Tag Archives: upward channel

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 While the upward channel is no longer valid, the uptrend remains intact as long as the crucial RM1.86/RM1.85 support is not breached.

KLCI: A Roller Coaster Ride

kklci

An extremely volatile market it is today with the index dipping by more than 50 points in the morning in anticipation of the dissolution of parliament. It recovered gradually once the dissolution is confirmed and ended the day marginally higher than yesterday’s closing. As we can see from the chart above, the index reversed after touching the lower boundary of the upward channel, creating a total move of more than 100 points in a single day. As was mentioned in the previous post, as long as the index stays within the upward channel, we can still afford to be bullish. This bullish view is further supported by the fact that the recent upward movement had created a “cushion” that ensure any downfall caused by election fear will not alter the effective trading range. If the index were to remain at low levels in the past few weeks, then the stance would be a bearish one since a dip like the one we saw today would bring the market to levels lower than 1600, thereby changing the effective trading range (which is dangerous because the lower boundary of the effective trading range cannot be known with certainty – This means that the risk is not assessable, and the risk-reward ratio cannot be estimated).

KLCI: Preparing for The Second Quarter of 2013

klci april fool
The aggressive buying by foreign funds last week had pushed our local index higher by a staggering 50 points. It stopped rising at the point where the horizontal major resistance of 1679 crosses the upper trendline of the upward channel, which coincidentally is also the Fibonacci 123.6% level of the prior uptrend. Such bold acquisition by foreign funds are partly due to the pressure arises from the poor performance of their portfolio in our market. If the index was to stay at 1625, foreign funds would have made a negative return of 3% for the first quarter of 2013, calculated from the closing price of 2nd of January 2013. By pushing few of the heavyweight of our KLCI higher (thereby causing the index to close at around 1672 on Friday), foreign funds that have exposure to our local market will only make a marginal loss of 0.2% (All the calculations above are done by assuming that the average return of all the portfolio of foreign funds are similar or close to the market return).

Moving on, the index is expected to consolidate or retrace to a lower level in the near term before rising further. As long as the index stay within its upward channel, the outlook is still bullish and any retracement that comes should be taken as a buying opportunity. We will continue to see lots of volatility in the second quarter of 2013, which represent more opportunities for profit for professional traders. For amateurs however, it would be advisable to trade the big trend and ignore the minor swings in between. Hopefully, we will see a better trading environment for the retailers in the second quarter of 2013.

The Hot and Sizzling Property Sector

Property shares have been in the limelight for almost a quarter and most have sky-rocketed to a very dangerous level. At this stage, the risk-to-reward ratio is definitely at the high side and we should not chase after these stocks. Having said that, there are still plenty of opportunities to profit from the swings. We shall look at the current situation of a few property stocks from the technical point of view and see how we can attempt to profit from them in the near future at low risk. Let’s start our analysis with Tebrau [1589].

tebrau
After moving within an upward channel for close to 2 months, Tebrau’s share price managed to break above the the ascending broadening wedge with high volume on the 15th of March, sending the share sky-high in subsequent days. Despite supported by volume, its share price has moved too much in too short a period (an average of 7% a day for the past 5 days), making a correction very likely in the near term. The correction that follows should be one of high magnitude since a parabolic movement can be clearly seen in Tebrau’s share price. Reflexivity is obviously at work and any slight uncertainty will trigger the first batch of selling, which will create fears in others to take profit or to cut loss, thereby reinforcing the downward movement. The uptrend could continue for a day or two, but at this juncture the risk is much higher than its reward and thus interested party that are looking to take a long position should refrain themselves from joining the herd in the next 2 days. Remember, losing the opportunity is always better than losing the money. Do not bet on overbought shares, thinking that they would the next big thing. The best strategy now would be to enter only after the share price has retrace to a much lower level, possibly at the 50% retracement level of the most recent up wave, or at RM1.05, a major support level. Next, we take a look at KSL [5038].

The week before Chinese New Year – how will KLCI fares?

KLCI 2nd March 2013

Though underperforming our regional peers, our KLCI is still moving within the upward channel, thus the long-term outlook remains intact. But how about its short-term movement? How will KLCI fares this week? Will there be an additional dip or will we see a W-shape recovery?

Honestly, I can’t tell until the market (KLCI) provides me with more information. I was expecting the market to make a clear directional move on last Thursday but both the bulls and bears were equally strong. Until there is a clear winner between the two, I shall not attempt to make any bold directional prediction.

While it is possible that the directional movement occurs on any day of the week, 4th of February (Monday) is definitely a day worth watching because according to Gann wheel, it is one of the many dates that we will see a reversal of price movement, either up or down. Otherwise, the market should move sideway since investors are cashing out for Chinese New Year celebration.

At the meantime, I shall maintain my downward bias since our general election (GE) is around the corner and based on historical trend, a GE announcement would usually send our market to a lower low.