SPSetia, Bursa, UEMLand

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.

Copyright © 2009 Straits Index (M) Sdn BhdImportant Disclaimer:These content provided by Straits Index (M) Sdn Bhd is solely for education and information purposes only, and do not suggest any investment advices. All information displayed are believed to be accurate and reliable. Interpretation of the data or analysis is at the reader's own risk. Straits Index (M) Sdn Bhd reserves the rights but obligations to update, admen, or even terminate the materials. 重要声明:以上的内容由海峡指数(马)私人有限公司提供,纯粹是教育性质, 并不是任何的投资忠告。所有资料显示认为是准确和可靠的。对数据或分析的解释和用途是在于用户自己的风险。海峡指数(马)有限公司持有保留及义务更新,甚 至终止材料的权利。

MAS, Bursa, GENP

After the KLCI had tested the 1532 level and started to retreat, total market volume has begun to fall since then. This is due to profit taking, as investors are staying on the sidelines waiting for a clearer picture of the market direction. In other words, the market sentiment weakening. Generally, stocks price are likely to stay weak or in a sideways manner when volume is low. However, as long as one's counters are still staying in an uptrend, and provided that he or she is using a trailing stop method, he or she can choose to hold.

MAS – 3786: Continue in weakness.

Chart 1: MAS – 3786 as at 24/11/2010.

As indicated by A, since falling below the T1 uptrend line on the 29th of October, price of MAS had also broken below the 14, 21, 31 EMA, and until now, it is still staying below the 14, 21, 31 EMA. Therefore, the 14, 21, 31 EMA is serving as a dynamic resistance.

Technically, if price should remain resisted by the dynamic resistance, and forming lower-highs, it means that the downtrend is still intact, and it is not a good idea to pick up any of this share, despite the share price is getting 'cheaper'.

Nevertheless, support for MAS is at RM2.00. For trend trading, the ideal buy signal would be when price break above the 14, 21, 31 EMA, and later form a higher-low, with strong volume. If one should buy with this signal, he or she shall apply the 14, 21, 31 EMA as a trailing stops reference.

4 Q Rolling PER	15.53 times	Dividend Yield	0.00%
Dividend		Dividend Yield	Net Profit Ratio
31/12/2009	0 sen	0.00%	4.24%
31/12/2008	2.25 sen	0.74%	1.58%
31/12/2007	2.50 sen	0.51%	5.57%
31/12/2006	0 sen	0.00%	-1.01%
31/12/2005	0 sen	0.00%	-14.29%

Table 1: MAS – 3786, yearly dividend, dividend yield, and net profit ratio.

Continuation of previous case study: Bursa – 1818: Short term weakening.

Chart 2: Bursa – 1818 as at 24/11/2010.

Previously, we said if price of Bursa could return to above the 14, 21, 31 EMA, then it would break away from its downtrend formation. However, as indicated by A, price of Bursa failed to break above the 14, 21, 31 EMA, but instead, falling further; and the 14, 21, 31 EMA is still serving as a dynamic resistance. This shows that the technical outlook for Bursa is still weak.

In other words, it is a dangerous move if one should attempt to 'buy on dip' when price is falling. Because, one would be buying into a downtrend. A sound approach is to buy when price forms a higher-low after returning to above the 14, 21, 31 EMA. Nevertheless, support for Bursa is at RM7.99 or RM8.00, followed by RM7.79 or RM7.80 WinChart Automatic Fibonacci Retracement.

4 Q Rolling PER	24.04 times	Dividend Yield	2.34%
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%	48.91%
31/12/2006	54.50 sen	6.77%	41.55%
31/12/2005	20.00 sen	5.46%	42.13%

Table 2: Bursa – 1818, yearly dividend, dividend yield, and net profit ratio.

GENP – 2291: Still in uptrend.

Chart 3: GENP – 2291 as at 24/11/2010.

As shown on chart 3, price of GENP retreated last two weeks as a technical correction, after hitting RM9.00 resistance. During its technical correction, it tested the 14, 21, 31 EMA dynamic support, and it managed to rebound from the 14, 21, 31 EMA, and this suggests that price of GENP is still in an uptrend.

However, although price rebounded from the 14, 21, 31EMA, it failed to break above RM9.00; instead, it formed a lower peak of RM8.80. If price should retreat again, it would be forming a lower-high.

Still, despite a chance of a lower-high formation, provided that price could remain above the 14, 21, 31 EMA, it is likely that price of GENP to consolidate further, and possible forming a Triangle. Nevertheless, immediate resistance is at RM9.00 while the support is RM 8.30.

4 Q Rolling PER	22.83 times	Dividend Yield	1.02%
Dividend		Dividend Yield	Net Profit Ratio
31/12/2009	9 sen	1.46%	31.19%
31/12/2008	10 sen	2.82%	36.03%
31/12/2007	14 sen	1.62%	37.96%
31/12/2006	7 sen	1.64%	29.68%
31/12/2005	6.25 sen	2.91%	32.87%

Table 3: GENP – 2291, yearly dividend, dividend yield, and net profit ratio.

Conclusion:
As the KLCI is taking a correction, the market direction is temporary unclear, and as a result, many stocks had started to turn weak. However, this does not mean that investors should start bargain hunting. In fact, one should follow the direction of the stock price, and if price should form a downtrend, the best thing to do its to avoid it at all.

