Stocks to Watch: Airasia [5099], CMSB [2852], AZRB [7078]

Last week was an exciting week as it was the first week after weeks of net selling by the foreign funds our local institutions and retailers turned from net buyers to net sellers. Index managed to move higher but volume wasn’t encouraging. There are several shares that are worth keeping an eye on as the sentiment shifted in favor of the bulls. We shall start with Airasia [5099].

airasia

First and foremost, it is worth mentioning that the price of Airasia is adjusted for dividends in this chart because the recent price development seems to respect the supports/ resistances (S/R) levels of an adjusted chart better. Despite dipping sharply last month, the price of Airasia still managed to stay above the long-term trendline (the black line shown in the chart). An ascending triangle was formed recently, waiting for a breakout to occur. By comparing the volume for each minor wave within the ascending triangle (Price-Volume-Time analysis), I speculate that share price will break above the triangle soon. If you notice, within the triangle, every minor upwave was supported by volume while downwave was not. Price retracements that are not supported by volume indicate bullishness (One easy way to look at it is by comparing the red volume bar with the green volume bar. You will notice that green bars are higher than subsequent red bars).  Estimated using my proprietary analytical tool, Relative Volume Density (RVD), the short-term average acquisition price of the big boys stands at about 2.55 – 2.60. If you can buy yourself some shares below the big boy’s average price, you are in a good position. I expect price to move to RM2.74 in the near term, and fill the gap (highlighted in pink) in the medium term. Depending on your tolerance for risk, if you plan to speculate, your stop loss should be just below RM2.49 or RM2.44. Alternatively, traders could wait for a breakout to occur before jumping in.

cmsb
CMSB [2852] is one very interesting share to look at. The recent price development had provided us with a very good example on how technical views can sometimes change 180 degree in just one day. Let’s begin our analysis by first looking at the big picture. After hitting the high of RM6.24, share price of CMSB has been falling gradually to about RM4.60 last Friday. Since highs are getting lower and lower, it is safe to assume that distribution is occurring. This assumption is further confirmed on the 11th of September, when share price of CMSB broke below its short term tight trading range of RM4.50 to RM4.60 with substantial volume. The price development next day, however, prompted us to reconsider our assumption. A spinning top with its high touching the RM4.50 major support-turned resistance – again, supported with high volume – was formed. If you are well-versed in candlestick patterns, you should know that this is the first sign of trend reversal. If price manages to close above RM4.50, the whole trend would turn from down to up. Last Friday, not only that share price of CMSB closed above RM4.50, it also closed near the upper boundary of the previous trading range (RM4.60). With that, we should alter our assumption and take the bulk of trading volume that occurred on the past few days as accumulation. Moving on, RM4.60 would be the first barrier that CMSB would need to overcome if it wishes to revisit its all-time high. Keep an eye on this resistance level as a break will propel this share to greater heights. RM4.50 will remain as our major support at this point.

azrb
AZRB [7078] is a relatively easy stock to trade since its S/R levels are well respected. The only trading issue with this stock is its low liquidity (If you buy into this share, you would run the risk of not being able to sell your share at a favorable price when you intend to liquidate your holdings). Looking at the chart above, AZRB had just recently broke above its major S/R level of 94cents. Share price continued to trade above the level despite the formation of a shooting star on the 11th of September, indicating bullishness. If we combine the surge in price from 9th to 11th September with the base building on the 12th and 13th September, we have a bullish pennant. I expect price to continue building its base at above 94cents, in preparation of a short-term move to above 99.5cents or even RM1.05.

After a string of good days, losers had at last outnumbered gainers on Friday. I expect the composite index/ price to move sideway or retrace a little in the coming days before any big moves occur. If you plan to trade, make sure you know at which level you should cut loss. Cut your position if price breaks below your support level.

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