Tag Archives: chart pattern

Stock To Watch: Alam [5115]

Alam, one of the most popular small-cap oil and gas company, had recently formed a beautiful pattern which traders like a lot. After consolidating for around 2 months, price broke above the huge triangle on the 16th of July with substantial volume. The momentum continued for another day, where we see the share price of Alam broke the 1-year high at ease and closed at RM1.58 before it retraced to lower price levels on subsequent days. By joining the highs and lows for the past few days, we could see an obvious triangle. Price never close below the RM1.52 support line during the formation of the triangle and the lows were moving higher each day, indicating that the bull were in-charge. Once the share price moves above the upper line of the triangle, it’s a buy. Traders could also see Alam as forming a pennant (a combination of the 2 up days and the triangle), of which the buy decision would be the same as the triangle pattern. The relatively low volume during the formation of the triangle compared to the 2 up days means that it is very likely that the share will break above the upper line.

alam

Do trade cautiously as the market is getting weaker.

Stocks to Watch: Benalec, Cliq, GOB, Malton, Tuneins, Ytlland

Despite distribution activities happening in a few index-linked stocks, the market sentiment was pretty good today, with a huge number of shares breaking above their short-term swing high after ‘testing the supply” (VSA methodology). In case you don’t understand, it means BULLISH, BULLISH, BULLISH! Let’s skip the talking and look straight at the chart of some of these counters.

benalecBenalec – Closed above RM1.37, forming a Double Bottom.

KLCI: Getting Weaker

Yes. You read the title correctly. W-E-A-K.

While it’s not entirely bearish yet (the index edged only slightly lower today and the losers outnumbered the gainers just marginally, so for some people there’s still HOPE… Hey! It’s time to wake up!) several signals show that the bears are about to launch an aggressive attack on our market in days to come. If you are an active trader, you would have notice that majority of the shares that have rose for the past few days are starting to reverse. Some are even approaching lower support levels already. For shares that still manage to hold up, the momentum is obviously fizzling out. With the smart money booking in their profit since the first trading day of July, there is no way the market is going to move higher, especially when the regional peers are falling. A correction is needed before traders and investors are willing to take fresh position again. Let’s take a look at the chart.

klci (5)

KLCI: Into the Rectangle Again

klci1
The index had managed to move into the rectangle again, breaking the support-turned resistance of 1766, thereby showing sign of bullishness. But hold on just a minute. As you can see from the chart, volume is declining as the index moved higher. This indicates that the trend is weakening. At the moment, we need more concrete evidences to determine the sustainability of the trend before we can establish huge long position. Breaking the recent high (the area highlighted in pink) with high volume would be a bullish signal. Otherwise, we should enter only after the recent low of 1743 is tested again or if a higher low is formed. That would be safer.

What if the intraday resistance level of 1775 is broken tomorrow, wouldn’t it be a buy signal? Yes it is, but it’s not a good one, or should I say its not a safe one since we are in the third day of an uptrend. Always remember, never ever take a position in the direction of the trend on the third day because it is very likely that a reversal will occur on the third day or on the forth, making the risk-reward ratio of the position to be unattractive. Unless the market is in an extreme bullish condition, this rule holds most of the time. Again, if you are eager to take a long position, wait for the market to provide you with more concrete evidences. Don’t rush in.

KLCI: The Long-waited Fall

At last, after weeks of consolidation, the strong support of 1766 gives way today. The break of the rectangle signals the beginning of a downtrend. At the moment, with the composite index dipping by a staggering 32.25 points today and a total loss of 50+ points in just 3 days, the most sensible strategy is to wait for the right time to take long position. A technical rebound is ought to follow after such a huge move in such short period of time, possibly at the start of the gap (1718) or at the psychological support level of 1700. One can capitalize on the rebound of the market by betting on shares that had dropped a lot recently and are now close to its major support level. It would be best that the shares had fell by at least 10% from the recent top and had fallen consecutively for at least 3 days. High transacted volume tomorrow will be another plus point. Remember, we are trying to profit from the rebound and not to buy-and-hold.

klci (5)
Some may ask, isn’t it possible that the index will rise tomorrow instead since it had fallen so much today? Yes it is possible, since 1743 could be a support level. If the market really pullback tomorrow, then the strategy should change from preparing to take long to take short. Watch for opportunities to short the market again if the pullback is weak. The support-turned ressitance of 1766 would be a good spot to initiate short future contracts.

Stock to Watch: MHB [5186]

Before we perform a thorough analysis on the price development of MHB [5186], lets take a brief look on the general market movement. As can be seen from the chart below, the index is still moving within the sideway channel (or in a rectangle). Market was weak in the morning, dragged by the poor performance of the regional market, but began to recover in the afternoon session and managed to close just below its opening, thereby forming a doji. With buyers coming in everytime the market touches the 1766 support level, it is hard to tell at this point whether the bull or the bear will triumph in the coming weeks. We need to watch the upper and lower boundaries of the sideway channel closely.

klci (4) (1)

Stock to Watch: Glomac [5020]

Opportunities for day trading are getting scarcer. With foreign funds began to offload their massive holdings since last week, coupled with the weak performance of the regional markets, our local bourse is expected to move sideway/lower in the near-term. The 1765 support is a crucial level to watch for as a breach will lead the composite index lower, which will definitely cause a round of sentiment-based selling across all shares. While most shares are gradually reversing, some are consolidating and are waiting for the right moment to move to higher grounds. Glomac [5020] could be one with such upside potential.

glomac

Stock to Watch: Pantech [5125]

Looking at the chart of our local index, we can see that the index is now consolidating within a 28 points range (Resistance of 1793; Support of 1765). A spinning top was formed on Thursday with slightly greater volume than the previous days, signalling a possible reversal. In fact, with both the Hang Seng (Hong Kong index) and Nikkei (Japan index) forming long lower-tail spinning top with high volume, the possible reversal of these two leading market in Asia could potentially pull our index up on Monday, thereby creating a better sentiment for shares to reverse/ move higher.

klci (3) (1)
Having said that, there are still plenty of oppportunities for us to tap on and among them is the popular oil and gas small-cap, Pantech, which would be the focus of today’s discussion. While the expected better sentiment on Monday could turn the share price around, thereby taking away the opportunity to profit, it would be best if we could get ourselves ready in the event that the expected better sentiment does not materialize (Possible since at the time of this writing, US index is falling).

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.

Stock to Watch: Maybulk [5077]

Our focus today is on Maybulk, a share which had moved by more than 30% since January. With the uptrend becoming clearer and steeper, is there any more opportunity ahead or is the correction about to come soon? We shall answer these questions by looking at the chart from both the bull’s and the bear’s perspective.

maybulk1
After forming a minor double bottom in December, price started to move higher and had successfully created a few higher highs. This, coupled with the lower lows formed in months prior to the formation of the double bottom, had made the rounding bottom formation clear. The down-wave that occurred in mid-March after the successful creation of the rounding bottom could be treated as the “handle” of the cup-and-handle pattern, which is essential for share price to climb to higher grounds. After breaking above the right edge of the “cup” 2 days ago (bullish), the share price is currently “resting” at its major resistance-turned support of RM1.64, providing traders a good opportunity to accumulate. As long as the share price stays above its uptrend line, we would expect the bull to continue to dominate in the near future, bringing Maybulk’s share price higher.