KLCI, Dialog, IOIcorp, Pchem

Chart 1: KLCI as at 11/5/2011.

As indicated by A, the FBM KLCI breaks above the L1 line, breaking away from its bearish biased technical outlook. However, this does not mean an immediate reversal for the KLCI, it only means that the KLCI is not forming a downtrend yet. Nevertheless, breaking above the L1 line is a positive signal for the KLCI for now.

Despite the improving technical outlook of the KLCI, total market volume remains low, as circled at B. Total market volume stays below the 40-day Volume Moving Average, and this suggests that the market participation is still low, and the inflow of fresh capital is still 'insufficient'. This suggests that the investors are still not feeling confident about the local market.

Revision of previous Case Study: Dialog – 7277: Breaking New High.

Chart 2: Dialog – 7277 as at 11/05/2011.

As shown on chart 2, price of Dialog has tested the RM 2.65 on the 5th and 28th of April, but failed to break above the RM 2.56 resistance. Fortunately, it only retreated mildly after being resisted by the RM 2.56, and was supported by the 14, 21, 31 EMA dynamic support, this means that the uptrend was still intact.

As indicated by A, after being supported by the 14, 21 ,31 EMA, price of Dialog formed another higher-low, and later on the 11th of May, breaking above the RM2.56 resistance, making a multi-year new high, and at the same time, extending its uptrend. Therefore, for those whom are already in position, it is a good idea to continue to hold, as long as one should follow his trailing stop strategy by gradually lifting the profit taking or cut loss level higher, according to the 14, 21, 31. This way, it will not only reduce trading risk, it will also maximize the potential of this uptrend.

As for those whom are interested in taking up new position, an ideal entry point would be at a higher-low formation. But new buyers should not use the 14, 21, 31 EMA as a trailing stop immediately, instead, he or she should set a base line, using the recent rebound support (RM2.40). If price should continue its uptrend, then only it is practical to switch to the 14, 21, 31 EMA as trailing stop method.

4 Q Rolling PER	38.96 times	Dividend Yield	1.15%
Dividend		Dividend Yield	Net Profit Ratio
30/06/2010	3.1 sen	2.82%	10.19%
30/06/2009	3.6 sen	3.30%	8.35%
30/06/2008	3.1 sen	2.31%	9.49%
30/06/2007	2.2 sen	1.17%	10.26%
30/06/2006	3.6 sen	6.67%	12.83%

Table 1: Dialog – 7277, yearly dividend, dividend yield, and net profit ratio.

IOIcorp – 1961: Downtrend intact.

Chart 3: IOIcorp – 1961 as at 11/05/2011.

As shown on chart 3, price of IOIcorp has formed a lower-high in April, as illustrated by the dotted line. Since this is a weekly chart that we are talking about, and this signal is usually more significant than a daily chart. In short, IOIcorp is trading in a downtrend.

As indicated by A, after falling for a few weeks, price of IOIcorp showed a little sign of a rebound, but still, a technical rebound from an existing downtrend is not the same as the higher-low rebound of an uptrend. Therefore, one should not be trying to catch a bottom of this rebound.

If price should rebound but still resisted by the 14, 21, 31 EMA, or the dotted line, it means that the downtrend is still intact. Meanwhile, please refer to Chart 3A for the CPO chart.

4 Q Rolling PER	16.03 times	Dividend Yield	3.20%
Dividend		Dividend Yield	Net Profit Ratio
30/06/2010	17 sen	3.28%	16.23%
30/06/2009	8 sen	1.69%	6.74%
30/06/2008	17 sen	2.28%	15.22%
30/06/2007	7 sen	1.35%	16.55%
30/06/2006	43.5 sen	3.04%	13.81%

Table 2: IOIcorp – 1961, yearly dividend, dividend yield, and net profit ratio.

Chart 3A: CPO Benchmark Index as at 11/05/2011.

As shown on chart 3A, price of CPO had once broken below RM 3235 but it managed to rebound the next day, and returned to above RM3235 level. But still, after the rebound, the CPO trend is still showing weakness as there are lower-highs formation. If price of CPO should remain resisted by the 14, 21, 31 EMA dynamic resistance, the technical outlook shall remains weak. If price should fall below RM3235 support, it would be breaking an important new low, thus bringing negative impact to plantation stocks.

