Stocks to Watch: CCM [2879], Tebrau [1589]

The market is extremely bullish today. The index rose by a staggering 17.39 points, with gainers outnumbered the losers by 298 shares. Some of the shares had managed to create new highs (UOADev, Tenaga, Pwroot) and are definitely worth the look as they may continue their rise tomorrow. But let’s not discuss about these shares because despite their possibility of continuing their upward movement tomorrow, the risk-reward ratio will rise slowly as price increases, making any trades in these shares to be increasingly dangerous. We are more interested in finding out shares that have yet to join the hype and are preparing to surge. We shall begin our analysis with CCM [2879].

After surging by around 45cents (more than 50%) in just 2 weeks, price had since consolidate at the RM1.13-RM1.26 range. It is clear from the chart that the price development of CCM over the past 5 weeks had created a pennant formation. By analysing the price movement using Gann’s number of 3 (trends usually end in multiple of 3 – 3 days/ 3 weeks/ 3 months), we know that it is almost time for the share to make a huge move since CCM’s share price has been consolidating for 3 weeks. In a bullish market like the one we are experiencing now, it is highly possible that the D-shape pattern under the market profile analysis that is necessary for the share to move to higher ground is skipped and numerous p-shape be seen consecutively. Relative volume density (RVD) is showing bullish signals as well, with bulks of the trading focused at RM1.21/RM1.20, 63% of the trading volume lies within one standard deviation from its mean and median trading price increases gradually to RM1.18. Risk-averse traders may choose to follow the traditional trading rule of the pennant formation, which is to buy when price break above the upper trendline of the pennant or the highest point of the flagpole, while aggressive traders may want to participate in this counter as soon as possible before the anticipated rise occurs. The best entry point for aggressive traders at the moment would be at RM1.20, with a cut loss point of RM1.18/RM1.17/RM1.14 (the choice of cut-loss point is depending on one’s risk tolerance). Next we take a look at Tebrau [1589

tebrau (1)
After a huge run for the past 3 months, Tebrau’s share price was expected to retrace with great magnitude since no meaningful correction was seen along the uptrend. Indeed, it started to retrace on the 22nd of March but the fall was not as great as expected. This is the first bullish signal. After testing the resistance of RM1.53, share price moved lower again, but this time at a much slower pace. The decline in the rate of decrease in price (by comparing the recent downtrend with the prior downtrend) suggests that the share price is going to reverse very soon. This is in-line with Gann’s price-time analysis. For the past 3 days, Tebrau’s share price had created a short-term base by constantly trading at above RM1.43. This provides a very good opportunity for aggressive traders to enter into a trade with minimal risk – entry point of RM1.43/RM1.44. If price really does rebound at this level, it has a high chance of breaking the RM1.53/RM1.54 resistance in the coming wave as it forms higher lows. If the share price moves below RM1.43, do CUT LOSS. Don’t hesitate.

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