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, Mahsing, Hiaptek, JCY

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:

Revision of last week's case study: Mahsing – 8583: Testing new high.

Chart 2: Mahsing – 8583 as at 13/04/2011

As indicated by A, price of Mahsing was resisted by the RM 2.73 resistance and started falling. However, the falling was rather mild, which seems to be a healthy correction. As shown on chart 2, the T1 uptrend line for Mahsing remains intact, and if price of Mahsing should rebound from the T1 line, the uptrend is likely to continue. But to sustain the uptrend, a valid break out above the RM 2.73 resistance is a must.

Technically, if price should rebound from the T1 or the 14, 21, 31 EMA dynamic support, it would be another formation of a higher-low, which is an important characteristic of an uptrend. Therefore, in general, when price should stay above the 14, 21, 31 EMA or the T1 line, it is a good idea to hold. Provided one should gradually lift the cutloss level higher according to the 14, 21, 31 EMA as a trailing stop.

As for those whom are interested in taking up new position, a higher-low signal would be a good entry signal, but of course, the condition of the market at the time of forming a higher-low plays an important factor which affect the strength and reliability of the signal. However, since price of Mahsing has not broken new high, new investors are not advisable to apply the 14, 21, 31 EMA as a trailing stop, but to first set a base line with RM 2.30 as the cut loss point. Only apply trailing stop when price breaks new high and extended the uptrend. If one should feel that the risk losing between his or her entry point to the cut loss point or RM 2.30 is too high, it is better to give up this trade.

4 Q Rolling PER	18.24 times	Dividend Yield	2.93%
Dividend		Dividend Yield	Net Profit Ratio
31/12/2010	7.60 sen	3.03%	10.64%
31/12/2009	6.50 sen	3.61%	13.44%
31/12/2008	8.00 sen	5.00%	14.30%
31/12/2007	8.00 sen	4.17%	14.15%
31/12/2006	12.00 sen	3.57%	13.19%

Table 1: Mahsing – 8583, yearly dividend, dividend yield, and net profit ratio.

Hiaptek – 5072: Forming higher-low for the first time after so long.

Chart 3: Hiaptek – 5072 as at 13/04/2011.

As indicated by A on Chart 3, price of Hiaptek rebounded from the 14, 21, 31 EMA on the 7th of April, forming a higher-low, and this is an early signal implying that an uptrend could be forming, and later price of Mahsing broke above RM 1.11 resistance. After the break out, price of Mahsing pullback as affected by the general market performance. Fortunately, volume was significantly smaller during the pullback as this implies that the pullback was rather healthy as no panic selling is seen.

If price should later rebound from the 14, 21, 31 EMA, it suggests that the short term uptrend is likely to continue, but if price should break below the 14, 21, 31 EMA, then the uptrend is violated. For those whom had bought early, it is a good idea to practice the trailing stop method, by using the 14, 21, 31 EMA as a trailing stop reference, or take RM 1.00 as a base line. Next resistance of Hiaptek is seen at RM 1.15.

4 Q Rolling PER	10.77 times	Dividend Yield	1.36%
Dividend		Dividend Yield	Net Profit Ratio
31/07/2010	1.50 sen	1.15%	4.76%
31/07/2009	1.50 sen	1.50%	3.68%
31/07/2008	4.11 sen	2.60%	9.35%
31/07/2007	2.50 sen	1.05%	5.53%
31/07/2006	2.50 sen	3.05%	3.19%

Table 2: Hiaptek – 5072, yearly dividend, dividend yield, and net profit ratio.

JCY – 5161: Forming Higher-low.

Chart 4: JCY – 5161 as at 13/04/2011.

As shown on chart 4, price of JCY formed a higher-low, after falling for a year, and the formation of higher-low had been absent for a long time. When price formed a higher-low, it was also supported by the 14, 21, 31 EMA, and also broke above the RM 0.78~RM0.80 resistance. However, the correction of the market pull JCY price back last week, but as indicated by A, price of JCY is still supported by the 14, 21 ,31 EMA, and this means that there is still a chance for the uptrend to form.

If price should rebound from the 14, 21, 31 EMA, the 14, 21, 31 EMA shall continue serving as the dynamic support and break out above the RM0.78 ~ RM 0.80 is possible, then a uptrend would sustain.

