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Friday, January 29, 2010

Daiboci- time to take profit

Background

Daibochi Plastic & Packaging Industry Bhd ('Daiboci') is involved in the production packaging materials for many applications such as food, beverage, FMCG, pharmaceutical and industrial uses.

Strong Rally in Share Price

Daiboci has rallied from a low of RM0.50 in March last year to a recent high of RM3.30 on Jan 26. The basis for this strong rally is Daiboci's improved financial performance. Is the recent improved financial performance sustainable? Or, is it an exceptional fortuitous period for Daiboci which is difficult to sustain?

Historical Financial Results


I have appended Daiboci's top-line & bottom-line for the past 10 years. While the estimated pre-tax profit for the current year (FYE Dec2009) is sharply higher than the preceding 5 years, Daiboci's top-line has risen very little in the past 4 years. So, the increased bottom-line for FYE Dec2009 is not due to increased business volume, but higher profit margin. How did this come about? Is this a result of higher selling prices? Is it a result of lower input cost? It may not be significant whichever one is the answer because in the commercial world, exceptional profit margin seldom persist for long.


Table 1: Daiboci's last 10 years' results


Chart 1: Daiboci's last 10 years

Recent Financial Results

Daiboci's top-line & bottom-line has been flattish in the last 3 quarterly results (QE31/3/2009 to QE30/9/2009). In fact, its top-line took a dip in QE30/9/2009. It would be interesting to see Daiboci's results for QE31/12/2009, which is expected to be released in mid-February. Unless a very convincing set of results is issued, I believe the rally in Daiboci would end abruptly.


Table 2: Perstima's last 8 quarterly results


Chart 2: Daiboci's last 8 quarterly results

Technical Outlook


I have appended Daiboci's weekly chart from 1992 until today. You can see that Daiboci is now deep in the overbought zone (look at RSI & Slow Stochastic indicators). In the past, Daiboci had similar sharp run-ups which ended very unpleasantly.


Chart 3: Daiboci's weekly chart as at Jan 28, 2010 (Source: Tradesignum)

Conclusion

Based on the extreme overbought condition & doubts as to the sustainability of Daiboci's current profitability, I would recommend profit-taking on this stock.

Harta- another great quarter

Results Update

Harta has just announced its results for QE31/12/2009. Its net profit increased by 12.4% q-o-q or 67.4% y-o-y to RM37.2 million, while turnover increased by 10.4% q-o-q or 24.8% y-o-y to RM149 million. The company attributed the continuous growth in its top-line & bottom-line to increased production capacity & demand; more efficient production process; higher premium nitrile gloves; lower input cost; and favorable exchange rate. In another word, everything worked out in its favor.


Table: Harta's last 8 quarterly results


Chart 1: Harta's 9 quarterly results

Valuation

Harta (closed at RM7.31 yesterday) is now trading at a PER of 13.8 times (based on last 4 quarters' EPS of 53 sen). At this multiple, I believe Harta's upside would be limited (say, about 10% from the current price), especially so due to the present cautious overall market sentiment. However, Harta's earning could increase and this should lead to a lowering of Harta's PER as more production lines are added in the future.

Technical Outlook

Harta is still in an uptrend, with support from either the 50-day or 100-day SMA line (at RM6.00-6.50). Since the MACD has done a negative cross-under, there is a likelihood that Harta may come under some selling pressure.


Chart 2: Harta's daily chart as at Jan 29, 2010_9.15am (Source: Quickcharts)

Conclusion

Harta still deserve a HOLD rating. A good entry level to this stock would be at RM6.00-6.50.

Perstima- an attractive stock for long-term investment

Background

Perusahaan Sadur Timah Malaysia Bhd ('PERSTIMA') is involved in the production of high quality Tinplate for both domestic and export market. The Malaysian operation has a production capacity of 260,000 MT per annum. In 2002, it established PERSTIMA (VIETNAM) Co. Ltd. which also produces prime grade tinplate, with a rated capacity of 90,000 MT/annum.

Recent Financial Results

Perstima has just announced its results for QE31/12/2009, where its net profit increased marginally q-o-q but jumped by 16-fold y-o-y to RM20.7 million. Turnover was mixed, down by 25% y-o-y but up a meager 3.2% q-o-q.


Table: Perstima's last 8 quarterly results

Perstima's Performance & Tin Prices

I have appended below the last 22 quarterly results of Perstima (the lower chart, with chronological order running from right to left) & the price movement of tin during the same period (the upper chart, with chronological order running from left to right). We can see a close correlation between these two charts. So, if tin prices continued to trend higher, Perstima's bottom-line would continue to rise.


