Chart 1: KLCI as at 16/3/2011.
As shown on chart 1, although the KLCI was also affected by the negative impact of the Japan nuclear crisis, the downside movement of the KLCI was rather insignificant. As indicated by A, the KLCI had once broken below the 1474 support, but it managed to return to above the support level and this shows that the support for the KLCI remains at 1474~1480. If the KLCI could hold up above this level, the KLCI could prolong its sideways consolidation.
But still, with the KLCI below the 14, 21, 31 EMA the technical outlook for the KLCI remains on the lower side. If the KLCI should break below the 1474 again, it would be making a half year new low.
Understanding volume – continue.
Last week, we discussed the relationship of volume with price movement. This week, we shall look deeper into their relationship and the effect caused.
A: Price gain with volume up.
When price goes up associated with the rising of volume, we theoretically say that there are increased of new buyers (greed) to replace the old sellers (fear). Not only that, these new buyers are mostly paying a higher price to get in, and old sellers are asking for more premium to get out. This is a good sign, especially for break out of resistance. Study Chart 1A.
Chart 1 Airasia : Price up with volume.
B: Price up but volume unchanged:
When price continues to go up, but volume remains unchanged, or there are no significant increased of volume, it is rather normal. This shows that there is still positive volume flow as new buyers are basically still paying higher price to take their shares from old sellers. Provided volume stays almost the same, it is fine. Another factor we must consider is that when price is getting higher, the buying power of the same money is less. Therefore, it is getter harder and harder to get the equal amount of shares for the same money. However, when it comes to a break out of an important resistance, significant increased of volume is still in favor.
Next week, we shall continue in exploring other combination of price and volume. Below are this week's case studies.
Axiata – 6888: Possible Head and Shoulders Top.
Axiata – 6888 as at 16/03/2011.
The L1 line of Chart 2 outlines the formation of lower-high of Axiata, since 9th of March, and the technical outlook for Axiata remains negative since then. Fortunately, price of Axiata is still supported by the RM 4.70 support, thus the downtrend is not devastating. Together with the L1 line and the RM4.70 support, it forms a Descending Triangle, and the descending Triangle is a consolidation pattern with weakness, for it shows that price already formed lower-high, but support remains unchanged.
Meanwhile, over the course of 1 and a half month, price of Axiata is forming a Head and Shoulders Top. Technically, a Head and Shoulders Top pattern implies that it is the temporary peak of Axiata, and the risk of a reversal is high, and the key factor of the reversal would be a break down below its neck line, the RM 4.70 support.
Nevertheless, regardless of the fancy name of the given pattern, the right edge of a Head and Shoulder top is always a Descending Triangle, and therefore, provided one could identify this pattern and stay away from its weakness, he is saved. As for investors whom are still holding, it is a good idea to refer to the long term weekly chart, and if price should break below the weekly 14, 21, 31 EMA, it means that the long term uptrend has been violated, thus a sign to exit.
Of course, there is still a possibility that Axiata could stay above RM 4.70, and prolong its sideways consolidation. By then, it would have broken away from the L1 descending line, thus reducing the risk of a bearish reversal.
| 4 Q Rolling PER | 22.71 times | Dividend Yield | 2.10% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/12/2010 | 10 sen | 2.07% | 11.33% |
| 31/12/2009 | 0 sen | 0.00% | 12.61% |
| 31/12/2008 | 0 sen | 0.00% | 4.39% |
Table 1: Axiata – 6888, yearly dividend, dividend yield, and net profit ratio.
CIMB – 1023: Short term weakness and testing RM 7.80 support.
Chart 3: CIMB – 1023 as at 16/03/2011.
As indicated by a, price of CIMB remains in a short term downtrend after breaking below the 14, 21, 31 EMA on the 21st of January. Therefore, the technical outlook for CIMB remains weak. It is a good idea to stay away from stocks which have negative technical outlook.
Meanwhile, price of CIMB is testing the RM 7.80 support and this is a support since August, 2010. If price should break below this support, it would be making a 7 months new low, and it means that all investors whom had bought within this 7 months will be making losses, or turning their profit into losses, thus increasing the selling pressure. Again, as long as price of CIMB is still trending below the 14, 21, 31 EMA, it is a not a good idea to “buy low”.
| 4 Q Rolling PER | 16.16 Times | Dividend Yield | 3.29% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/12/2010 | 26.07 sen | 3.23% | 29.81% |
| 31/12/2009 | 18.50 sen | 1.46% | 26.31% |
| 31/12/2008 | 25 sen | 4.27% | 25.22% |
| 31/12/2007 | 25 sen | 2.27% | 31.00% |
| 31/12/2006 | 15 sen | 1.94% | 23.53% |
Table 2: CIMB – 1023, yearly dividend, dividend yield, and net profit ratio.
Revision of last week's case study: UEMland – 5184: Still testing RM2.64 support.
Chart 4: UEMland – 5184 as at 16/03/2011.
Last week, we mentioned UEMLand's Descending Triangle, with weakness. Until now, the technical condition of UEMLand is unchanged, while the Descending Triangle remains intact. But, right now, price of UEMLand is staying at the edge of the Triangle, and usually the break out is not far away from now.
If price should break below the RM2.60 support, it would increase the selling pressure and by then, the 14, 21, 31 EMA would serve as the dynamic resistance, with negative technical outlook. Therefore, when price break below RM2.60, it is a signal to cut loss. On the other hand, if price of UEMland prolongs its consolidation, it would eventually break away the L1 line, and by then, the Descending triangle would be dysfunctional. In short, right now is not a good time to make any trading decision until a valid break out away from the L1 line.
| 4 Q Rolling PER | 45.83 times | Dividend Yield | 0.00% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/12/2010 | 0 sen | 0.00% | 41.42% |
| 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:
As the market is generally affected by negative impact of the Japan nuclear incident, many counters are falling and price is definitely lower. However, this does not mean that it is a good time to pick up some of the cheap stocks, and if one should do this, he or she is actually going against the trend.
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