Revision of last week's Case Study: OSK – 5053: Has not formed an uptrend.
Chart 1: OSK – 5053 (10/03/2010～30/06/2010)
As indicated by A, price of OSK fell below the 14, 21, 31 EMA, and therefore, it has failed to form an uptrend. Now that price is below the 14, 21, 31 EMA, the immediate technical outlook is weak, and the 14, 21, 31 EMA is serving as the dynamic resistance instead.
Technically, if price should remains resisted by the 14, 21, 31 EMA, the weakening movement of OSK is expected to carry on. In other words, breaking out above the 14, 21, 31 EMA is important if OSK should regain its position. If price should break above the 14, 21, 31 EMA with strong volume, there is a chance for OSK to regain its strength. Support for OSK is at RM1.22 level while the resistance is at RM1.35 level.
| 4 Q Rolling PER | 6.15 times | Dividend Yield | 5.91% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/12/2009 | 7.5 sen | 6.1% | 13.73% |
| 31/12/2008 | 7.5 sen | 7.58% | 16.59% |
| 31/12/2007 | 20 sen | 8.62% | 21.38% |
| 31/12/2006 | 12.5 sen | 6.38% | 23.84% |
| 31/12/2005 | 7.5 sen | 7.85% | 13.52% |
Table 1: OSK – 5053, yearly dividend, dividend yield, and net profit ratio.
PBBANK – 1295: Resisted by RM12.00.
Chart 2: PBBANK – 1295 (26/12/2008～23/06/2010) (Weekly Chart)
Chart 2 is a weekly chart of Public Bank. As shown on chart 2, since April 2009, price PBBank has broken above the 14, 21, 31 week EMA, and it remained above the 14, 21, 31 week EMA since than. Therefore, the 14, 21, 31 EMA is an important long term uptrend dynamic support.
Although the long term movement of the Pbbank is still on the uptrend, price of Pbbank has been testing the resistance of RM12.00 for many times, and remains resisted. Therefore, this is also an important resistance for Pbbank, as many investors have built a memory at this level, and eventually, the selling pressure is expected to be stronger at this level. In other words, to break above this resistance, strong volume, a strong inflow of new buying interests are needed.
Due to the frequent dividend payout, and the dividend yield is generally attractive, Pbbank is generally a favorite for long term investors. Therefore, it is a good idea to apply the weekly chart on Pbbank when doing analysis. Ideally, the best buying signal would be a higher-low of the Weekly chart.
If price should stay above the weekly 14, 21, 31 EMA, it is a good idea to hold this counter. But if price should break below the weekly 14, 21, 31 EMA, investors might want to consider taking profit or partially taking profit.
| 4 Q Rolling PER | 15.75 times | Dividend Yield | 4.62 % |
| 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 2: PBBANK – 1295, yearly dividend, dividend yield, and net profit ratio.
KINSTEL – 5060: Remains in weak trend.
Chart 3: KINSTEL – 5060 (10/03/2010～30/06/2010)
As shown on chart 3, price of Kinstel rebounded at the end of May at Rm0.77 level, and price gradually regained its position. However, despite the rebound, it is still resisted by the 14, 21, 31 EMA, thus suggesting that the downtrend remains intact.
Now that price has started to fall again after being resisted by the T1 line, it suggests that the downtrend would resume, thus the technical outlook is expected to be on the weaker side. If price should break below RM0.77 level, it would mark a new low, then, it is assumed that all investors who bought this share and are still holding will be losing money, thus creating a stronger selling pressure in the downtrend.
In short, it is unwise to buck the downtrend, and try to catch a lower price. Generally, a safer strategy is to wait until price break above the 14, 21, 31 EMA with strong volume, then look for a higher-low formation with strong volume, that would be an ideal buy signal. Nevertheless, if price should break below RM0.77, the next support level is at RM0.67 level.
| 4 Q Rolling PER | 10.11 times | Dividend Yield | 1.23% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/12/2009 | 1 sen | 1.01 % | 0.95% |
| 31/12/2008 | 1.7 sen | 4.00% | 1.52% |
| 31/12/2007 | 1.7 sen | 1.27% | 6.38% |
| 31/12/2006 | 7.5 sen | 4.60% | 35.60% |
| 31/12/2005 | 5 sen | 5.49% | 3.57% |
Table 3: KINSTEL – 5060, yearly dividend, dividend yield, and net profit ratio.
Conclusion:
The performance of the Dow Jones Industrial Average has always been a major catalyst for many stock markets across the globe. Therefore, it is crucial for investors to not over-look the performance of the Dow Jones Industrial Average.
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