Friday, April 02, 2010

POS flying away

On March 31, two readers (Solomon & Wong) asked for my comments on POS. My reply was as follows:
POS has horizontal resistance at RM2.30, RM2.40 & RM2.50. Since Khazanah is only divesting a 32.2% stake, there will be no GO. I do not think it will go up just because of the divestment unless the new owner is someone who can add value to the company or can change the business model significantly. As it is, POS is kind of like TM- a company awaiting transformation. Can it transform?

However, POS broke above its medium-term downtrend line at RM2.30 this morning and flew. It even broke above the horizontal resistance at RM2.65-70. As at 3.00 pm, POS is at RM2.77 (a gain of 37 sen). If you ignored my comment and trade this stock strictly based on technical analysis, you could have made some money. However we cannot run away from the possibility that the buyer may be a Mr Nobody who would be paying a handsome price (say, RM3.00 per share) but there would be no GO. The share price may just drift back from where it has started. Some may say that's the risk you have to run in the stock market.

Chart: POS's weekly chart as at Mar 29, 2010 (Source: Tradesignum)

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