Technically, the most ideal break out would be a break out with strong volume, and of course, the condition of the overall market is very important too. If any one should be interested in taking up new position, a good break out above RM0.78~RM0.80 with strong volume should be viewed as a buy signal, but he or she should set a base line at RM0.67~RM0.80. If price should continue its uptrend, then only switch to the 14, 21, 31 EMA as the trailing stop reference.

Please be reminded that price of JCY has been falling or about 1 year, since its peak of RM 1.98, and only now it is showing some sign of a possible uptrend. On one hand, it appears that the price of JCY now is “cheap” and one could understand why most would call it a “bottom fishing” opportunity.

On the contrary, one should also consider the other side of the factor, which is the selling pressure. Consider that during the course of a downtrend, many investors whom initially bought must have thought that their entry price was “reasonable” or “cheap” or else, they would have waited. But as price fall, these now regret investors are losing money, some are losing so much that they only wanted to break even. Therefore, there are many losers in the downtrend are now looking forward to break even, and this notion will turn into “reader sellers” thus explained as selling pressure or resistance.

As always, there are two sides to a story, and how does one select and cope with the contradiction of ideas? This is the time where investors should first consider the risk involved, then only consider the potential reward. First, one must determine how much he or she is prepared to lose, and if the maximum allocated amount is bearable, then the next step is to try to follow the market flow, do not go against the general market direction. Do know that there is no system or method to find out how long or how strong an uptrend would go, and all uptrend are formed with the repetition of short term rallies.

Lastly, when in a situation where one finds him or herself torn between buying or not, or the analysis signals are not obvious, it is best to give up the trade, look for something else more manageable. Because, trading is a private matter, you don't have to feel pressure just someone else bought the same counter.

Conclusion:

Technical analysis, is a study of stock past behavior, and when there are no special events that causes drastic movement, technical analysis believe that there is a logic path to the stock behavior. Despite all that, still, it does not have they ability to forecast, not even the next minute. The use of technical analysis is to help one understand the risk behavior of a counter, then from there, design a trading plan, and follow the general market direction, and hopefully profit from it. For those shallow thinkers, who solely rely on “signals”, technical analysis becomes meaningless. That is why you will hear many people complaining about the fault of technical analysis, it is not the system, it is the person that has problem.

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。

Dialog, Sapcres, MHB

A few weeks after the nuclear crisis of Japan, stock markets across the world are recovering, especially the US and European markets, which are back to the pre-crisis level. Of course, the KLCI also gaining strength, breaking above the 14, 21, 31 EMA.

Chart 1: KLCI as at 30/3/2011.

As indicated by A, after breaking above the 14, 21, 21 EMA, the KLCI also broke above 1525 WinChart Automatic Fibonacci Retracement, and the technical outlook for the KLCI is now positive. As for whether the KLCI could form an uptrend, it will have to first firm a higher-Low.

Meanwhile, as indicated by B, total market volume increased significantly, and breaking above the 40-day Volume Moving Average. This suggests some increased of capital inflow, and it will generally help lifting the market sentiment. Which, indirectly, a positive element for the performance of individual counters.

This week, we are looking at some Oil and Gas related counters:

DIALOG – 7277: Testing new high in an uptrend.

Chart 2: DIALOG – 7277 as at 30/03/2011.

As shown on chart 2, price of Dialog has been testing the RM2.36~RM2.42 resistance few times. Although price of Dialog retreated every time after being resisted by the resistance, it is still supported by the 14, 21, 31 EMA, and this suggests that the uptrend is still intact.

As indicated by A, price of Dialog is now testing the RM2.36~RM2.42 again, and if price could break above this level, it would be making a historical new high, thus the uptrend could continue. Technically, as long as price is still supported by the 14, 21, 31 EMA, it is a good idea to hold.

As for those whom are interested in taking up new position, an ideal buy signal would be a new formation of higher-low, or new high, and preferably with strong volume. As for those whom are already in position, as long as price is still rising, it is a good idea to practice the trailing stop method by using the 14, 21, 31 EMA, and gradually lifting the profit taking level or the cut loss level according by the 14, 21, 31 EMA.

Due to the flat movement of Dialog for the past two months, it is not advisable to use the 14, 21, 31 EMA for new investors whom are taking up new position. A more suitable base line should be at RM2.15. New investors should only be using the 14, 21, 31 EMA as a trailing stop when price started rising.