Pchem – 5183: Showing weakness.

Chart 4: Pchem – 5183 as at 11/05/2011.

As shown on chart 4, after reaching for its peak at RM7.61 on the 7th of April, price of Pchem started retreat as profit taking took place, which lead to a consolidation at 14, 21, 31 EMA level. After moving sideways for about two weeks, price of Pchem fell below the 14, 21, 31 EMA, thus the uptrend was violated, and those who follow their trading plan, should take profit.

After breaking below the 14, 21, 31 EMA, price of Pchem also formed an L1 descending line, which illustrates the formation of lower-high, which is an early sign of weakness, or possibly a downtrend formation.

Technically, there is no ideal buy signal for Pchem for now, and on the contrary, traders should view the formation of lower-high as a signal to sell. Support for Pchem is at RM 6.80 followed by RM 6.40.

Conclusion:

In conclusion, other than following the broad market trend, one must know the conditions of picking stocks, which includes understanding the fundamental of the company, together with technical analysis to choose stocks that is in an uptrend, and avoid stock trending down, because the stock price will directly affect the performance of one's portfolio.

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。

KLCI, IOICorp, CIMB, Timecom

Chart 1: KLCI as at 44/5/2011.

As at the 4th of May, the KLCI has been consolidating in a sideways manner for the past week, and as a result, the 14, 21, 31 EMA are losing their gradient. In other words, when the moving average lines are staying flat, the significance of their signals is reduced. Meanwhile, as illustrated by the dotted line, the KLCI might be forming a lower-high, which is an early sign of weakness.

As indicated by A, total market volume remains below the 40-day Volume Moving Average, and this suggests that the market is indeed quiet, as inflow of fresh capital is also low. Also, it implies that the investors' confidence is also low. It is like boiling water, where you have to keep the heat intact, or else, once the heat is removed, the water cools down. Don't forget that this is a the entire market volume that we are talking about here, and if total market volume is low, the chances of individual counters to sustain their uptrend is also affected.

This week's Case Studies:

IOIcorp – 1961: Technical outlook remains weak.

Chart 2: IOIcorp – 1961 as at 04/05/2011 (Weekly Chart)

As indicated by A on weekly chart of IOIcorp, price of IOIcorp fell below the RM 5.50 support, and the breaking below this level, means that all investors who had bought IOIcorp and are still holding, are losing money now. Therefore, these losers are having negative memory of IOIcorp.

Meanwhile, the T1 line is illustrating the formation of Lower-high, which means that IOIcorp is now in downtrend.

Technically, provided that price of IOIcorp is staying below the T1 line or the 14, 21, 31 EMA dynamic resistance, the technical outlook shall remains on the negative side, and it is generally not advisable to trade against the weakness of price movement. Of course, it is normal to have a rebound after falling for some time, but if price should rebound and form a lower-high again, it suggests that the downtrend is expected to continue. Meanwhile, readers can refer to Chart 2A, the CPO chart.

Chart 2A: CPO Benchmark Index as at 04/05/2011.

As indicated by A, price of CPO has been trending weak, but fortunately still supported by the RM3235 support. Although price of CPO has been supported by this level, the rebounds showed its weakness by forming lower-highs. Technically, if CPO should fall below RM3235 level, it would be making a 6 months new low, and most likely, plantation stocks will be affected.

4 Q Rolling PER	16.12 times	Dividend Yield	3.18%
Dividend		Dividend Yield	Net Profit Ratio
30/06/2010	17 sen	3.28%	16.23%
30/06/2009	8 sen	1.69%	6.74%
30/06/2008	17 sen	2.28%	15.22%
30/06/2007	7 sen	1.35%	16.55%
30/06/2006	43.5 sen	3.04·%	13.81%

Table 1: IOIcorp – 1961, yearly dividend, dividend yield, and net profit ratio.

CIMB – 1023: Trendless.

Chart 3: CIMB – 1023 as at 04/05/2011.