Chart 1: Tin Prices & Perstima's 22 quarterly results (Source of Tin Prices: LME)

Financial Position

Perstima is in excellent financial position. Its liquidity position is very good as reflected by a current ratio of 5 times while leverage position is negligible as reflected by its borrowings to shareholders' funds of only 0.05 times.

Valuation


Perstima (trading at RM3.80 as at 11.15am) has a PER of 6 times (based on last 4 quarters' EPS of 65 sen). At this PER multiple, Perstima is deemed very attractive.

Technical Outlook

Perstima is in an medium-term uptrend, guided by either the 50-day SMA line or 100-day SMA line (see Chart 2). However, Perstima seems to be range-bound in the past 5 years, with support at RM2.00 & resistance at RM4.00 (see Chart 3). As such, Perstima's short-term upside may be limited, unless it can surpass the RM4.00 resistance level.


Chart 2: Perstima's daily chart as at Jan 29, 2010_9.45am (Source: Quickcharts)


Chart 3: Perstima's weekly chart as at Jan 29, 2010_11.30am (Source: Quickcharts)

Conclusion

Based on good financial performance & attractive valuation, Perstima can be a good stock for long-term investment. Its upside potential is somewhat limited if viewed from the technical angle. In the current uncertain market condition, you can wait for better prices to appear (say, a pullback to the 50 or 100-day SMA line).

Thursday, January 28, 2010

RSawit- an attractive fast-emerging plantation stock

Background

Rimbunan Sawit Berhad (RSB) group is engaged in cultivation of oil palm (based in Sarawak), which are carried out via its subsidiaries such as R.H. Plantation Sdn Bhd ('RHP'), Timrest Sdn Bhd ('TR'), Baram Trading Sdn Bhd ('BT') and Nescaya Palma Sdn Bhd ('NP'). For details of their respective planted area & output, see Table 1 below.


Table 1: RSawit's current plantation estates & hectarage

Recent Acquisition

RSawit has recently completed the acquisition of 2 companies, each with a sizable vacant land earmarked for oil palm cultivation located in Batang Baram. The acquisitions are:
1) 100%-stake in Lumiera which owns a piece of vacant land measuring 6071 ha for RM31.0 million; and
2) 85%-stake in Woodijaya which owns a piece of vacant land measuring 5000 ha for RM27.6 million.

The financial commitment for future plantation development of these 2 piece of land amount to RM113 million (i.e. RM53 million for the Lumiera estate & RM60 million for the Woodijaya estate). For more details on these completed acquisitions, go here.

On Dec 30 last year, RSawit announced another large acquisition- acquiring equity interests in nine plantation companies and the commercial rights to a plantation estate from several vendors (some of which are related to RSawit's shareholders) for RM286.1mil to be satisfied via the issuance of 28.33 million new shares and 191.75 million new irredeemable convertible preference shares (ICPS) shares at a price of RM1.30 per share/ICPS share. The total hectarage of the estate land managed by these companies is about 21680 ha. For details of the pricing & hectarage of the new estates to be acquired, see Table 2 below. For further details of the proposed acquisition, go here.


Table 2: Latest Acquisition- pricing & hectarage

When the latest acquisition, RSawit will own or control a total planted hectarage is about 42254 ha, plus vacant land measuring 11071 ha that is slated for future plantation development.

Recent Financial Results

RSawit has just announced its results for QE30/11/2009, where its net profit increased by 189% q-o-q or 198% y-o-y to RM9.0 million while turnover increased by 16.7% q-o-q or 11.6% y-o-y to RM48 million. The improved financial performance is due mainly to better prices for CPO & Palm Kernel. A closer look at Table 3 below shows that RSawit could be returning to the level of profitability it has achieved before the sharp plunge in the prices of CPO in 2008.


Table 3: RSawit's 8 latest quarterly results


Chart 1: RSawit's latest 8 quarterly results

Valuation

RSawit (closed at RM1.48 yesterday) is now trading at a PER of 5.3 times (based on annualized EPS of 28 sen). At that multiple, RSawit is considered attractively priced.

Technical Outlook

From the weekly chart, it seems that RSawit is trapped within a rising trading band, with support at RM1.30-33 & resistance at RM1.52-55. A break above the resistance could signal the next upleg for this stock.


Chart 2: RSawit's weekly chart as at Jan 27, 2010 (Source: Quickcharts)

Conclusion

Based on a recovery in its financial performance, attractive valuation & positive technical outlook, RSawit could be a good stock for long term investment. However, in the current uncertain market condition, you can choose to wait for better prices to appear.