4 Q Rolling PER	35.05 times	Dividend Yield	1.34%
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.

Sapcres – 8575: Testing resistance.

Chart 3: Sapcres – 8575 as at 30/03/2011.

As shown on chart 3, since November, 2010, price of Sapcres has been staying in a trading range within the resistance of RM 3.75~ RM 3.85 and the support of RM 3.39~RM 3.40.

As indicated by A, price of Sapcres is now testing the RM 3.75~RM 3.85 resistance, and if price should break above this resistance, it would be making a new high of many years, and price could resumes its uptrend. Based on the current trading range condition, investors could take the support of RM3.39～RM3.40 as the last frontier, or the bottom line, and if price could stay above this level, it is still a good idea to hold.

As soon as price break above the resistance, then for those whom are holding could switch to apply the 14, 21, 31 EMA as a trailing stop method. This way, the trading risk will be reduced, and yet taking advantage of the uptrend.

4 Q Rolling PER	20.35 times	Dividend Yield	2.30%
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: Sapcres – 8575, yearly dividend, dividend yield, and net profit ratio.

MHB – 5186: Testing resistance in an uptrend.

Chart 4: MHB – 5186 as at 30/03/2011.

As shown on chart 4, since the IPO, price of MHB has been trending up, and staying above the 14, 21, 31 EMA, which is serving as the dynamic support. Therefore, for those whom are already in position, it is a good ideal to continue to hold. As long as you lift your profit taking level higher according to the 14, 21, 31 EMA.

Right now, it is testing its new high of RM7.00 resistance. If price of MHB could break above this successfully, it would allow more upside room for the uptrend. For those whom are interested in taking up new position, an ideal buy signal would be a new formation of higher-low, preferably above the 14, 21, 31 EMA. Support for MHB are found at RM 6.30 followed by RM 5.70.

Conclusion:

It is said that most of the time, the stock market performance is usually thematic. For example, a few months back, Properties stocks were among the favorite of investors, but not all nearly 90 properties counter were trending up. For now, the outlook for oil and gas related industry remains positive, but out of 20+ O&G related counters, those that are trending down, or moving is sideways still outnumbered those that are trending up. One may wonder, out of many brands of television set, a consumer would spend a considerable time and effort to pick the best one, but sadly the same person might not be spending enough time to pick his O&G stock.

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。

Pchem, Tenaga, Sozo

A few weeks after the nuclear crisis of Japan, stock markets across the world are recovering, especially the US and European markets, which are back to the pre-crisis level. Of course, the KLCI also gaining strength, breaking above the 14, 21, 31 EMA.

Chart 1: KLCI as at 30/3/2011.

As indicated by A, after breaking above the 14, 21, 21 EMA, the KLCI also broke above 1525 WinChart Automatic Fibonacci Retracement, and the technical outlook for the KLCI is now positive. As for whether the KLCI could form an uptrend, it will have to first firm a higher-Low.

Meanwhile, as indicated by B, total market volume increased significantly, and breaking above the 40-day Volume Moving Average. This suggests some increased of capital inflow, and it will generally help lifting the market sentiment. Which, indirectly, a positive element for the performance of individual counters.

Revision of last week's case study: Pchem – 5183: Breaking new higher, continue its uptrend.

Chart 2: Pchem – 5183 as at 30/03/2011.

As indicated by A, price of Pchem broke above the RM 6.83 resistance, making a new high, and now price of Pchem is extending its uptrend. As price is rising, the 14, 21 ,31 EMA is also following, and therefore, for those whom are already in position, it is a good idea to continue to hold, as long as one should gradually lift the cut loss or profit taking level according to the 14, 21, 31 EMA. This way, it will gradually reduce trading risk, while maximizing the potential of the uptrend.

As for those whom are interested in taking up new position, an ideal buy signal would be a new formation of a higher-low, preferably with strong volume, and price remain above the 14, 21, 31 EMA, for if price should start rising again after the entry, one could immediately apply the trailing stop method by using the 14, 21, 31 EMA as a reference.

Tenaga – 5347: Remains in downtrend.

Chart 3: Tenaga – 5347 as at 30/03/2011.