As indicated by A, price of CIMB has been trading in a narrow range, and for the last month, the fluctuation of price was less than 3.5%. As price is entering the narrow sideways movement, the 14, 21, 31 EMA has lost its gradient, which makes the EMA non-functioning, or the significance of the 14, 21, 31 EMA is greatly reduced. Although it might not be a good time to study the 14, 21, 31 EMA for CIMB now, it is a good time to apply the Bollinger Bands.

When price is staying in a narrow sideways manner, the Bollinger Bands will contract significantly, suggesting that price is consolidating, and trendless, until the obvious re-expansion of the band width. When the Bollinger Bands should re-expands, it means that price begins to fluctuate. If the Bollinger Bands expands with price above the Bollinger Middle Band, it means a positive biased volatility, and other wise, a negative biased volatility.

Generally, after the Bollinger Bands re-expanded, and when price should form a higher-Low or lower-high, then it is time to apply the 14, 21, 31 EMA again for trailing stop, or other trend trading reference purpose.

Based on the current chart of CIMB, the RM7.80 is an important support level for the year 2011. If price of CIMB should break below this level, it means those investors whom had bought CIMB in 2011 and are still holding, will turn their profit into losses, thus creating more selling pressure.

4 Q Rolling PER	16.71 times	Dividend Yield	3.18%
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: Timecom – 5031: Testing support level.

Chart 4:Timecom – 5031 as at 04/05/2011.

As shown on Chart 4, after breaking above the resistance on the 22nd of April, price of Timecom started to retreat as a pull-back effect, and price of Timecom retreated to RM0.89~RM0.90 support level. Technically, if price should failed to stay above this level, the breakout would be a faulty one.

As indicated by A, fortunately, price of Timecom managed to stay above the 14, 21, 31 EMA dynamic support, and therefore, the technical outlook remains positive. If price could rebound from the 14, 21, 31 EMA, the uptrend is likely to remain intact.

On the contrary, if price should continue to pull back, and later break below the 14, 21, 31 EMA, the uptrend would be violated, then investors will have to honor their own trading plan, by cutting loss, or taking profit. For example, for those whom had previously set a base line, if price of Timecom should fall below this base line, they have to cut loss. As for those whom had bought much earlier, they would have a choice to apply the 14, 21, 31 EMA as a trailing stop reference.

4 Q Rolling PER	21.16 times	Dividend Yield	0.00%
Dividend		Dividend Yield	Net Profit Ratio
31/12/2010	0 sen	0.00%	33.35%
31/12/2009	0 sen	0.00%	11.54%
31/12/2008	0 sen	0.00%	-331.43%
31/12/2007	0 sen	0.00%	-53.37%
31/12/2006	0 sen	0.00%	-53.01%

Table 3: Timecom – 5031, yearly dividend, dividend yield, and net profit ratio.

Conclusion:

When the broad market direction is unclear, it is harder to follow, and stock pick will be more difficult. Therefore, if one should find it difficult to making any buying picks, the natural thing to do is to avoid buying 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。

KLCI, IOIcorp, Drbhcom, MHB

Chart 1: KLCI as at 13/4/2011.

As shown on chart, the KLCI had a sharp correction last week, and during the correction, the KLCI had briefly broken below the 14, 21, 31 EMA, but was supported by the 1525 level and rebounded on Wednesday.

Technically, the couple of falling days could not indicate a reversal, but merely a technical correction. Unless, of course, the KLCI should form a lower-high, then it would be an early warning signal. Nevertheless, market volume has fallen below the 40-day Volume Moving Average. Generally, if volume should remain low, the market or the KLCI is less likely to regain its strength.

Case Studies:

IOIcorp – 1961: Short term weakness.

Chart 2: IOIcorp – 1961 as at 13/04/2011, weekly chart.

When the KLCI corrected, index components are likely to be affected, IOIcorp is no exception. As shown on chart 2, price of IOIcorp is now testing the RM 5.50 support. The RM 5.50 was originally a resistance (from October 2009 to September 2010). when price of IOIcorp broke above the RM 5.50 resistance, it became the support for the year 2011. In end of February 2011, price of IOIcorp retreated sharply, and tested this support, and fortunately, it works, price rebounded, and avoided a downtrend formation.