Copyright © 2009 Straits Index (M) Sdn BhdImportant Disclaimer:These content provided by Straits Index (M) Sdn Bhd is solely for education and information purposes only, and do not suggest any investment advices. All information displayed are believed to be accurate and reliable. Interpretation of the data or analysis is at the reader's own risk. Straits Index (M) Sdn Bhd reserves the rights but obligations to update, admen, or even terminate the materials. 重要声明:以上的内容由海峡指数(马)私人有限公司提供,纯粹是教育性质, 并不是任何的投资忠告。所有资料显示认为是准确和可靠的。对数据或分析的解释和用途是在于用户自己的风险。海峡指数(马)有限公司持有保留及义务更新,甚 至终止材料的权利。

Kencana, Bursa, MEGB

News on Korean and China may raise interest rate, plus the negative news on Ireland debts problem, pulled down regional markets as well as the KLCI. As a result, many individual counters had a technical correction, and some even fell below the dynamic support. However, the uptrend of the KLCI remains intact, as it has not formed a lower-high. Nevertheless, investors should remains cautious.

Kencana – 5122: Remains in uptrend.

Chart 1: Kencana – 5122 as at 16/11/2010.

Despite the KLCI taking a technical correction, price of Kencana stays in its uptrend, and the 14, 21, 31 EMA is still serving as the dynamic support to Kencana. Although price retreated after hitting RM2.11 resistance, the correction was rather mild, and now price of Kencana is consolidating.

As long as price should stay above the 14, 21, 31 EMA, the technical outlook shall remains positive.

If one should feel uncomfortable during the market correction, one could consider partial profit taking, while the rest of stocks should hold with the 14, 21, 31 EMA as the trailing stop reference.

As for those who are interested in taking up a new position, then an ideal buy signal would be a formation of higher-low, with increased of volume, and immediate after buying, the 14, 21, 31 EMA should be used as a trailing stop reference.

4 Q Rolling PER	18.71 times	Dividend Yield	0.00%
Dividend		Dividend Yield	Net Profit Ratio
31/07/2010	0 sen	0.00%	12.46%
31/07/2009	0.1 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 1: Kencana – 5122, yearly dividend, dividend yield, and net profit ratio.

Bursa – 1818: Breaking below the dynamic support.

Chart 2: Bursa – 1818 as at 16/11/2010.

As shown on chart 2, price of Bursa has been testing the RM8.66 resistance a few times, and stayed in a consolidating stage for about 3 weeks, but at the same time, it was also supported by the 14, 21, 31 EMA, and therefore, it has not shown any weakness yet.

However, as indicated by A, price of Bursa declined gradually, and breaking below the 14, 21, 31 EMA by margin. This implies that the price of movement of Bursa is weakening. Unless price could return to above the 14, 21, 31 EMA, the technical outlook for Bursa is expected to turn negative.

Technically, if price should form a Lower-high below the 14, 21, 31 EMA, it would be a characteristic of a downtrend formation. As for those who has followed their trading plan, it would be a signal to take profit when price breaks below the 14, 21, 31 EMA. Next support for Bursa is seen at RM8.16.

4 Q Rolling PER	24.78 times	Dividend Yield	2.27%
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%	48.91%
31/12/2006	54.50 sen	6.77%	41.55%
31/12/2005	20.00 sen	5.46%	42.13%

Table 2: Bursa – 1818, yearly dividend, dividend yield, and net profit ratio.

MEGB – 5166: New low.

Chart 3: MEGB – 5166 as at 16/11/2010.

As shown on chart 3, price of MEGB were temporary supported by the RM2.25 level, but as indicated by A, it fell below RM 2.25 level, making a new low. Although it seems like when price is touching new low, it was a lowest price, it does not mean that price should rebound the next day; in fact, one should realize that price could very well go down even more the next day.

Trying looking it at a different way, when stock price is making new low, the selling pressure is higher than the buying interest. This is because all investor who had bought earlier above RM2.25 are now making losses, some could not even break even, thus they are likely to be ready sellers.

This is why, we kept mentioning that it is important to buy with the uptrend, when price is rising, not when price is dropping. One must learn to avoid the though of 'buying cheap'. Nevertheless, since MEGB is making a new low, there is no valid support for now, until a rebound of price.

Conclusion:

When stock price started to retreat, it does not mean that it would form a downtrend right away. When a stock price makes new low, it does not mean that it is the lowest price of all, chances are it could fall even lower.

Copyright © 2009 Straits Index (M) Sdn BhdImportant Disclaimer:These content provided by Straits Index (M) Sdn Bhd is solely for education and information purposes only, and do not suggest any investment advices. All information displayed are believed to be accurate and reliable. Interpretation of the data or analysis is at the reader's own risk. Straits Index (M) Sdn Bhd reserves the rights but obligations to update, admen, or even terminate the materials. 重要声明:以上的内容由海峡指数(马)私人有限公司提供,纯粹是教育性质, 并不是任何的投资忠告。所有资料显示认为是准确和可靠的。对数据或分析的解释和用途是在于用户自己的风险。海峡指数(马)有限公司持有保留及义务更新,甚 至终止材料的权利。