Chart 1: KLCI as at 16/2/2011.
Technically, as long as the KLCI is still trading within the downtrend channel, the technical outlook is expected to be weak, even if the KLCI could rebound from the 1500. In other words, the KLCI has to break above the T1 line successfully to break away from this negative trend.
Other than the 1500 psychological support, the next support for the KLCI is at 1480. As for whether the KLCI is heading towards a bear market, it is still too soon to call. This is because the KLCI is still supported by the 14, 21, 31 Weekly EMA, which is the long term uptrend dynamic support since March of 2009. Meanwhile, the recent correction of the KLCI had mostly affect some blue chips counters, whereas, other non-blue chips stocks are not much affected. In addition to that, during this correction, only the Asian markets were affected, while the US and European markets are basically still trending up. Therefore, if the KLCI should consolidate above 1500, and the US and European markets are still doing well, the local market sentiment is likely to regain some of this ground.
Below are this week's Case Studies:
Mulpha – 3905: Uptrend violated.
Chart 2: Mulpha – 3905 as at 16/02/2011.
As shown on chart 2, price of Mulpha attempted to rebound on the 8th of February, and it managed to return to above the 14, 21, 31 EMA briefly. However, price started falling after that, and breaking below the 14, 21, 31 EMA again, and the 14, 21, 31 EMA is now serving as the dynamic resistance.
Not only that, when price fell below the 14, 21, 31 EMA, it also formed a lower-high, which is outlined by the T1 line. As indicated by A, if price should break below its recent support of RM 0.555, it would be making a new low.
It is important that one should remember the characteristic of a downtrend, which is the formation of lower-high and new low. In other words, if price of Mulpha should remain below the 14, 21, 31 EMA or the T1 line, the technical outlook is expected to be weak. And it is not a good idea to buy at this moment. As for those whom already had position, it was a signal to take profit or the cut loss when price fell below the 14, 21, 31 EMA. Nevertheless, next support for Mulpha is seen at RM 0.52 followed by RM0.48.
| 4 Q Rolling PER | 6.16 times | Dividend Yield | 0.00% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/12/2009 | 0 sen | 0.00% | -1.45% |
| 31/12/2008 | 0 sen | 0.00% | -8.24% |
| 31/12/2007 | 0 sen | 0.00% | 12.22% |
| 31/12/2006 | 0 sen | 0.00% | 6.75% |
| 31/12/2005 | 0 sen | 0.00% | 27.33% |
Table 1: Mulpha – 3905, yearly dividend, dividend yield, and net profit ratio.
Revision of last week's case study: KUB – 6874: Forming Symmetrical Triangle.
Chart 3: KUB – 6874 as at 16/02/2011.
As shown on chart 3, price of KUB successful rebound from the 14, 21, 31 EMA on the 9th of February, and therefore, the uptrend is still intact, and the 14, 21, 31 EMA is still serving as the dynamic support. In other words, for those whom are already in position, it is a good idea to hold, provided that you should gradually lift your cut loss or profit taking level accordingly to the 14, 21, 31 EMA.
Although price rebounded from the dynamic support, it failed to return nor break above its peak of RM0.95; instead, it started to retreat at RM0.90, forming a lower-high, which marked by the L2 line. This is a sign suggesting a possible weakening movement for KUB. By combining the 14, 21, 31 EMA (or L1) and the L2 line, KUB is actually forming a Symmetrical Triangle consolidation.
For those whom are already in position, the Symmetrical Triangle will not affect much, as the trailing stop method still applies. However, it is not a good idea to take up new position when price is forming a Symmetrical Triangle, for the Symmetrical triangle means that the direction of price is unclear. It is usually better to wait for a valid break out above the L2 line while still supporting by the 14, 21, 31 EMA, then one could only consider taking up a new position. On the contrary, if price should break below the L1 line or the 14, 21, 31 EMA, it is a signal suggesting to take profit.
| 4 Q Rolling PER | 14.26 times | Dividend Yield | 0.00% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/12/2009 | 0 sen | 0.00% | 5.62% |
| 31/12/2008 | 0 sen | 0.00% | 3.92% |
| 31/12/2007 | 0 sen | 0.00% | -14.43% |
| 31/12/2006 | 0 sen | 0.00% | -1.08% |
| 31/12/2005· | 0 sen | 0.00% | -4.77% |
Table 2: KUB – 6874, yearly dividend, dividend yield, and net profit ratio.
Ramunia - 7206: Uptrend remains intact.
Chart 4: Ramunia - 7206 as at 16/02/2011.
The recent correction has affected mostly blue chips, for stocks like Ramunia, as shown on chart 4, the uptrend remains intact, despite a mild correction after hitting RM0.75. As indicated by A, price of Ramunia is still supported by the 14, 21, 31 EMA, and this suggests that the uptrend is not violated. Technically, if investors could gradually lift the cut-loss or profit taking level according to the 14, 21, 31 EMA, he or she would gradually reduce the trading risk when price should continue supported by the 14, 21, 31EMA.
If price should rebound from the 14, 21, 31 EMA, it would form another higher-low, which could be seen as a buy signal. However, one should consider another factor, which is the overall market condition. If the KLCI should stay below the T1 downtrend, chances are the general market sentiment as a whole will be affected, and the probability of Ramunia to continue its uptrend will also be affected.
Nevertheless, immediate resistance for Ramunia is at RM0.75. If price should form a higher-Low, then the next target would be to break above the RM0.75, in order for the uptrend to continue. Please note that Ramunia is a PN-17 counter.
| 4 Q Rolling PER | 6.54 times | Dividend Yield | 0.00% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/10/2010 | 0 sen | 0.00% | 195.00% |
| 31/10/2009 | 0 sen | 0.00% | -15.48% |
| 31/10/2008 | 0 sen | 0.00% | -77.48% |
| 31/10/2007 | 0 sen | 0.00% | 3.37% |
| 31/10/2006 | 0 sen | 0.00% | 5.02% |
Table 3: Ramunia - 7206, yearly dividend, dividend yield, and net profit ratio.
Conclusion:
Nevertheless, for those investors whom are already in position, and their stocks are still trending up, it is a good idea to continue to hold, as long as the trailing stop trading plan is still in place. As for those counters that are affected by this correction, and if price should break below the trailing stop reference, the right thing to do is to cut loss.
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