Now that price of IOIcorp is testing the RM 5.50 again, and if price should really break below this level, the technical outlook for IOIcorp would stay negative. On the weekly chart basis, price of IOIcorp has already broken below the 14, 21, 31 Weekly EMA, and therefore, IOIcorp chart is showing weakness.

In short, if price of IOIcorp could stay above RM 5.40~RM 5.50, then it might have a chance to prolong its sideways consolidation, and hopefully when market turns better one day, then it would have a chance to regain its strength. But for now, RM 5.40~RM 5.50 is an important level to watch out for.

4 Q Rolling PER	16.60 times	Dividend Yield	3.09%
Dividend		Dividend Yield	Net Profit Ratio
30/06/2010	17 sen	3.28%	16.23%
30/06/2009	8 sen	1.69%	6.74%
30/06/2008	17 sen	2.28%	15.22%
30/06/2007	7 sen	1.35%	16.55%
30/06/2006	43.5 sen	3.04%	13.81%

Table 1: IOIcorp – 1961, yearly dividend, dividend yield, and net profit ratio.

Drbhcom – 1619: Uptrend remains intact.

Chart 3: Drbhcom – 1619 as at 13/04/2011.

As shown on chart 3, after breaking above the RM 2.25 resistance, price of Drbhcom pullback last week, and now testing the RM 2.25 support as well as the 14, 21, 31 EMA dynamic support. Fortunately, as indicated by A, price of Drhbcom successfully rebounded from the 14, 21, 31 EMA and RM 2.25, thus the uptrend is still intact.

For those whom are already in position, as long as price of Drhbcom is still supported by the 14, 21, 31 EMA, it is still a good idea to hold. Provided one should gradually lift the cut loss level higher according to the 14, 21, 31 EMA.

Although the uptrend is still intact, to sustain the uptrend, price has to later break above RM 2.50 peak. On the contrary, if price should later form a lower-high, it would be an early signal implying a weakness of Drbhcom's uptrend.

4 Q Rolling PER	21.13 times	Dividend Yield	2.22%
Dividend		Dividend Yield	Net Profit Ratio
31/01/2010	8.50 sen	2.39%	7.25%
31/01/2009	7.00 sen	2.97%	5.23%
31/01/2008	5.00 sen	6.71%	3.32%
31/01/2007	2.00 sen	1.33%	3.46%
31/01/2006	2.00 sen	2.78%	-1.00%

Table 2: Drbhcom – 1619, yearly dividend, dividend yield, and net profit ratio.

Revision of last week's Case Study: MHB – 5186: Uptrend remains intact.

Chart 4: MHB – 5186 as at 13/04/2011.

Like many counters, price of MHB was affected by the sharp correction of the KLCI last week, but price of MHB managed to stay above the 14, 21, 31 EMA, and this suggests that the uptrend of MHB is still intact. Therefore, those whom had already bought, it is a good idea to stay in position, so long price is still above the 14, 21, 31 EMA.

Technically, if price of MHB should break below the 14, 21, 31 EMA, then the short term movement of MHB will be affected, but the longer term movement of MHB shall remain unaffected. If price should later form a lower-high after price of MHB stays below the 14, 21, 31 EMA, it suggests a weakness of price movement, or a possible downtrend formation, thus a signal to suggests a reduce of position.

Since total market volume were reduced, and the market is in a consolidation mood. Therefore, those whom are interested in picking up new position, will need to consider that if market volume should stay low, chances of stock to rally is generally lower.

Conclusion:

Generally, the chances of a stock sustaining its uptrend, has to do with the overall market condition, particularly, the volume. When volume is low, the market usually is in a consolidation mood, or with some weakness. When stock market rally, volume is an important element to push price higher. Of course, volume can not always be high, it is not likely. So long as the rally with volume, will repeat again and again, it would suffice in fueling the general uptrend.

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。

KLCI, KLK, IOICORP, GENP

The KLCI managed to find its support at 1480, and tested the T1 downtrend line. Technically, as long as the KLCI is still staying within the T1 and T2 downtrend line, the technical outlook shall remains negative.

Chart 1: KLCI as at 2/3/2011.

