OSK – 5053: Falling below the dynamic support.
Chart 1: OSK – 5053 as at 19/01/2011.
As shown on chart 1, price of OSK rebounded on the 14, 21, 31 EMA dynamic support on the 5thof January and attempted to test the RM 2.23 resistance, but failed. In stead, as indicated by A, price of OSK fell below the 14, 21, 31 EMA, and therefore, the previous uptrend has been violated.
After breaking below the 14, 21, 31 EMA, the 14, 21 ,31 EMA is now serving as the dynamic resistance, and technically, as long as price is staying below the falling dynamic resistance, the technical outlook shall remains on the lower side.
Based on the chart reading, price of OSK has been falling for a few consecutive days, and therefore, the short term movement is now getting over-sold. In other words, there is a chance of a technical rebound in the near future, but still, the technical outlook is weak. Despite the chance of a technical rebound in the near future, it is not wise to catch the rebound. In fact, if price should rebound but failed to break above the 14, 21, 31 EMA, it would form a lower-high, which is a typical characteristic of a downtrend movement. Technically, when price forms a lower-high, it is time to close positions by reducing losses.
| 4 Q Rolling PER | 12.71 | Dividend Yield | 4.10% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/12/2009 | 7.5 sen | 6.10% | 13.73% |
| 31/12/2008 | 7.5 sen | 7.58% | 16.59% |
| 31/12/2007 | 20 sen | 8.62% | 21.38% |
| 31/12/2006 | 12.5 sen | 6.38% | 23.84% |
| 31/12/2005 | 7.5 sen | 7.85% | 13.52% |
Table 1: OSK – 5053, yearly dividend, dividend yield, and net profit ratio.
KENCANA – 5122: In uptrend, testing important dynamic support.
Chart 2: KENCANA – 5122 as at 19/01/2011.
As shown on chart 2, price of KENCANA touched its peak of RM2.96 recently, but broad based profit taking activities had pulled back prices of most of the Oil and Gas counters, and price of Kencana fell RM 0.34 or 11%, but the uptrend remains intact.
As indicated by A, price of Kencana is currently testing the 14, 21, 31 EMA dynamic support. If price should rebound from the 14, 21, 31 EMA, it would be forming a new higher-low, and then the uptrend is likely to resume.
Although it is said that the uptrend is now still intact, it is still important that investors to honor their trading plan, by using a trailing stop method. This is because price of Kencana has not rebounded yet, and in case price should fall below the 14, 21, 31 EMA, the uptrend would be violated. As for investors whom are feeling uncomfortable, he or she could choose to take profit partially, by selling 1/3 of the position.
On the other hand, even if price should rebound from the 14, 21, 31 EMA, price would have to break above RM2.96 resistance to extend the utprend. If price should rebound from the 14, 21, 31 EMA, but started falling again below RM2.96 resistance, it would be forming a lower-high, and it would be a first sign of a possible reversal.
| 4 Q Rolling PER | 23.70 times | Dividend Yield | 0.00% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/07/2010 | 0 sen | 0.00% | 12.46% |
| 31/07/2009 | 0 sen | 0.00% | 10.36% |
| 31/07/2008 | 0 sen | 0.00% | 5.86% |
| 31/07/2007 | 0 sen | 0.00% | 6.93% |
| 31/07/2006 | 0 sen | 0.00% | 0.00% |
Table 2: KENCANA – 5122, yearly dividend, dividend yield, and net profit ratio.
CIMB – 1023: In uptrend, testing uptrend support line.
Chart 3: CIMB – 1023 as at 19/01/2011.
As indicated by A, price of CIMB had a technical correction as investors take profit. Price retreated RM0.54 or 5.88% from its recent peak of RM9.17. If price of CIMB could rebound from the T1 uptrend line, which is a medium to long term uptrend support line, it means that the uptrend is still intact.
On the other hand, if price should break below the T1 uptrend line, it is a first signal to take profit, as it suggests that the uptrend could be violated. However, the long term movement of CIMB remains in an uptrend as shown on Chart 3A weekly chart. As for investors whom choose to invest for long term, it is a good idea to monitor the weekly chart as well, for a long term investor might choose ignore the daily fluctuation of price. Therefore, as long as price of CIMB is still supported by the 14, 21, 31 weekly EMA, it suggests that the long term movement of CIMB is still on the uptrend.
Chart 3A: CIMB weekly chart.
| 4 Q Rolling PER | 17.42 times | Dividend Yield | 2.14% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/12/2009 | 18.5 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% |
| 31/12/2005 | 15 sen | 2.63% | 17.51% |
Table 3: CIMB – 1023, yearly dividend, dividend yield, and net profit ratio.
Conclusion:
Although the theory of technical analysis is almost universal, interpretation of chart varies between traders. When price is moving against you, it suggests that either you had made a mistake, or the market direction has changed. Either way, it is against the portfolio of a trader, and therefore, the only right thing to do is to reduce position or cut loss.
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