Wednesday, January 27, 2010

CIMB & Bursa- more downside ahead

One of our most distinguished blue chips, CIMB broke below its medium-term uptrend line support at RM13.30 yesterday. It failed to recover today as it lost 22 sen to close at RM13.06 on increased volume of 10 million shares traded.


Chart 1: CIMB's daily chart as at Jan 27, 2010_4.50pm (Source: Quickcharts)

One stock that tends to track our stock market very well is Bursa, the listed company that owns our stock exchange. From Chart 2, we can see that Bursa share price has been moving sideway for the past 3 months after hitting a high of RM8.59 on Oct 20 last year. When we compared this to the steady uptrend in the FBM-KLCI (denoted by 'A'), we should have noted this bearish divergence (denoted by 'B') & the danger it forewarned.

We note that Bursa has now broken below its very strong horizontal support of RM8.00 yesterday. At the close today, Bursa lost 12 sen to end at RM7.68. Its next horizontal support is at RM7.50. I have displayed Bursa's weekly chart together with FBM-KLCI's weekly chart to show how well the FBM-KLCI has performed vis-a-vis Bursa. The reverse of the coin would be the potential downside for FBM-KLCI if & when the players give up & cash in their chips.


Chart 2: FBM-KLCI & Bursa's weekly chart as at 26/1/2010 (Source: Tradesignum)

Market Outlook as at January 27, 2010

Our market did some catching up to the downside this morning, with a sharp fall of 18 points to an intra-day low of 1265 (as at 9.50 am). This compared unfavorably to other regional markets, which either went up slightly or down only marginally (except for the Australian All-Ordinaries). The main reason for the disproportionately larger fall is because of our earlier smaller decline. From the table below, we can see that most major indices had dropped to & are presently holding onto their 100-day SMA, while our market is still more than 3% away from the 100-day SMA line. If we were to follow other markets in the current selldown, then the FBM-KLCI may test its 100-day SMA line at 1244 (see Chart 1 below).


Table: Major indices closing level & their 100-day SMA as at Jan 26, 2010


Chart 1: FBM-KLCI's daily chart as at Jan 27, 2010_10.15am (Source: Quickcharts)

A closer study of the weekly chart of our FBM-KLCI will show that a failure to surpass the 1280-1330 level can lead to very sharp drops- be it a bear market or otherwise. The next strong horizontal support are at 1200 & thereafter 1150. Can it go down so much? It is hard to believe that we have to ponder such a distance shore after reaching the dizzy height of 1308 just three trading days ago.


Chart 2: FBM-KLCI's weekly chart as at 26/1/2010 (Source: Tradesignum)

If a quick recovery does not come within the next few days, I am afraid we can conclude that the bull rally of 2009 has ended. If you need a confirmation, then look out for a breakdown of the 100-day SMA line. In which case, it would be advisable to reduce our long position as prices would likely to continue to drift lower for many weeks or months ahead.

Tuesday, January 26, 2010

All BRIC markets breaking important technical support

In 2001, Goldman Sachs coined the acronym BRIC that refers to the fast-growing developing economies of Brazil, Russia, India, and China. Since then, the investment world has been following the development of these 4 countries closely. Investing in BRIC countries has also proven to be very successful. Since the global recovery started in March 2009, investment in BRIC countries has significantly outpaced investment in other emerging markets.

When Shanghai's SSECI recently broke below its uptrend line, the question that many investors has been asking is whether this bearish technical signal is something unique to China because of its recent monetary tightening & upcoming long lunar new year holidays. However, after studying the other stock markets of the BRIC countries- Brazil, Russia & India- one will get an impression that these markets are also in critical juncture.

BRAZIL

The Brazil's Bovespa Index (BVSP) has broken below its uptrend line ('SS') at 69000 a few days ago. It closed at 66220 yesterday.


Chart 1: BVSP's daily chart as at 25/1/2010 (Source: Stockcharts.com)

RUSSIA

Yesterday, RSTI closed at 1490, which means that it is now marginally below its uptrend line ('SS'), with support at 1500.



Chart 2: RTSI's daily chart as at 25/1/2010 (Source: Stockcharts.com)

INDIA

Yesterday, BSE closed at 16780, which is now marginally below the support ('SS') (presently, at 16850) of the rising wedge formation.


Chart 3: BSE's daily chart as at 25/1/2010 (Source: Stockcharts.com)

With all the BRIC countries' main stock market indices violating their uptrend lines (or, major support), the outlook for emerging markets as a whole looks very precarious at this moment. AVOID ADDING NEW LONG POSITION UNTIL CLEARER SIGNALS HAVE EMERGED.

