Stock to Watch: AeonCr [5139]

After appreciating by a staggering 400+% in less than 2 years to an all-time-high of RM13.72, funds that are involved began to take profit. While the long-term uptrend was only violated in early January, sign of long-term reversal was revealed earlier in December when it formed a lower high.

As a contrarian, I would not shun this counter just because it is on a downtrend. In fact, downtrend stocks are sometimes good to trade because they provide not just the margin of safety but also more information on all possible explicit and implicit support/ resistance. Greater insight on a fund’s intention could be obtained as well by studying the price and volume on each minor waves that form the major trends.

Let’s look at the reasons why I think Aeoncr is an attractive buy at the moment.

We shall start by looking at the most recent downtrend. We take the high of January 3rd as the beginning of the short-term downtrend since no substantial upward movement occurs in between. To-date, AeonCr’s share price has fallen by 16+% in just 18 days. Based on experience, a continuous fall in a company’s share price that is not due to changes in its fundamental attributes would have a high probability of reversal after moving down by 15 to 20%. This, coupled with the fact that the downtrend breached the RM11.18 support without “taking a rest” (meaning the share price did not stay at the support level for more than 2 days), provides a strong bullish reversal signal.

aeoncr2

By counting lows starting from January 8, the day when major support was breached (the red arrow in the chart), the share had created 9 new lows. This, according to the candlestick pattern Eight-to-Ten New Price Low, is also a bullish reversal signal.

On top of that, the increased volume as share price moved lower indicates rising interest. Changing hand of huge block of shares at the price of RM10.60 today also creates a good base for share price to move higher.

What is the downside risk, you might wonder. Well, the only concern I have is that the share price could be dragged by the poor sentiment of the overall market. Should the market fall further, AeonCr’s share may follow suit and could touch RM10.20/ RM10 before rebounding. But that should not be a huge worry because at a lower price, the share could only be more attractive and reversal is deemed to be even more imminent, at least in the short-term.

Should there be a change in circumstances, a re-analysis will be required.

Have fun reading and happy trading. =)

*Disclaimer: This is not a recommendation to buy. Please contact your dealer representative for further information or clarification. Thank you.*

 

 

One Response to Stock to Watch: AeonCr [5139]

  1. Francis says:

    great analysis, price has jumped nearly rm2 since then

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