As indicated by A, other than the T1 downtrend line, the 14, 21, 31 EMA, is still serving as the dynamic resistance to the KLCI and in other words, the KLCI has to also break above the 14, 21, 31 EMA in order to break away from the downtrend movement. Although a break out above the 14, 21, 31 EMA would signal a break away from the downtrend, it does not necessary mean that the KLCI would immediately reverse and form an uptrend, and there is still a good chance that the KLCI would form a sideways consolidation as mentioned in last two weeks articles. In short, if the KLCI could stay in a consolidation above the 1480~1500, the new inflow of capital will gradually neutralize some selling pressure.

Meanwhile, as indicated by B, total market volume remains low recently, below the 40-day Volume Moving Average. This suggests that the market participation was low, as investors are being cautious, and this also implies that the investors confidence is low. Not only that, over the last few trading days, loser significantly outnumbered winners, and this reflects the overall negative market mood.

Despite the low participation from investors, the KLCI, or the market as a whole is still not showing sign of a bearish market signs, and it is still too soon to call for a bear market. As long as the KLCI could stay in a sideways consolidation, preferably above 1480, and the weak market sentiment would gradually neutralizes, and the KLCI could gear-up for a new movement; and if the new movement of the KLCI or the whole market should be a positive one, it would be time to pick up some stocks again.

Our case studies will be focusing on plantation stocks.

Revision of last week's case study: KLK – 2445: Forming short term downtrend.

Chart 2: KLK – 2445 as at 02/03/2011.

As shown on chart 2, price of KLK fell blow the RM21 support, and touched its low at RM19.20 last week. However, after being over-sold, price of KLK rebounded and managed to return to above RM20.00, and RM20 is now the current support. (Study A)

Despite the short term over-sold condition, the immediate outlook for KLK is still on the negative side, as it has formed a lower-high, which is an early sign of a downtrend formation. If price of KLK should remains resisted by the downtrend line (dotted line), or the 14, 21, 31 EMA dynamic resitance, then the negative technical outlook shall continue.

The RM20 support was formed since October 2010, and if price should break below this support, it would be making a 4 months plus new low, which would eventually trigger more selling pressure. In short, price of KLK has to break above the 14, 21, 31 EMA, in order to steer away from this short term downtrend.

4 Q Rolling PER	20.08 times	Dividend Yield	2.96%
Dividend		Dividend Yield	Net Profit Ratio
30/09/2010	60 sen	3.00%	13.51%
30/09/2009	40 sen	2.90%	9.20%
30/09/2008	70 sen	7.29%	13.25%
30/09/2007	50 sen	3.79%	13.70%
30/09/2006	50 sen	4.59%	11.06%

Table 1: KLK – 2445, yearly dividend, dividend yield, and net profit ratio.

IOIcorp - 1961: Remained in short term downtrend.

Chart 3: IOIcorp - 1961 as at 2/03/2011.

As shown on chart 3, despite price of IOIcorp rebounding from the RM5.40 support, the immediate technical outlook remains on the negative side, as the 14, 21, 31 EMA is still serving as the dynamic resistance. Thus the short term downtrend remains intact.

If price should being to retreat after resisted by the 14, 21, 31 EMA, it would form another lower-high, which is a characteristic of a downtrend. At the moment, there is no ideal buy signal for in order to break away from the short term downtrend, price of IOIcorp has to first break above the 14, 21, 31 EMA, then forming a higher-Low, then only it is an ideal buy signal.

Nevertheless, if price should stay in the downtrend, and later break below the RM5.30 support, it would be making a 4 months plus new low, and the selling pressure would likely to be higher.\

4 Q Rolling PER	16.75 times	Dividend Yield	3.06%
Dividend		Dividend Yield	Net Profit Ratio
30/06/2010	17 sen	3.28%	16.23%
30/06/2009	8 sen	1.69%	6.74%
30/06/2008	17 sen	2.28%	15.22%
30/06/2007	7 sen	1.35%	16.55%
30/06/2006	43.5 sen	3.04%	13.81%

Table 2: IOIcorp - 1961, yearly dividend, dividend yield, and net profit ratio.

GENP – 2291: Short term downtrend still intact.

