Case Studies Haio, BJcorp, MRCB

When the broad market is falling, there will be more counters falling than counters rising, and therefore, the probability of losing money is higher. However, it does not necessary means that whenever a broad market is having its correction, it would be a signal to take profit. Nevertheless, investors should stay cautious, and watch if the correction of the broad market would damage the existing uptrend on your portfolio. If the uptrend of your stocks remains intact, it is a good idea to hold on to it, but if price should break below an uptrend, it is a good idea to reduce position. This week, we would like to take a look at some counters which is turning weaker from their previous uptrend, and study the process of turning weaker from a stronger trend.

Haio-7668: Forming downtrend.

Chart 1:Haio-7668 (08/01/2010～05/05/2010)

As indicated by A and A', price of Haio formed a Lower-high, and later consolidated above the RM4.38 level. Despite being supported by the RM4.38 level, the consolidation was bearish biased, for the lower-high implies a weakening movement.

As indicated by B, price of Haio broke below RM4.38 level, suggesting that those who had bought and hold their position above RM4.38 are now making losses, thus the idea of breaking even is getting stronger. Therefore, there will be memory of breaking even at RM4.38, A' and A1 level.

Nevertheless, when price broke below the RM4.38 level, the 14, 21, 31 EMA was also falling while serving as a dynamic resistance. In other words, the technical outlook for Haio shall remain bearish biased until price should successful break above the 14, 21, 31 EMA with strong volume.

4 Q Rolling PER	15.7 times	Dividend Yield	10.29%
Dividend		Dividend Yield	Net Profit Ratio
30/04/2009	42 sen	11.11%	11.96%
30/04/2008	40 sen	11.17%	12.97%
30/04/2007	18 sen	8.11%	11.29%
30/04/2006	8 sen	6.35%	7.06%
30/04/2005	6 sen	6.00%	3.95%

Table 1:Haio-7668, yearly dividend, dividend yield, and net profit ratio.

BJCORP-3395]：Forming Downtrend.

Chart 2: BJCORP-3395 (08/01/2010～05/05/2010)

As shown on chart 2, price of JBCorp retreated after reaching its height of RM1.87 level, but managed to be supported by the 14, 21, 31 EMA and rebounded from there. However, when price rebound from the 14, 21, 31 EMA, it has failed to return to its previous height, and formed a Lower-high, which forms the L1 line.

As indicated by A, after forming the L1 line, price of BJCorp also break below the 14, 21, 31 EMA, confirming the formation of a downtrend while the 14, 21, 31 EMA as well as the L1 line are both serving as dynamic resistance. In short, the technical outlook for BJCorp is now bearish biased.

If price were to return to its uptrend, it has to break above these dynamic resistance with strong volume, or else, any rebound below the dynamic resistance would only be counted as technical rebound, not a reversal.

Leading PER	-75.49 times	Dividend Yield	2.18%
Dividend		Dividend Yield	Net Profit Ratio
30/04/2009	3.35 sen	3.99%	-0.83%
30/04/2008	9.00 sen	8.11%	17.20%
30/04/2007	0 sen	0%	5.72%
30/04/2006	0 sen	0%	-24.33%
30/04/2005	0 sen	0%	-3.03%

Table 2: BJCORP-3395, yearly dividend, dividend yield, net profit ratio.

Review of last week's Case Study:MRCB-1651 :T1 downtrend line remains intact.

Chart 3: MRCB-1651 (08/01/2010～05/05/2010)

As shown on chart 3, the T1 downtrend line is still intact, suggesting that price of MRCB is still trending down. As indicated by A, price of MRCB rebounded and tested the 14, 21, 31 EMA as well as the T1 line last week, but failed to break above these dynamic resistance. This has once again, proven that the technical outlook for MRCB is on the negative side.

Nevertheless, technically, provided price should remain resisted by these dynamic resistance, the bearish biased outlook is expected to carry on. If price should rebound but failed to break above these resistance line, the rebound would only be technical rebound, not a reversal. A valid break out above the T1 line has to be accompanied by strong volume, or else, the downtrend remains intact.

4 Q Rolling PER	39.79 times	Dividend Yield	0.66%
Dividend		Dividend Yield	Net Profit Ratio
31/12/2009	1 sen	0.73%	3.76%
31/12/2008	0 sen	0%	-7.18%
31/12/2007	0 sen	0%	4.51%
31/12/2006	0 sen	0%	6.20%
31/12/2005	0 sen	0%	4.25%

Table 3: MRCB-1651, yearly dividend, dividend yield, and net profit ratio.

Conclusion:
Many investors had complaint that when the market turns downside, they don't have enough time to get out quickly. In fact, with the exception of Limit down, all downtrend needs time to form, and during the process of changing between the end of an uptrend to the beginning of a downtrend, there are specific characteristics, which is a very important aspect for investors to find out. With the skill in spotting these characteristics, there should be enough time for one to react. However, to pick up such skills, it takes years, and therefore, there are no short cut in this learning curve.

