Chart 1: KLCI chart from 5/10/2009 to 10/03/2010.
As lead by the positive performance of stock markets abroad, the KLCI gained strength after breaking above the 14, 21, 31 EMA, it marked a 2 years new high with a gap breaking above the 1300 mark. At the same time, total market volume increases gradually, suggesting that the market sentiment is still improving, even though it has not reached the ideal level yet. As the KLCI is gaining strength, let us take a look at some blue chips counters this week.
Axiata: Consolidating after a sharp rally.
Chart 2: Axiata, from 9/11/2009 to 10/03/2010.
As indicated by A, price of Axiata broke above the RM3.50 and had a strong rally. After the strong short term rally, the Bollinger Bands is now contracting, suggesting that Axiata is consolidating, and the Bollinger Middle Band shall be the dynamic support as well as the target of the consolidation.
As indicated by B, as price of Axiata is consolidating, volume decreases significantly, suggesting that there are no panic selling sighted, thus a rather healthy consolidation. Nevertheless, if price should resume its uptrend, we need to have strong volume to confirm such move.
For now, it is a good idea to monitor the re-expansion of the Bollinger Bands, for if the Bollinger Bands should re-expand with price above the Bollinger Middle Band, it would be a signal suggesting another bullish movement. Otherwise, if the Bollinger Bands should expand with price below the Bollinger Middle Band, it would be a bearish move, thus a signal to take profit or to cut loss.
| Leading PER | 17.73 times | Dividend Yield | 0% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/12/2009 | 0 sen | 0% | 12.61% |
| 31/12/2008 | 0sen | 0% | 4.39% |
Table 1: Axiata, yearly dividend, dividend yield, and net profit ratio.
Genting: Uptrend not confirmed.
Chart 3: Genting, chart from 19/10/2009 to 10/03/2010.
As shown on chart 3, price of Genting rebounded at RM6.20 level, and broke above the 14, 21, 31 EMA, after that, it went into a consolidation while supported by the 14, 21, 31 EMA. This suggests that Genting has temporary broken away from its bearish trend, but it has not formed an uptrend yet.
Technically, price of Genting has to formed a Higher-low, and rebound above the 14, 21, 31 EMA inorder to signal a formation of an uptrend.
If price should rebound above the 14, 21, 31 EMA, the 14, 21, 31 EMA shall serve as the dynamic support as well as the trailing stop reference. Until the 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 | 23.71 times | Dividend Yield | 1.07% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/12/2009 | 7.2 sen | 1.14% | 11.74% |
| 31/12/2008 | 7 sen | 1.89% | 6.27% |
| 31/12/2007 | 37sen | 0.98% | 12.15% |
| 31/12/2006 | 32sen | 0.97% | 21.66% |
| 31/12/2005 | 29sen | 1.36% | 22.86% |
Table 2: Genting, yearly dividend, dividend yield, and net profit ratio.
IOI Corp: Testing the resistance.
Chart 4: IOIcorp, from 14/09/2009 to 10/03/2010.
As shown on chart 4, price of IOIcorp tested the RM 5.60 resistance level many times, and as it approached the resistance, profit taking kicked in. As indicated by A, price of IOIcorp broke above the RM 5.60 level with its intra-day movement, but it failed to closed above the resistance. Therefore, this suggests that the selling pressure is still strong.
Volume started to pick up as price tested the RM 5.60 resistance again, suggesting some increased in buying interest. Therefore, technically, if price should break above the resistance with huge volume, it would be a valid break out. Then, the 14, 21, 31 EMA shall continue serving as the dynamic support for the upward movement.
| 4 Q Rolling PER | 22.23 times | Dividend Yield | 1.47% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 30/06/2009 | 8 sen | 1.69% | 6.74% |
| 30/06/2008 | 17 sen | 2.28% | 15.22% |
| 30/06/2007 | 7 sen | 1.35% | 16.55% |
| 30/06/2006 | 43.5 sen | 3.04% | 13.81% |
| 30/06/2005 | 35 sen | 3.33% | 14.86% |
Table 3: IOIcorp yearly dividend, dividend yield, and net profit ratio.
Conclusion:
Generally, blue chips are fund managers favorite picks for long term holdings. Therefore, these blue chips usually don't come in cheap. However, despite they are perceived as strong and value stocks, their stock price could come too. Therefore, there is also risk in blue chips, and investors would still have to learn how to pick a good timing, other than picking the right blue chips.
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