Chart 4: Genp - 2291 as at 2/03/2011.

As shown on chart 4, after breaking below the 14, 21, 31 EMA in January, price of GENP has been staying in a short term downtrend, with the 14, 21, 31 EMA serving as the dynamic resistance. Technically, the immediate technical outlook for GENP shall stay negative as long as price of GENP is still resisted by the 14, 21, 31 EMA.

As shown on the chart above, price of GENP is testing the RM7.40~RM 7.50 support, and this was a new high level on the 5th of August, 2010. Previous, it was a resistance for GENP, until a break out above this level, it reversed its role to becoming a support. If price of GENP should remain supported by RM7.40~RM 7.50, there is a chance for GENP to consolidate, but the short term downtrend shall remains intact, unless price of GENP could successfully break above the 14, 21, 31 EMA.

When price rebound from a downtrend, it is not really the best time to buy. If price should remains resisted by the 14, 21, 31 EMA and started falling again, it is viewed as a good timing to cut loss and reduce losses. Technically, price has to break above the 14, 21, 31 EMA, and then forming a higher-low, then only it is an ideal buy signal.

4 Q Rolling PER	18.01 times	Dividend Yield	1.62%
Dividend		Dividend Yield	Net Profit Ratio
31/12/2010	12.5 sen	1.57%	32.80%
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%

Table 3: Genp - 2291, yearly dividend, dividend yield, and net profit ratio.

　

Conclusion:

Any breakout above the resistance, or below the support, does not necessary form a reversal of trend immediately. It takes time to form a reversal, for people need time to accept the turning of the direction. In other words, the market need more and more people buying and starting to make money, to create more greed and buying interests. On the contrary, we need more people to buy but loss money, and later feeling regret, then only a downtrend could form. The period between uptrend and downtrend, is the trendless fluctuation of price, and this is where it forms Triangles, Rectangular, or sort of patterns, called a consolidation; and this period will be the hardest challenge to most investors whom would put their patience and perseverance to a test.

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。

KLCI, CIMB, RHBCAP, IOICORP

Due to worries in Libya as well as China raising interest rate, the Asian markets were affected, and many counters of local market are also affected. Especially, on the 22nd of February, there were 880 counters losing. (There were 905 counters losing on the 10 of March, 2008). Investors could do a simple math and figure the probabilities of picking a winner when losers outnumbered winner in such scale.

Chart 1: KLCI ast at 23/2/2011.

As indicated by A, the KLCI tested the T1 downtrend line, and also the 14, 21, 31 EMA dynamic resistance, and the KLCI retreated, and resumed its downtrend, within the downtrend channel of the T1 and T1 lines. Technically, provided that the KLCI is still trending below the 14, 21, 31 EMA, the technical outlook is still negative.

Although the KLCI is still trending down in the downtrend channel, it has not broken 1500 psychological support level. We would like to remind our readers that the characteristic of a downtrend formation is lower-High, and later new low. This is because, when price breaks new low, it means more investors (including those whom are already in profit) will be losing money, or turning their profit into losses. As a result, it will trigger more selling pressure, and create more negative memory in the downtrend.

As mentioned last week, if the KLCI could find its support above 1500, then the KLCI or the market would have a chance to temporary prevent the downtrend for getting worse, by forming a sideways consolidation. And if so, after a while, the new inflow of fresh capital will eventually neutralize some selling pressure, and then, the KLCI or the market would have a better position to start a new trend. In other words, if the KLCI could stay above 1480~1500, the bear is still away from sight.　

CIMB – 1023: Short term downtrend remains intact.

Chart 2: CIMB – 1023 as at 23/02/2011.

As shown on chart 2, since breaking below the T1 uptrend line, price of CIMB has been falling, and forming a short term downtrend, and the 14, 21, 31 EMA is serving as the dynamic resistance. Technically, provided that price is still below the 14, 21, 31 EMA, the technical outlook is still on the negative side. Despite last week's rebound, price of CIMB was still resisted by the 14, 21, 31 EMA, as indicated by A, forming a lower-high, and the short term downtrend remains intact.

