KNM has risen steadily over the past 3 months & is now testing a strong horizontal line resistance at RM1.08-1.10. Immediate support is at the psychological level of RM1.00 & the horizontal line of RM0.95.
Chart 1: KNM's weekly chart as at 9/6/2009 (Source: Quickcharts)
Last week, we witnessed a sharp selloff in Genting SP (formerly, Genting International) in Singapore when the market learned that a major shareholder, the Lim family had sold about 9 percent (or, 853.8 million) of shares in its Singapore unit to institutions. The shares were sold at S$0.72 a share, a discount of around 17 percent to its last closing price. For more, go here.
Chart 2: Genting SP's daily chart as at 8/6/2009 (Source: Yahoo Finance)
The above two stories indicate that the stock market may have reached or even surpassed the fair valuation, in the eyes of the insiders. While this may not necessarily mean that the market will correct shortly, but it is warning that we should not ignore.
4 comments:
I wonder whether we are nearing the point where smart money is coming out and dumb money is rushing in!
Hi Marcella,
One can never tell. Some smart moneys have also missed out on this superb rally.
KNM has emerged victory after consolidation of its shares from 4 into i . Its last closing price before the merged is only 42 cts. After the merged should be around 1.68-1.70 . Now it has risen to 3.00 . Some analyst even rated to around 4.00-5.00 after securing billions of contract overseas. The irony is previous to that , many analysts had formed the opinion that this stock is going to bust after the unsuccessful attempt to buy over. The present set of analysts came out strongly by projecting highly on this stock even the contract has yet to be inked and no work done yet? Quite irony and very unusual for the market. Are you sure after securing contract that the co is going to make tons of profit? It can be anybody guess...
Hi leslieroycarter
The current rally for KNM is clear reminder that we should be very careful when a company announced a share consolidation or a bonus issue. The latter leads to a short-term rise & a subsequent fall (after the bonus shares have been issued). The former leads to an immediate fall & a subsequent rise (after the shares have been consolidated). To me, that explained the price movement in KNM as much as its recent corporate exercise (a tie-up with Petrosab to bid for contract in Sabah) and its recent contracts secured.
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