Although the KLCI has broken away from the short term downtrend, price of Tenaga remains in a weakening trend. As shown on chart 3, price of Tenaga was supported by the RM 5.94~RM 6.05 for a few times and price rebounded from this support. However, despite the rebound, price of Tenaga as still resisted by the 14, 21, 31 EMA, which is still serving as the dynamic resistance, and this suggests that the technical outlook for Tenaga is still weak.

As indicated by A, price of Tenaga retreated on the 22nd of March, after being resisted by the 14, 21, 31 EMA, forming yet another lower-high, which is a sign of weakness. Technically, it has to break above the 14, 21, 31 EMA, in order to bring the technical outlook back to positive, and as for whether it could form an uptrend, it would have to form a higher-low, after the break out.

As a general rule, despite the improvement of the market sentiment in general, investors should still honor the rule of trading stocks in an uptrend, and avoid catching any falling stocks.

4 Q Rolling PER	9.25 times	Dividend Yield	4.29%
Dividend		Dividend Yield	Net Profit Ratio
31/08/2010	26 sen	2.94%	10.56%
31/08/2009	17.77 sen	2.22%	3.19%
31/08/2008	20 sen	2.53%	10.07%
31/08/2007	36.30 sen	3.65%	17.41%
31/08/2006	12 sen	1.31%	10.43%

Table 1: Tenaga – 5347, yearly dividend, dividend yield, and net profit ratio.

Sozo – 5187: Short term weakness.

Chart 4: Sozo – 5187 as at 30/03/2011.

As shown on chart 4, after falling below the 14, 21, 31 EMA on the 10th of March, price of Sozo remained in a downtrend, with the 14, 21, 31 EMA serving as the dynamic resistance. Although there was a rebound from RM0.75 on the 17th of March, price of Sozo was still resisted by the 14, 21, 31 EMA, and retreated afterward. Technically, it is still showing weakness for Sozo right now.

As indicated by A, price of Sozo is now testing the RM0.75 support, and if price should rebound from here, it would have to re-test the dynamic resistance again. If it could break above the dynamic resistance, it would break away from this weakness short term trend. But it does not mean it would reverse and form an uptrend immediately.

On the other hand, if price should break below the RM0.75 support, it would be making a two and a half month new low, and the technical outlook shall remains negative. Next support for Sozo is seen at RM 0.64.

Conclusion:

The increased of volume as a whole implies that investors participation and confidence is improving. It will generally help lift the market sentiment, and the performance of individual counters. One should be able to benefit from the increased of volume provided the counters show signs of an uptrend. However, despite the improvement of market sentiment, if one is still buying a counter breaking new low or staying in a downtrend, he would most likely be left out because he is aiming at a wrong target.

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, Pchem, DIALOG ,JCY, MEDIA

Although the aftermath of the nuclear crisis in Japan has not rested, global stock markets rebounded. Despite the rebound, some major indices are still exposed to the risk of forming a lower-high, which includes the KLCI.

Chart 1: KLCI as at 22/3/2011.

As indicated by A, the KLCI rebounded from the 1474~1480 support, and now testing the 14, 21, 31 EMA dynamic resistance. Meanwhile, total market volume started to increase, and if volume could break above the 40-day Volume Moving Average, and the KLCI breaks above the 14, 21, 31 EMA, the KLCI would have a better chance to break away from this weakening trend.

Understanding Volume (End)

Last two weeks, we mentioned the relationship between price and volume, including the numbers of sellers and buyers must be equal, et cetera. We will conclude the last portion of volume and price relationship in this article.

C: Price fall with low volume:

When price fall with lower volume, it means that the stock is most likely trending down or staying in a weakening consolidation. When the market is quiet, when most investors are staying on the sidelines, and at the same time, the market is lack of good news to stimulate the market sentiment, stock price is less likely to go up. Therefore, one should learn to identify these characteristic, and if volume should trend down with low volume, together with formation of lower-highs, it is best to avoid this downtrend.

Chart 2A: Price fall with low volume.

D: Price fall with strong volume.

Generally, when the market is hit by major negative news, stock price would fall with huge volume, and this is what we called a panic selling. When sellers are so afraid that they don't mind selling their stocks at lower price, they would quickly sell their stock to the the buyers at the next buyer price. These panic selling activities are usually short-term, but they will certain have an impact to the stock trend and investors confidence.

Chart 2B: Panic Selling with huge volume.　

E: Price stopped rising, while volume remains strong.