Next support for CIMB is at RM7.80~RM7.90, and this is a support since October, 2010, and also the 50% Fibonacci Retracement Line by calculating using the low of RM 6.58 and the high of RM9.17.

Generally, it is likely that price could temporary find its support at RM 7.80. However, it is important not to misunderstand the meaning of a support. A support does not mean that it will be the lowest price that price could go, but instead, it only implies a possible level of a rebound, and hopefully after a rebound, price could move sideways and if price could move sideways, over time, new inflow of capital could neutralize some selling pressure. However, as of now, if price should stay below the 14, 21, 31 EMA, there is no buy signal, until price of CIMB should form a higher-low.

4 Q Rolling PER	11.41 times	Dividend Yield	2.26%
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 1: CIMB – 1023, yearly dividend, dividend yield, and net profit ratio.

　

Rhbcap – 1066: Short term downtrend.

Chart 3: Rhbcap – 1066 as at 23/02/2011.

As shown on chart 3, price of RHBCAP rebounded from RM7.80 support, but failed to break above the 14, 21, 31 EMA, forming yet another lower-high. As indicated by A, if price should remains resisted by the 14, 21, 31 EMA, the downtrend shall remain intact.

Again, a downtrend characteristic is price forming lower-high first, then breaking below a support, forming a new low. Therefore, if price of RHBCAP should later break below RM7.80, it would be making a 4 months new low, and more downside movement is expected for RHBCAP.

While it may seem like a discount with price falling, and some untrained investors might take is as a good time for some bargain buying. It is important for us not to forget the effect of a new low, and consider those whom are trapped in the new low, the losers.

In reality, when price breaks new low, more investors are losing money, even those whom were making profit are now turning their profit into losses. Therefore, selling pressure is expected to be high.

Take the example of RHBCAP, if price should break below RM7.80, then all investors whom had position for the last 4 months will be losing money, and their original intention of making money will slowly be replaced by a new intention, unconsciously, which is to 'break even'.

4 Q Rolling PER	12.27 times	Dividend Yield	3.26%
Dividend		Dividend Yield	Net Profit Ratio
31/12/2010	26.38 sen	3.23%	23.10%
31/12/2009	22.45 sen	4.25%	22.14%
31/12/2008	19.60 sen	5.03%	17.48%
31/12/2007	13.60 sen	3.66%	21.44%
31/12/2006	8.00 sen	2.34%	7.96%

Table 2: Rhbcap – 1066, yearly dividend, dividend yield, and net profit ratio.

IOICorp - 1961: Short term Dowtnrend.

Chart 4: IOIcorp - 1961 as at 23/02/2011.

As shown on chart 4, since breaking below the 14, 21, 31 EMA on the 21st of January, price of IOIcorp has been forming a short term downtrend, with the 14, 21, 31 EMA serving as the dynamic resistance. Technical outlook for IOIcorp is on the negative side.

Although price of IOIcorp was recently supported by RM5.30~RM5.40, the downtrend remains intact, as indicated by A, price formed another lower-high at 14, 21, 31 EMA. If price should later break below RM 5.30~RM5.40 support, it would be making a 4 months new low, which would trigger more selling pressure, and more negative memory. Therefore, a wise thing to do is to avoid this stocks unless it could break above the 14, 21, 31 EMA, and form a higher-low. Nevertheless, next support for IOIcorp is at RM 5.20 and followed by RM5.00.

4 Q Rolling PER	16.54 times	Dividend Yield	3.10%
Dividend		Dividend Yield	Net Profit Ratio
30/06/2010	17 sen	3.28%	16.23%
30/06/2009	8 sen	1.69%	6.74%
30/06/2008	17 sen	2.28%	15.22%
30/06/2007	7 sen	1.35%	16.55%
30/06/2006	43.5 sen	3.04%	13.81%

Table 3: IOIcorp - 1961, yearly dividend, dividend yield, and net profit ratio.

Conclusion:

If the KLCI should break below 1480 support, and the above mentioned stocks were to break below their support, they would have made a 4 months new low, all together (more blue chips stocks are testing their 4 months support as well). Eventually, they will create a same reaction to the market in general, by triggering more selling. Therefore, we as an individual investor should always following the market trend, and avoid going against this massive movement.

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