Review last week's Case Study: TA – 4898: Weaker technical outlook after new low.
Chart 1: TA – 4898 (16/11/2009～26/05/2010)
As indicated by A, price of TA has been supported by the RM0.66 level for about 4 months, and finally, it broke below RM0.66 level, marking a 10 months new low. This means that all investors who have been holding their share for this 10 months are now making losses, no matter how low he or she has bought this share during this 10 months. Therefore, the RM0.66 level, will be an important resistance level, as it is now the psychological break even level for these losers.
As price breaks new low, the 14, 21, 31 EMA is also falling as it is still serving as a dynamic resistance, which making the technical outlook still weak.
If price should rebound, it would only be a technical rebound, not a reversal yet, unless it could break above the 14, 21, 31 EMA, together with substantial increased of volume. But if price should rebound but resisted at the RM0.66, it would only make the RM0.66 resistance stronger, and investors should consider cut loss, to avoid holding their shares in downtrend.
| 4 Q Rolling PER | 11.78 times | Dividend Yield | 0% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/01/2010 | 0 sen | 11.11% | 0 % |
| 31/01/2009 | 4.50 sen | 11.17% | 7.32% |
| 31/01/2008 | 10.00sen | 8.11% | 7.94% |
| 31/01/2007 | 7.00sen | 6.35% | 7.95% |
| 31/01/2006 | 3.00sen | 6.00% | 6.34% |
Table 1: TA-4898 , yearly dividend, dividend yield, and net profit ratio.
Muhibah - 5703: Breaks 15 months new low.
Chart 2: Muhibah - 5703 (23/12/2009～26/05/2010)
As indicated by A on chart 2, price of Muhibah breaks below RM0.91 support, making 14 months new low, with price trending weak. When price is making a 14 months new low, it appears to be a lowest price in 14 months, thus attracting many bargain buying. However, it is very risky to buy at new low, as all the investors who has been holding their shares in this 14 months are now losing money, while their will of breaking even is very strong, and the RM0.91 is now a strong resistance level. Therefore, it is not easy for price to rally, unless with strong volume together with the recovery of the broad market.
Meanwhile, the 14, 21, 31 EMA is still serving as the dynamic resistance, thus the technical outlook remains weak. Technically, all rebound below the falling dynamic resistance will only be considered as technical rebound, not a reversal, unless price could break above the 14, 21, 31 EMA. Therefore, any attempt in catching a rebound is literally buying into a downtrend. This is a risky trading style, not suitable for inexperienced traders or conservative investors. Nevertheless, next support for Muhibah is seen at RM 0.65 level.
| 4 Q Rolling PER | 22.95 times | Dividend Yield | 2.98% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/12/2009 | 2.5 sen | 2.72% | 0.64% |
| 31/12/2008 | 2.5 sen | 2.53% | 1.02% |
| 31/12/2007 | 4.5 sen | 1.20% | 4.94% |
| 31/12/2006 | 7.5 sen | 2.88% | 3.06% |
| 31/12/2005 | 4.0 sen | 5.76% | 2.68% |
Table 2: Muhibah - 5703, yearly dividend, dividend yield, and net profit ratio.
Airasia – 5099: Testing important Support.
Chart 3:Airasia – 5099 (02/07/2009～26/05/2010)
As shown on chart 3, price of Airasia has been fluctuating between RM1.30 to RM 1.45 trading range for about 5 months, and on the 17th of May, price broke away from the trading range, breaking below the RM1.30 support level, entered a downtrend, while the 14, 21, 31 EMA became the dynamic resistance.
As indicated by A, after breaking below RM1.30 level, price of Airasia has fallen about RM0.20 or 15%, and precisely rebounded at RM1.10. RM1.10 level is the support level before the rally of June, 2009, thus suggesting there are some positive memory of investors at this level.
If price should rebound from this level, and breaking above the 14, 21, 31 EMA, there is a good chance for Airasia to break away from this downtrend and consolidate. If price should break away from the 14, 21, 31 EMA with strong volume, it could be a reversal signal.
On the other hand, if price should rebound but failed to break above the 14, 21, 31 EMA, and later starts falling again, it would resume its downtrend, and the technical outlook shall remains weak. It is a signal to cut loss. If price should break below RM1.10 level, next support will be at RM1.00 and RM0.84 Fibonacci restracement line, while the 14, 21, 31 EMA remains the dynamic resistance.
| 4 Q Rolling PER | 4.96 times | Dividend Yield | 0% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/12/2009 | 0sen | 0% | 17.27% |
| 31/12/2008 | 0sen | 0% | -17.87% |
| 31/12/2007 | 0sen | 0% | 38.90% |
| 31/12/2006 | 0sen | 0% | 31.07% |
| 31/12/2005 | 0sen | 0% | 10.25% |
Table 3: Airasia – 5099, yearly dividend, dividend yield, and net profit ratio.
Conclusion:
Every buyer wishes to buy at the lowest possible price, and it is natural, but during a downtrend, it is easier to buy low, as price closing lower than yesterdays' closing price is more frequent. Therefore, when buying low, it is likely that one is buying into a downtrend. The less risky way is buying higher during an uptrend, which is not natural to most people, but this is a way professional trades.
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