This is different from panic selling, where the panic selling is clearly visible, but as shown on chart 2C, when price stopped rising and volume is still strong, it implies that the stronger hands are off loading their shares to late comers, or the weaker hands, and this is usually not obvious, in fact, rather hard to notice. One should ask, if there are such strong inflow of volume (fresh capital), why wouldn't the sellers ask for any premium? Why must the sellers rush to sell their stocks?

Chart 2C: Price stop rising, volume remains strong.

This week's Case Studies:

Pchem – 5183: Uptrend remains intact.

Chart 3: Pchem – 5183 as at 22/03/2011.

As shown on chart 3, price of Pchem was resisted by the RM6.80~RM 6.83 resistance, and entered a sideways consolidation. Despite the resistance, the uptrend of the Pchem remains intact, while the 14, 21, 31 EMA is still serving as the dynamic support of the uptrend.

Technically, as long as price of Pchem could stay above the 14, 21, 31 EMA, investors could choose to hold, provided that he or she should lift the cutloss or profit taking level according to the 14, 21 ,31 EMA level, this will gradually reduce trading risk.

As for those whom are interested in taking up new position, it could be viewed as a buy signal if price should break above RM 6.80~RM6.83 resistance, and apply the 14, 21, 31 EMA as a trailing stop reference after entering. Of course, the break out should be accompanied by strong volume.

DIALOG – 7277: Testing Resistance.

Chart 4: DIALOG – 7277 as at 22/03/2011.

As shown on chart 4, price of Dialog was affected by the recent incident in Japan, as a form of a technical correction. However, price of Dialog remains above the 14, 21, 31 EMA dynamic support, and this means that the uptrend remains intact. For those whom are already in position, he or she could choose to hold, as long as price of Dialog remains above 14, 21, 31 EMA.

Meanwhile, as indicated by A, after being supported by the 14, 21, 31 EMA, price of Dialog started rising again, and now set to test the RM 2.36~RM 2.42 resistance. If price should break above the RM2.36~RM2.42 resistance, it would be making a historical new high. If the break out should be accompanied by strong volume, there is a good chance that the uptrend would prolong, with positive technical outlook.

4 Q Rolling PER	34.75 times	Dividend Yield	1.35%
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.

JCY – 5161: Remains in downtrend.

Chart 5: JCY – 5161 as at 22/03/2011.

As shown on chart 5, price of JCY rebounded last week, after being supported by the RM0.575 ~ RM 0.585. However, it is still testing the 14, 21, 31 EMA, which is still serving as the dynamic resistance. Technically, as long as price of JCY is still staying below the 14, 21, 31 EMA, the technical outlook for JCY shall remain weak. Furthermore, with the lower market participation, chances of a reversal is still slim.

Theoretically, the most ideal buy signal, is when price breaks above the 14, 21 ,31 EMA, and then forming a higher-low. On the contrary, if price should remain resisted by the 14, 21, 31 EME, and later break below the RM0.575~RM 0.585 support, it would make yet another new low.MEDIA – 4502: Short term downtrend remains intact.

Chart 6: MEDIA – 4502 as at 22/03/2011.

As shown on chart 6, since breaking below the 14, 21, 31 EMA on the 25th of January, price of Media has been staying below the 14, 21 ,31 EMA, thus the short term technical outlook for Media remained negative. Price of Media was supported by RM2.20 in the beginning of March, but after rebounding from RM2.20 support, price of Media is now testing the 14, 21, 31 EMA as indicated by A.

If price should remain resisted by the 14, 21, 31 EMA, and started falling again, it would form another lower-high, which suggests that the downtrend is still intact. If price should break below RM2.20 support, it would be making a near 6 months new low, and by then, it would trigger more selling pressure.

Technically, as long as price of Media is still resisted by the 14, 21 ,31 EMA, then investors should stay away from this counter, until a valid break out above the 14, 21, 31 EMA. If price should break above the 14, 21, 31 EMA, and later forms a higher-Low, it could be a positive reversal signal.

4 Q Rolling PER	8.95 times	Dividend Yield	4.33%
Dividend		Dividend Yield	Net Profit Ratio
31/12/2010	10 sen	4.18%	16.45%
31/12/2009	10 sen	5.24%	26.18%
31/12/2008	25 sen	22.52%	11.01%
31/12/2007	0 sen	0.00%	16.98%
31/12/2006	0 sen	0.00%	15.05%

Table 2: MEDIA – 4502, yearly dividend, dividend yield, and net profit ratio.

