Category Archives: Consumer Products

Stock to Watch: GAB [3255]

The composite index edged higher today with oil and gas counters getting most of the attraction (Perdana, Penergy, Alam, and Dayang). Looking at the current market sentiment, the index is expected to stay strong and will re-test the 1793 resistance level again in days to come.

The focus of today’s discussion would be on GAB [3255], a brewing company which had dipped by more than 20% from it’s highest high in just a month. Investors who kept on adding their position as the share price eased are now worrying that their decision to buy could be a huge mistake. If you fall into this category of people, let me assure you that the share is about to rebound very soon. So don’t fret. As for the others who are looking to take a position… let us look at the chart first.

gab

KLCI: Wave 3 In The Making

Fear begets fear. That’s the core of Soro’s Theory of Reflexivity, of which he smartly used to take advantage of the general public’s herd mentality to amass great personal fortune over the decades of his active participation in various financial markets. And yes, reflexivity is happening now in most Asian equity market – at a great magnitude in fact. The past few weeks were disastrous to many as they witnessed their investment gains for the year got wiped off in a relative short period of time. Technical rebounds in global equity markets were short-lived as the weak sentiment induced traders to short on any market pullback. Wrongful application of our innate ability to extrapolate past events to the future causes the investment communities to increasingly believe that we are now experiencing a recessionary dip, and whatever that we had experienced are merely the beginning. This belief is further reinforced by China’s weak PMI data and Bernanke’s “hint” on stopping the quantitative easing, indicating a possible recession or sluggish growth in months or years to come. Recession talks are mushrooming in the local investment communities as well since crucial support levels were breached, no thanks to the appreciation of USD against RM which causes a flight of capital out of our capital market.

Stocks to Watch: Padini [7052], Sendai [5205]

As requested by some of the readers, we shall discuss on Padini and Sendai today. Let’s begin our analysis with Padini [7052].

padini (1)
Ever since the uptrend was projected in late February, share price of Padini has been moving up gradually. Just recently, it hit a short-term high of RM2.10 on the 9th of April before falling for 4 consecutive days, partly due to poor market sentiment. The share price was dragged below its upward channel to its horizontal support of RM1.86 yesterday and after trading at a tight range, price managed to close higher at RM1.88 today. The signal for potential reversal and limited downside risk at the current price level means that long-term investors/ traders should start accumulating this share now. While the upward channel is no longer valid, the uptrend remains intact as long as the crucial RM1.86/RM1.85 support is not breached.

PPB [4065]: The Forgotten Giant

The share price of this KLCI constituent was hammered since last year due to the expected short-term poor performance of its 18.3%-owned associate, Wilmar, which contributes more than 50% of PPB’s earnings. After moving slightly lower than its book value in the end of December 2012, interests in this share started to kick-in and price began to move upward with high volume.

ppb2

Padini [7052]: Ready for a Huge Directional Move

Padini’s year-long uptrend was broken in September and had been on a downtrend since. The wide swings during the downtrend offered a number of opportunities to believers of short-term mean-reversion and experts in candlesticks pattern. The downtrend ended in early December after completing the falling 5-way sequence of the Elliot Wave and it’s share price has been moving sideway since.

Padini
The range which the share price has been trading for the past 3 months is tightening slowly and is converging at around the Fibonacci confluence zone of RM1.82. This is not surprising given that Fibonacci confluence zone, being the price level where multiple Fibonacci ratios align, has always been the level where price equilibrates in the medium term. The price movements of Padini for the past 1 year have successfully form a D-shape, which according to Robin Mesch signals the end of a cycle of market activity and the beginning of a new one. This essentially means that the share price is poised to make a huge directional move and it is expected to happen anytime soon given that price has been moving sideway for 3 months. Such time prediction is in accordance to Gann’s observation that “majority of trends occur in time period of 3 (3 days, 3 weeks or 3 months)”.

Stock to Watch: CSL [5214]

When China Stationery Limited (CSL) was first listed in January 2012, there was a worry that it’s IPO will not perform well since local interest on china-based companies are generally low. Almost all of the shares of red chips were on a downtrend during the proposed listing of CSL (most are still on a downtrend or remain stagnant at a low level today). Investors are not willing to take risk in these companies mainly due to the unreliability of their financial data, thereby causing the share price to be traded at an abnormally low P/E (price-to-earnings ratio).

China-based companies listed in M'sia (PE)
But the strong 3-days upward movement on the first week of its listing and a subsequent wave that brought the share to its high of RM1.90 causes the general public to reconstruct their perception on this company, as can be seen from the spike in trading activities when the share price retraced from its high. Perhaps that is the intention behind the manipulation of the share price. The prior strong uptrend may be the work of syndicates so as to allow them to dispose their holdings at a favorable price to the optimistic investors when the share price retrace. If CSL is genuinely good and is really different from other China-based companies, it’s share price will not be traded at a depressed level today. Let’s look at the chart of CSL.

Update on Zhulian [5131]

I mentioned in my previous post on Zhulian that its price is expected to rebound once it reaches the RM2.53 level. Given the improved sentiment today, the price may not reach the RM2.53 level but instead rebound tomorrow since RM2.60 is itself a support level. The formation of a dragonfly doji with high volume and the creation of 8 new lows as counted from the 21st of January provide further signal of a possible reversal.

Stocks to Watch: Pwroot [7237], Spsetia [8664]

Pwroot

pwroot
This is pretty straight forward. After a consolidation of 2 months, Pwroot is poised to move again. RM1.27 is the level to watch closely as a break/ close above would send the stocks fly. If you are a fan of Bollinger Band (BB), the first buy signal would have appear on the 18th of February, when the share closed above its middle band. Today, a further buy signal can be seen as it closed above the upper band of the BB. The support is at RM1.22/ RM1.20.

Spsetia

Spsetia

Watch Spsetia closely as well as it is forming a pennant. Using the flagpole as an estimate, the stocks could shoot up by around 40cents and stop at around its previous high of RM3.78 in the event of a break-above. Immediate support is at RM3.39.

Stock to Watch: Zhulian [5131]

Given the strong track record of the company, coupled with its high dividend yield, Zhulian will definitely attract the attention of both the fundamentalists and technical analysts as it slides further. We need to be quick in determining the level of which the risk-reward ratio is low enough for us to take a comfortable position before it stages a rebound. To determine this level, we need to look at its supports and resistances (S/R).