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:
Uemland – 5148: Remains in consolidation.
Chart 2: Uemland – 5148 as at 04/05/2011.
As shown on chart 2, price of UEMland has been consolidating in a Rectangular pattern, with RM3.00 being the resistance, and the RM2.65 being the support. Technically, when price is staying in a rectangular pattern or a trading range, the direction is usually unclear, thus not suitable for trading.
Although price of UEMland been supported by the RM2.65, the recent rebounds, has shown some weakness as price failed to touch RM3.00, but instead, forming lower-highs, as illustrated by the dotted line. The lower-high is showing an early weakening signal for UEMLand.
If price should later break below RM2.65, it would be making a 4 months new low. It means that all investors whom have been holding in this 4 months, will be turning their profit (if any) into losses, thus creating more negative memory, and eventually increasing the selling pressure. Therefore, at this time where the weakness is still in place, it is not a good time to buy.
If price should reverse, then it should first form a Higher-low, then breaking above RM3.00 with strong volume. If price should break below RM2.65, the next support are found at RM2.38 followed by the RM2.00 psychological level.
| 4 Q Rolling PER | 44.83 times | Dividend Yield | 0.00% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/12/2010 | 0 sen | 0.00% | 41.42% |
| 31/12/2009 | 0 sen | 0.00% | 28.44% |
| 31/12/2008 | 0 sen | 0.00% | 14.50% |
Table 1: Uemland – 5148, yearly dividend, dividend yield, and net profit ratio.
Perisai – 0047: Uptrend was violated.
Chart 3: Perisai – 0047 as at 04/05/2011.
As indicated by A on Chart 3, price of Perisai formed a Lower-high, as illustrated by the dotted line, which suggests a weakness of price movement. Price of Perisai also broke below the 14, 21, 31 EMA as well as the RM0.79 support, thus the uptrend was violated.
Although no one knows where the weakening price movement shall continue, one must honor his or her own trading plan which was set before or at the time buying this stock. Since the uptrend is violated, it is logic to cut loss or to take profit.
Technically, provided that price of Perisai is still staying below the falling 14, 21, 31 EMA, the technical outlook for Perisai is on the negative side, and there is no buying signal, until a valid break out above the 14, 21, 31 EMA with a formation of Higher-Low.
| 4 Q Rolling PER | 50.32 times | Dividend Yield | 0.00% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/12/2010 | 0 sen | 0.00% | 13.63% |
| 31/12/2009 | 0 sen | 0.00% | 32.60% |
| 31/12/2008 | 0 sen | 0.00% | 20.98% |
| 31/12/2007 | 0 sen | 0.00% | 7.55% |
| 31/12/2006 | 0 sen | 0.00% | 4.28% |
Table 2: Perisai – 0047, yearly dividend, dividend yield, and net profit ratio.
E&O – 3417: Pullback effect.
Chart 4: E&O – 3417 as at 04/05/2011.
As indicated by A, price of E&O has been staying in a short term uptrend since last month and even broke above the RM1.38 resistance on the 28th of April, breaking a 3 months new high. After the breakout, price of E&O has its high reaching RM 1.54 but profit taking started to kick in and price retreated as a pullback effect.
It is quite normal to have a pull-back after breaking above a resistance, and technically, price should stay above its recently broken resistance (RM 1.38) and the break out shall remains intact. Ideally, volume has to be reduced during the pull-back, this means that the selling pressure was not too strong. But as price rebound again, volume has to be significantly higher in order to resume its uptrend. On the other hand, if price should break below RM1.38, the break out would be a faulty one.
Nevertheless, for those whom are already in position, it is a good idea to use the 14, 21, 31 EMA as a trailing stop reference, by lifting the cut-loss or profit taking level gradually higher according to the 14, 21, 31 EMA. This way, it will gradually reduce your trading risk.
| 4 Q Rolling PER | 25.60 times | Dividend Yield | 2.53% |
| Dividend | Dividend Yield | Net Profit Ratio | |
| 31/03/2010 | 3.80 sen | 4.29% | 20.12% |
| 31/03/2009 | 0 sen | 0.00% | -12.45% |
| 31/03/2008 | 5 sen | 2.78% | 24.95% |
| 31/03/2007 | 4 sen | 1.84% | 5.76% |
| 31/03/2006 | 0 sen | 0.00% | 12.93% |
Table 3: E&O – 3417, yearly dividend, dividend yield, and net profit ratio.
Conclusion:
As an investor or trader, one should realize that there are times where the market is bullish, bearish, and also in an unclear trendless situation. It is said that different strategies are being applied for different market situation, for example, some choose to short the market during a bearish trend. But the point is, it requires different skills for different strategies, and one does not have to imitate what others do. We have to first know what we are capable of, our trading style, capital allocation, and emotional control. We will have to always remind ourselves that we don't have to trade all the time. When situation is uncertain, or if one should feel uncomfortable, it is perfectly OK to stay out of the market.
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。
