Stock to Watch: Benalec [5190]

Led by panic selling across Asia market (WHY? Click here to find out), KLCI gapped down by 15 points in the evening session, widening the difference in the number of gainers and losers. Instead of making an analysis on the local index, we shall discuss on the price movement of Benalec, a good stocks to trade because it is one of the most “obedient” shares that respect all the main supports and resistances. Also, since the share price has been moving sideway for 2,3 years (long-term trend), its effective trading range is clearly provided and thus the price movements are more predictable in the intermediate term. Let’s begin our analysis.


On the Monday following our election day, Benalec began it’s short term up-trend. The uptrend was healthy with volume increasing gradually as the share price moved higher. On the 20th of May, Benalec’s share price shot up by 10% and broke the triangle with high volume, providing a sign of bullishness. But on the 21st of May, the Gann’s date for reversal, a long black distribution candlestick was formed with great volume, signalling bearishness. Share price continued to slide after that and today it dropped further and touched the low of RM1.30 before closing higher at RM1.33. Since RM1.30 is one of the resistance-turned major support, share price of Benalec is expected to rebound next week. This prediction is supported by the fact that (1) price has moved down by around 13% in 3 days (In normal circumstances where the selling is sentiment-based and not due to unfavourable factors, any dip of >=13% in 3 days is considered a lot. Of course, this works only on fundamentally sound shares that are above RM1), and also (2) the volume is declining as share price moved lower (This is not very convincing though as the volume is pretty high in absolute term). If, however, the bear decided to stay until Monday (not probable unless there are more bad news to come), it might move lower to its next major support of RM1.28, of which the probability of rebouding is even higher. Traders would definitely not want to miss this opportunity.

There will be more write-ups tomorrow on other shares, so do make sure you revisit this site again tomorrow. Have a good night.

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