Conclusion:

The above examples of case studies reinforced an important idea, which is to follow the trend. Trying to buy low during a downtrend is not the way. The idea of buy low sell high is easy to accept for this is human nature to buy things cheap. However, the prices of a stock trend is not governed by common sense, and this explains why we generally say that a few winners takes all the profit from most losers, because only few could make it.

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, Genting, MRCB, Airasia

After the earthquake and Tsunami, the nuclear crisis in Japan is the main concern of investors around the world, with last week's Nikkei 225 index was falling up to 2000 points or 20%, and the regional markets were severely affected too. However, the Malaysian market was mildly affected.

Chart 1: KLCI as at 16/3/2011.

As shown on chart 1, although the KLCI was also affected by the negative impact of the Japan nuclear crisis, the downside movement of the KLCI was rather insignificant. As indicated by A, the KLCI had once broken below the 1474 support, but it managed to return to above the support level and this shows that the support for the KLCI remains at 1474~1480. If the KLCI could hold up above this level, the KLCI could prolong its sideways consolidation.

But still, with the KLCI below the 14, 21, 31 EMA the technical outlook for the KLCI remains on the lower side. If the KLCI should break below the 1474 again, it would be making a half year new low.

Understanding volume – continue.

Last week, we discussed the relationship of volume with price movement. This week, we shall look deeper into their relationship and the effect caused.

A: Price gain with volume up.

When price goes up associated with the rising of volume, we theoretically say that there are increased of new buyers (greed) to replace the old sellers (fear). Not only that, these new buyers are mostly paying a higher price to get in, and old sellers are asking for more premium to get out. This is a good sign, especially for break out of resistance. Study Chart 1A.

Chart 1A: Price up with volume.

B: Price up but volume unchanged:

When price continues to go up, but volume remains unchanged, or there are no significant increased of volume, it is rather normal. This shows that there is still positive volume flow as new buyers are basically still paying higher price to take their shares from old sellers. Provided volume stays almost the same, it is fine. Another factor we must consider is that when price is getting higher, the buying power of the same money is less. Therefore, it is getter harder and harder to get the equal amount of shares for the same money. However, when it comes to a break out of an important resistance, significant increased of volume is still in favor.

Next week, we shall continue in exploring other combination of price and volume. Below are this week's case studies.

Genting – 3182: Short term weakness, testing RM10 support.

Chart 2: Genting – 3182 as at 16/03/2011.

As shown on chart 2, since breaking below the 14, 21, 31 EMA on the 7th of February, price of Genting has been staying in a short term weakness trend, whereas the 14, 21, 31 EMA is serving as the dynamic resistance. However, indicated by A, price of Genting remains supported by the RM10.00 psychological support level. Generally, investors are more likely to remember round number, and therefore, it is called psychological support.

If price should break below RM10.000, it would be making a 6 months plus new low. In other words, all investors whom had bought Genting in the last 6 months, no matter at a lower price or higher price, will be losing money, or turning their profit into losses. Therefore, it would evoke more selling pressure.

In short, when price breaks below the support, selling pressure will increase and therefore, not a good idea to pick up at that time, or it could be viewed as a signal to cut loss. In other words, as long as the price is still staying below the 14, 21, 31 EMA, it is a good idea to stay away from it.

4 Q Rolling PER	16.82 times	Dividend Yield	0.78%
Dividend		Dividend Yield	Net Profit Ratio
31/12/2010	7.80 sen	0.75%	14.50%
31/12/2009	7.20 sen	1.14%	11.74%
31/12/2008	7.00 sen	1.89%	6.27%
31/12/2007	37 sen	0.98%	12.15%
31/12/2006	32 sen	0.97%	21.66%

Table 1: Genting – 3182, yearly dividend, dividend yield, and net profit ratio.

MRCB - 1651: Short term weakness.

Chart 3: MRCB - 1651 as at 16/03/2011.

As shown on chart 3, price of MRCB formed a Descending Triangle, with the L1 line being the dynamic resistance. Support is at RM 1.97~RM 2.00. A descending Triangle, is a consolidation pattern of price with weakness, for the L1 descending line is actually outlining the formation of lower-high, which is the early sign of a possible downtrend formation; while the support remains unchanged.

