With the KLCI having a technical correction, many individual counters are having correction or consolidation too. Technically, it is too soon to call for any bearish trend or a reversal. However, we have to know that all reversal started with a technical correction, and if the KLCI (or the broad market) should failed to return to above the 14, 21, 31 EMA, and later forming lower-highs, then the risk of a downtrend will be greater.
SPSETIA – 8664: Continue testing RM 5.30 resistance.
Chart 1: SPSETIA – 8664 as at 01/12/2010.
As shown on chart 1, after being resisted by the RM5.30 on the 27th of October, price of Spsetia entered a consolidation stage, but still supported by the 14, 21, 31 EMA, thus the technical outlook remains positive, but with limited upside room, unless a break out above RM5.30
.During the consolidation, price of Spsetia tested the RM5.30 few times, and on the 29th of November, it had an intra-day high reaching RM5.50, breaking above RM5.30. However, as investor rushed to take profit, price was pulled back below RM5.30, and the break out was failed.
Nevertheless, with price supported by the 14, 21, 31 EMA, the overall technical outlook is still positive; and also, since price is still testing the RM5.30 resistance, it is still a good idea to hold, as long as the 14, 21, 31 EMA trailing stop method is still in place.
In other words, if price should break below the 14, 21, 31 EMA, then the uptrend will be affected, but it does not mean that it would form a downtrend immediately, unless price should form lower-highs. Nevertheless, if price should break below the 14, 21, 31 EMA, investors can choose to take profit partially.
| 4 Q Rolling PER | 22.81 times | Dividend Yield | 2.67% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/10/2009 | 15 sen | 3.62% | 12.16% |
| 31/10/2008 | 17 sen | 6.12% | 16.07% |
| 31/10/2007 | 18.4 sen | 2.36% | 22.54% |
| 31/10/2006 | 22.5 sen | 5.74% | 20.81% |
| 31/10/2005 | 25 sen | 6.79% | 16.11% |
Table 1: SPSETIA – 8664, yearly dividend, dividend yield, and net profit ratio.
Revision of last week's case study: Bursa – 1818: Short term movement remains weak.
Chart 2: Bursa – 1818 as at 01/12/2010.
As shown on chart 2, ever since breaking below the 14, 21, 31 EMA, price of Bursa remains in a short term downtrend, and the 14, 21, 31 EMA remain serving as the dynamic resistance. Technically, as long as the price is below the 14, 21, 31 EMA, the technical outlook shall remain weak.
As individual by A, price of Bursa is testing the RM7.99 or RM8.00, and this is the 50% Fibonacci Retracement line, and generally, it is an important support level. If price should rebound from this level, price of Bursa is expected to consolidate.
Nevertheless, when price is having a technical rebound, it does not mean that the downtrend is over, and catching a rebound is a risky move. This is because if price should rebound but still resisted by the 14, 21, 31 EMA, and later forms a lower-high, it means that the downtrend is still intact.
In short, there is no buy signal until a valid break out above the 14, 21, 31 EMA, or at least a formation of a higher-low. If price should break below RM8.00, then the next support is at RM7.58.
| 4 Q Rolling PER | 22.96 | Dividend Yield | 2.46% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/12/2009 | 19.10 sen | 2.46% | 44.13% |
| 31/12/2008 | 24.30 sen | 4.72% | 31.48% |
| 31/12/2007 | 85.00 sen | 5.94% | 41.55% |
| 31/12/2006 | 54.50 sen | 6.77% | 42.13% |
| 31/12/2005 | 20.00 sen | 5.46% | 42.13% |
Table 2: Bursa – 1818, yearly dividend, dividend yield, and net profit ratio.
UEMLAND – 5184: Short term weakness.
Chart 3: UEMLAND – 5184 as at 01/12/2010.
As shown on chart 3, after breaking below the 14, 21, 31 EMA on the 16th of November, price of UEMland remains resisted by the 14, 21, 31 EMA, as indicated by A, and the 14, 21, 31 EMA is now serving as a dynamic resistance.
Technically, when price is falling below the 14, 21, 31 EMA, the technical outlook is on the negative side, despite a sign of a technical rebound after touching RM 2.09 last week. Unless price could break above the 14, 21, 31 EMA successfully, catching a rebound is usually risky. If price should resisted by the 14, 21, 31 EMA after a rebound, it could be forming another lower-high, which is the characteristic of a downtrend.
| 4 Q Rolling PER | 36.41 times | Dividend Yield | 0.00% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/12/2009 | 0 sen | 0.00% | 28.44% |
| 31/12/2008 | 0 sen | 0.00% | 14.50% |
Table 3: UEMLAND – 5184, yearly dividend, dividend yield, and net profit ratio.
Conclusion:
Although it is still too soon for call for any bear market, it pays to be prudent, and watch out for the negative signals and clues. This is because a downtrend does not form in a day, it is formed with continuation of lower-highs. With that in mind, buying low, or trying to catch a bottom, will eventually resulted in buying in to a downtrend.
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