AXIATA – 6888: Long term uptrend remains intact.
Chart 1: AXIATA – 6888 as at 12/01/2011 (Weekly Chart)
As shown on chart 1, as the KLCI stays in its uptrend, Axiata also extended its uptrend, and making a new high since 20/10/2008. As we all know that Axiata is one of the heavy weighted KLCI components, and its daily fluctuation is generally not too high, and therefore, when trading, investors should consider that this or similar counters as such, are not suitable for short term trading, but for longer term trend trading.
Chart 1 is a weekly chart of Axiata, with the weekly 14, 21, 31 EMA as the long term dynamic support. If one should have used a daily chart to trade Axiata, he or she would have missed out the entire trend, and had many ins and outs in the course of this same uptrend. This is because daily chart gives distortion or noise to the overall direction of Axiata, while the bigger picture remains unchanged.
In short, for stocks that are usually less volatile especially heavy weight blue chips like Maybank, Public Bank, Genting or similar stocks, it is a good idea to refer to the weekly chart for the long term directing. Technically, as long as their share price are still above the weekly 14, 21, 31 EMA, it is a good idea to hold.
| 4Q Rolling PER | 14.76 times | Dividend Yield | 0.00% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/12/2009 | 0 sen | 0.00% | 12.61% |
| 31/12/2009 | 0 sen | 0.00% | 4.39% |
Table 1: AXIATA – 6888, yearly dividend, dividend yield, and net profit ratio.
HAPSENG – 3034: Sharp correction, may affect its uptrend.
Chart 2: HAPSENG – 3034 as at 12/01/2011.
As shown on chart 2, since forming its uptrend in October, 2010, price of HAPSENG has been staying above the 14, 21, 31 EMA, and price of HAPSENG had gained RM 4.70 in share price or 170%. Recently, it hit a peak of RM 7.52 on the 10th of January, 2011, and price started falling as a correction after the company has announced a bonus share and rights issue; its share price has sharply dropped RM 1.38 or 18%.
As indicated by A, the sharp correction of price has fallen below the 14 and 21 day EMA, but precisely supported by the 31-EMA. Generally speaking this sharp correction has put the overall uptrend to a pause, and now price is likely to consolidate for now. It is not surprised that some investors or traders might start buying (bargain buying), and price of HAPSENG could rebounded. However, if price should rebound but failed to break above the RM7.52 level, it would be forming a lower-high, which is a first sign of a downtrend characteristic.
Please take a careful look at its price for the last four months uptrend, has it ever formed any lower-high? Never. This is because during an uptrend, the characteristic of price movement is higher-Low. Lower-high would be the characteristic of a downtrend price movement. (Please study Chart 2A)
Chart 2A: HAPSENG – 3034, from June 2008 to August, 2008.
| 4 Q Rolling PER | 15.24 times | Dividend Yield | 1.95% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/12/2009 | 12 sen | 4.90% | 4.07% |
| 31/12/2008 | 12 sen | 5.91% | 9.98% |
| 31/12/2007 | 56 sen | 22.60% | 36.09% |
| 31/12/2006 | 7 sen | 2.94% | 6.13% |
| 31/12/2005 | 7 sen | 3.93% | 6.07% |
Table 2: HAPSENG – 3034, yearly dividend, dividend yield, and net profit ratio.
MUHIBAH – 5703: Uptrend still intact.
Chart 3: MUHIBAH – 5703 as at 12/01/2011.
As indicated by A, price of MUHIBAH rebounded from the 14, 21, 31 EMA after precisely supported by the 14, 21, 31 EMA, and therefore, it extended its uptrend. As for those investors whom are already in position, it is a good idea to hold until price should break below the 14, 21, 31 EMA dynamic support. As long as one is honoring his own trading plan, by lifting the stop loss level gradually higher according to the 14, 21, 31 EMA. This, he or she could gradually reduce the trading risk, and at the same time, maximize the possibilities of the uptrend.
Although price is still staying in its uptrend, when price is rising faster, or speeding up, it began to stay further away from the dynamic support, and the risk of a technical correction will increase as well. This why, as a general rule of thumb, never buy when price is too far away from the dynamic support.
Technically, it is a better time to buy when price has just rebounded from the 14, 21 ,31 EMA, forming a “fresh” higher-low, and after price should continue rising, it is then a time to apply the 14, 21, 31 EMA as a trailing stop reference.
| 4 Q Rolling PER | 38.71 times | Dividend Yield | 1.39% |
| 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 sen | 5.76% | 2.68% |
Table 3: MUHIBAH – 5703, yearly dividend, dividend yield, and net profit ratio.
Conclusion:
As the KLCI rallied, total market volume increased significantly, and the higher volume usually means an increased of investors confidence. However, the increased of confidence does not translate to a decreased of risk. Therefore, a smart investor will still have to be prudent and always honor his sound trading plan.
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