If price should break below the RM1.97~RM2.00 support, it would be making a 6 months new low. By then, it means more people will be losing money, and eventually creating more selling pressure. Technically, as long as price of MRCB is staying below the L1 line or the 14, 21, 31 EMA, the technical outlook for MRCB is expected to be weak, and it is not a good idea to buy right now. Next support is seen at RM1.77~RM 1.80.

If price should prolong it's sideways consolidation, price will eventually break away the L1 line, but it does not mean that price will form an uptrend reversal. Not until it forms a higher-low. Even so, investors should consider the overall market condition, volume et cetera.

4 Q Rolling PER	39.88 times	Dividend Yield	0.72%
Dividend		Dividend Yield	Net Profit Ratio
31/12/2010	1.5 sen	0.66%	6.30%
31/12/2009	1 sen	0.73%	3.76%
31/12/2008	0 sen	0.00%	-7.18%
31/12/2007	0 sen	0.00%	4.51%
31/12/2006	0 sen	0.00%	6.20%

Table 2: MRCB - 1651, yearly dividend, dividend yield, and net profit ratio.

Airasia – 5099: Short term weakness.

Chart 4: Airasia – 5099 as at 16/03/2011.

As shown by chart 4, the price movement of Airasia is rather similar to the price movement of MRCB, and they both are staying below the L1 descending line as well as the 14, 21, 31 EMA. The short term view of Airasia is weak, but it is still above the RM2.40 support, thus the current condition is not devastating.

As indicated by A, price of Airasia tested the 14, 21, 31 EMA and the L1 line after rebounding from the RM 2.40 support. If price should break away from the L1 line, it would help the technical outlook of Airasia, back to neutral from the short term bearish biased movement. However, it does not mean a bullish reversal right away, not until price forms a higher-low.

On the other hand, if price should break below RM2.40, it would be making a near 6 months new low, thus creating more selling pressure, as all the investors whom had bought within this 6 month will be making losses, and turning their profit into losses. Therefore, it will be a sell signal.

4 Q Rolling PER	6.58 times	Dividend Yield	0.00%
Dividend		Dividend Yield	Net Profit Ratio
31/12/2010	0 sen	0.00%	26.72%
31/12/2009	0 sen	0.00%	17.27%
31/12/2008	0 sen	0.00%	-17.87%
31/12/2007	0 sen	0.00%	38.90%
31/12/2006	0 sen	0.00%	31.07%

Table 3: Airasia – 5099, yearly dividend, dividend yield, and net profit ratio.

Conclusion:

Most of the time, when stock price forms a downtrend, it will first form a lower-high, followed by breaking a new low. However, the behavior of stock price varies with different stocks, and to identify these behavior, is actually not easy. That's why, it takes years to master this skill, and most failed.

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, Axiata, CIMB, UEMland

After the earthquake and Tsunami, the nuclear crisis in Japan is the main concern of investors around the world, with last week's Nikkei 225 index was falling up to 2000 points or 20%, and the regional markets were severely affected too. However, the Malaysian market was mildly affected.

Chart 1: KLCI as at 16/3/2011.

As shown on chart 1, although the KLCI was also affected by the negative impact of the Japan nuclear crisis, the downside movement of the KLCI was rather insignificant. As indicated by A, the KLCI had once broken below the 1474 support, but it managed to return to above the support level and this shows that the support for the KLCI remains at 1474~1480. If the KLCI could hold up above this level, the KLCI could prolong its sideways consolidation.

But still, with the KLCI below the 14, 21, 31 EMA the technical outlook for the KLCI remains on the lower side. If the KLCI should break below the 1474 again, it would be making a half year new low.

Understanding volume – continue.

Last week, we discussed the relationship of volume with price movement. This week, we shall look deeper into their relationship and the effect caused.

A: Price gain with volume up.

When price goes up associated with the rising of volume, we theoretically say that there are increased of new buyers (greed) to replace the old sellers (fear). Not only that, these new buyers are mostly paying a higher price to get in, and old sellers are asking for more premium to get out. This is a good sign, especially for break out of resistance. Study Chart 1A.

Chart 1 Airasia : Price up with volume.