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。

Case Studies Time, Faber, MRCB.

Even though the KLCI is still consolidating, the total market volume is actually falling, while staying below the 40-day VMA level. This suggests that the market continuity is weak, as investors are staying on the sidelines, implying that their confidence is still low. Therefore, trading for individual counters would be twice as hard, for chances of an uptrend forming is lower, or many would be breaking below their support level. Let's study a few case study.

Time-4456: Testing important support.

Chart 1: Time-4456 (22/10/2009～28/04/2010)

As shown on chart 1, price of Time tested the RM0.39 ~ RM0.40 support level many times, which lasted for about 5 months. Therefore, investors of Time has naturally built up a memory around this level.

Despite many rebound from the RM0.39~ RM0.40 level, price of Time failed to form an uptrend due to insufficient market participation, and instead, its upside volatility is gradually reducing. As indicated by A, now it is testing the RM0.39~RM0.40 support, and if price should break below this level, it would mark a 6 months new low, and then the RM0.39~RM0.40 level shall reverse its role as a resistance, for those who had hold their shares above RM0.39 would be losing money, thus their memory of the RM0.39 will become a break-even level.

Nevertheless, it is still too early to say that for price of Time has not broken below this level. But it is never too early to be mentally prepared for the worst. If price should remain supported by the RM0.39~RM0.40, it would prolong its consolidation, but without strong volume, it is less likely that price of Time would form an uptrend. Next support for Time, if price should break below RM0.39, is seen at RM0.335 level, study Chart 1A.

Chart 1A: Time-4456 (17/02/2009～28/04/2010)

4 Q Rolling PER	21.47 times	Dividend Yield	0.00%
Dividend		Dividend Yield	Net Profit Ratio
31/12/2009	0 sen	0%	11.96%
31/12/2008	0 sen	0%	-24.48%
31/12/2007	0 sen	0%	6.40%
31/12/2006	0 sen	0%	-8.21%
31/12/2005	0 sen	0%	-152.95%

Table 1: Time-4456 yearly dividend, dividend yield, and net profit ratio.

Faber-1368: Breaking below the 14, 21, 31 EMA, a weakening sign.

Chart 2: Faber-1368 (31/12/2009～28/04/2010)

As indicated by A, price of Faber breaks below 14, 21, 31 EMA, this is the first time the price closed below the 14, 21, 31 EMA since the 2nd time uptrend, suggesting that the current uptrend is taking a pause. Unless price could resume to above the 14, 21, 31 EMA with strong volume, the immediate technical outlook shall stay bearish biased.

Since price of Faber is now below the 14, 21, 31 EMA, the 14, 21, 31 EMA is now serving as the dynamic resistance and the next support is at RM2.00 psychological level. Technically, when price should break below the 14, 21, 31 EMA after riding in an uptrend for some time, it is a signal to take profit. If one should find it hard to decide, a partial profit taking (selling 1/3 of a position) is usually a good choice to reduce trading risk.

4 Q Rolling PER	10.14 times	Dividend Yield	2.60%
Dividend		Dividend Yield	Net Profit Ratio
31/12/2009	6 sen	3.61%	10.27%
31/12/2009	4 sen	5.97%	23.29%
31/12/2009	0 sen	0%	7.76%
31/12/2009	0 sen	0%	5.96%
31/12/2009	0 sen	0%	5.98%

Table 2: Faber-1368, yearly dividend, dividend yield, and net profit ratio.

MRCB-1651]: Breaking below dynamic support.

Chart 3:MRCB-1651 (31/12/2009～28/04/2010)

As indicated by A, price of MRCB fell below the 14, 21, 31 EMA for the first time after moving in uptrend since March. Meanwhile, it has also form an T1 short term downtrend line, suggesting that the immediate technical outlook is on the negative side, with lower volume.

Despite having a sign of a technical rebound, price of MRCB remains below the 14, 21, 31 EMA, thus the rebound is only a technical rebound, not a reversal. To break away from the short term bearish movement, price has to break above the T1 line and return to above the 14, 21, 31 EMA, with strong volume. Nonetheless, next support for MRCB is seen at RM1.45 level.

4 Q Rolling PER	40.58 times	Dividend Yield	0.56%
Dividend		Dividend Yield	Net Profit Ratio
31/12/2009	1 sen	0.73%	3.76%
31/12/2008	0sen	0%	-7.18%
31/12/2007	0sen	0%	4.51%
31/12/2006	0sen	0%	6.20%
31/12/2005	0sen	0%	4.25%

Table 3: MRCB-1651, yearly dividend, dividend yield, and net profit ratio.

Conclusion:
When the overall market volume is low, profit taking will push the price lower, thus the uptrend is generally harder to sustain. This is even truer for an individual counter which is moving in downtrend. Therefore, unless the overall market participation improves, picking stocks will not be an easy job for now.

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。