking blue chips, the KLCI gapped up last week, breaking above the 1300 mark, and marked a 2 years new high. Meanwhile, total market volume was also gradually increasing, suggesting that investors might be regaining market confidence, although it has not reached the most ideal volume level yet. Nonetheless, with the KLCI still supported by the rising 14, 21, 31 EMA, together with the Bollinger Middle Band, the immediate technical outlook is still on the bullish side. In other words, the uptrend is still intact, and therefore, position traders or investors could take advantage of the positive market sentiment, and select some blue chips which has the similar trend like the KLCI. Before picking up any stocks, lets take a look at some case studies.
Maybank:
Chart 2: Maybank, from 9/11/2009 to 10/03/2010.
As shown on chart 2, price of Maybank broke above the RM 7.00 resistance level, and went up all the way to RM 7.65, but soon, profit taking took place, and price of Maybank retreated and now consolidating. As shown on the chart above, the 14, 21, 31 EMA is still serving as the dynamic support for Maybank and if price should rebound from the dynamic support, there is a good chance that the uptrend would resume.
Technical, provided that the price is still above the 14, 21, 31 EMA, it is a good idea to hold the stocks, while using the 14, 21, 31 EMA as a trailing stop reference. When price should break below the 14, 21, 31 EMA, it would be a signal to take profit or to cut loss. Next resistance for Maybank is seen at RM 7.83 WinChart Automatic Fibonacci Retracement .
| 4 Q Rolling PER | 38.61 times | Dividend Yield | 1.08% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 30/06/2009 | 8 sen | 1.36% | 3.93% |
| 30/06/2008 | 52.5 sen | 7.45% | 18.13% |
| 30/06/2007 | 80 sen | 6.67% | 20.95% |
| 30/06/2006 | 85 sen | 7.94% | 22.07% |
| 30/06/2005 | 102.5 sen | 9.4% | 22.31% |
Table 1: Maybank, yearly dividend, dividend yield, and net profit ratio.
CIMB:
Chart 3: CIMB, from 3/11/2009 to 10/03/2010.
As shown on chart 3, price of CIMB continued its rally after breaking above the RM 13.5 resistance, while the 14, 21, 31 EMA is still serving as the dynamic support for CIMB. Therefore, the RM13.50 is an important support for CIMB.
Technically, if price should remain above the 14, 21, 31 EMA, the uptrend is still intact, until price should break below the 14, 21, 31 EMA, it would be a signal to take profit or to cut loss.
| 4 Q Rolling PER | 15.92 times | Dividend Yield | 1.46% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/12/2009 | 18.5 sen | 1.46% | 26.31% |
| 31/12/2008 | 25 sen | 4.27% | 25.22% |
| 31/12/2007 | 25 sen | 2.27% | 31.00% |
| 31/12/2006 | 15 sen | 1.94% | 23.53% |
| 31/12/2005 | 15 sen | 2.63% | 17.51% |
Table 2: CIMB yearly dividend, dividend yield, and net profit ratio.
Public Bank:
Chart 4: Public Bank, chart from 3/11/2009 to 10/03/2010.
As indicated by A, price of Public Bank broke above the 14, 21, 31 EMA with a gap, rising RM0.62 or 5.5% in 1 day, and breaking away from the bearish biased trend. However, as price gets near the resistance at RM 12.14, profit taking took place, and as a result, the rally has temporary stopped.
As indicated by B, as price of Public Bank is consolidating, its trading volume also declined, which is a typical healthy correction, as the lower volume during a consolidation suggests that there were no panic selling activities. However, if price would resume its rally, a substantial increased of volume is needed to confirm such move.
The 14, 21, 31 EMA is now serving as the dynamic support as well as the trailing stop reference, thus if price should break below the 14, 21, 31 EMA, it would be a signal to take profit or to cut loss.
| 4 Q Rolling PER | 16.20 times | Dividend Yield | 4.63% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/12/2009 | 55 sen | 4.55% | 25.91% |
| 31/12/2008 | 55 sen | 6.21% | 24.58% |
| 31/12/2007 | 75 sen | 6.82% | 22.22% |
| 31/12/2006 | 60 sen | 7.74% | 22.89% |
| 31/12/2005 | 55 sen | 8.40% | 24.50% |
Table 3: Public Bank, yearly dividend, dividend yield, and net profit ratio.
Conclusion:
As investors takes profit, the rally of these banking blue chips has temporary stopped. However, technically, they are still supported by the dynamic support, 14, 21, 31 EMA, thus the uptrend remains intact. If price should rebound above the 14, 21, 31 EMA there is a good chance that the uptrend would resume. Otherwise, if price should break below the 14, 21, 31 EMA, it would mark an end to this rally, thus a signal to take profit.
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