B: Price up but volume unchanged:

When price continues to go up, but volume remains unchanged, or there are no significant increased of volume, it is rather normal. This shows that there is still positive volume flow as new buyers are basically still paying higher price to take their shares from old sellers. Provided volume stays almost the same, it is fine. Another factor we must consider is that when price is getting higher, the buying power of the same money is less. Therefore, it is getter harder and harder to get the equal amount of shares for the same money. However, when it comes to a break out of an important resistance, significant increased of volume is still in favor.

Next week, we shall continue in exploring other combination of price and volume. Below are this week's case studies.

　

Axiata – 6888: Possible Head and Shoulders Top.

Axiata – 6888 as at 16/03/2011.

The L1 line of Chart 2 outlines the formation of lower-high of Axiata, since 9th of March, and the technical outlook for Axiata remains negative since then. Fortunately, price of Axiata is still supported by the RM 4.70 support, thus the downtrend is not devastating. Together with the L1 line and the RM4.70 support, it forms a Descending Triangle, and the descending Triangle is a consolidation pattern with weakness, for it shows that price already formed lower-high, but support remains unchanged.

Meanwhile, over the course of 1 and a half month, price of Axiata is forming a Head and Shoulders Top. Technically, a Head and Shoulders Top pattern implies that it is the temporary peak of Axiata, and the risk of a reversal is high, and the key factor of the reversal would be a break down below its neck line, the RM 4.70 support.

Nevertheless, regardless of the fancy name of the given pattern, the right edge of a Head and Shoulder top is always a Descending Triangle, and therefore, provided one could identify this pattern and stay away from its weakness, he is saved. As for investors whom are still holding, it is a good idea to refer to the long term weekly chart, and if price should break below the weekly 14, 21, 31 EMA, it means that the long term uptrend has been violated, thus a sign to exit.

Of course, there is still a possibility that Axiata could stay above RM 4.70, and prolong its sideways consolidation. By then, it would have broken away from the L1 descending line, thus reducing the risk of a bearish reversal.

4 Q Rolling PER	22.71 times	Dividend Yield	2.10%
Dividend		Dividend Yield	Net Profit Ratio
31/12/2010	10 sen	2.07%	11.33%
31/12/2009	0 sen	0.00%	12.61%
31/12/2008	0 sen	0.00%	4.39%

Table 1: Axiata – 6888, yearly dividend, dividend yield, and net profit ratio.

CIMB – 1023: Short term weakness and testing RM 7.80 support.

Chart 3: CIMB – 1023 as at 16/03/2011.

As indicated by a, price of CIMB remains in a short term downtrend after breaking below the 14, 21, 31 EMA on the 21st of January. Therefore, the technical outlook for CIMB remains weak. It is a good idea to stay away from stocks which have negative technical outlook.

Meanwhile, price of CIMB is testing the RM 7.80 support and this is a support since August, 2010. If price should break below this support, it would be making a 7 months new low, and it means that all investors whom had bought within this 7 months will be making losses, or turning their profit into losses, thus increasing the selling pressure. Again, as long as price of CIMB is still trending below the 14, 21, 31 EMA, it is a not a good idea to “buy low”.

4 Q Rolling PER	16.16 Times	Dividend Yield	3.29%
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: UEMland – 5184: Still testing RM2.64 support.

Chart 4: UEMland – 5184 as at 16/03/2011.

Last week, we mentioned UEMLand's Descending Triangle, with weakness. Until now, the technical condition of UEMLand is unchanged, while the Descending Triangle remains intact. But, right now, price of UEMLand is staying at the edge of the Triangle, and usually the break out is not far away from now.

If price should break below the RM2.60 support, it would increase the selling pressure and by then, the 14, 21, 31 EMA would serve as the dynamic resistance, with negative technical outlook. Therefore, when price break below RM2.60, it is a signal to cut loss. On the other hand, if price of UEMland prolongs its consolidation, it would eventually break away the L1 line, and by then, the Descending triangle would be dysfunctional. In short, right now is not a good time to make any trading decision until a valid break out away from the L1 line.

4 Q Rolling PER	45.83 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 3: UEMland – 5184, yearly dividend, dividend yield, and net profit ratio.

Conclusion:

As the market is generally affected by negative impact of the Japan nuclear incident, many counters are falling and price is definitely lower. However, this does not mean that it is a good time to pick up some of the cheap stocks, and if one should do this, he or she is actually going against the trend.

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。