Monday, January 25, 2010

USD recovery & the impact on commodities

In my last post, I touched on the subject of a recovery in USD. Nothing shows more clearly the recent weakness in the USD as the strength of the precious metal, gold or, vice versa. To illustrate the slow turnaround in USD, I have presented below (see Chart 1) the weekly charts of USD & GLD (the latter as a proxy to gold prices). We can see clearly that GLD has been weakening over the past 2 months, while USD has been strengthening. The same inverse relationship was played out in the period from March to August 2008, just prior to the strong rally in USD during the period of the Global Financial Crisis. Could a rally in USD be due to purely technical reasons (such as, deeply oversold position) or the onset of financial turmoil ahead? We will have to wait & see...


Chart 1: USD & GLD's weekly chart as at 22/1/2010 (Source: Stockcharts.com)

Another area where one can look for clue as to the strength or weakness of the USD is in the prices of commodities. After the global financial system has returned to normalcy in April-June 2009, we noticed a retracement in the value of USD as well as a recovery in crude oil prices (represented by WTIC) as well as the prices of commodities in general (represented by CRB index) [see Chart 2 & 3 below]. While commodities in general are still rising in an uptrend line ('SS'), crude oil prices appear to be tracing out a trend fan. As noted before, crude oil prices should be turning bearish after it had broken below the third fan line (now, re-designated as the fourth fan line). While the principle behind a trend fan comprising of 3 fan-lines could potentially accommodate an additional fan-line (or two), it is very likely that the latest violation of the fifth fan-line would be the last. We may see WTIC testing its 200-day SMA line at USD69.73-70.00 shortly. A break below the 200-day SMA line could coincide with a sharp rise in USD. Watch out for this development!


Chart 2: WTIC's daily chart as at 22/1/2010 (Source: Stockcharts.com)


Chart 3: CRB's daily chart as at 22/1/2010 (Source: Stockcharts.com)

For those who like to read up on the USD carry trades & the possible unwinding of these trades, go here & here.

Friday, January 22, 2010

Markets at a critical juncture

Overnight, US markets dropped quite sharply. DJIA has broken below the 20 and 50-day SMA line in one swoop. The last time DJIA broke below its 50-day SMA line was in June 2008 when it came quite close to the 100-day SMA line.


Chart 1: DJIA's daily chart as at 21/1/2010 (Source: Stockcharts.com)

This morning, SSECI & HSI dropped sharply to their low of 3062 & 20250, respectively. As at 1.35 am ET, SSECI & HSI have rebounded to 3140 & 20538, respectively. As noted previously, SSECI's uptrend line support is at 3150 & it is important that it should recover back above that level. Similar, it is also important that HSI should recover above its strong horizontal support of 21000.

What may have prompted the current weaknesses in global equity markets? Other than the monetary & administrative tightening in China, I believe most financial assets are now reacting to a possible upswing in USD which could lead to the unwinding of the USD carry trade. See Chart 2 below.


Chart 2: USD's weekly chart as at 21/1/2010 (Source: Stockcharts.com)

Our market is now in a very precarious position. Our market was trying to break above the strong horizontal resistance of 1280-1330. We have seen two previous cyclical tops (1993 & 1997) that failed at this level (denoted as 'A' & 'B') as well as the April-May 2008 bear rally that failed to overcome this level (denoted as 'C'). A failure to break through this level now could led to a sharp reversal, which could be the top for the uptrend that dated back to March 2008. Indeed, the next few days could be a very critical & nerve-racking time for all investors.


Chart 3: FBM-KLCI's weekly chart as at Jan 21, 2010 (Source: Tradesignum)

Thursday, January 21, 2010

Shanghai's SSEC index testing its uptrend line

Shanghai's SSECI is again at its medium-term uptrend line ('SS') support of 3150. In fact, it was below that support marginally (at 3137) as at 12.36am ET. If a recovery above the uptrend line does not come quickly, we can expect severe correction ahead. See Chart 1 below.


Chart 1: SSEC's daily chart as at 20/1/2010 (Source: Stockcharts.com)

The Hong Kong market tracks the Shanghai market quite closely. We can see that Hang Seng Index is taking the shape of a rounding top, with strong horizontal support at 21000. As at 12.35am ET, it is down 123 points to 21163. See Chart 2 below.


Chart 2: HSI's daily chart as at 20/1/2010 (Source: Stockcharts.com)

While the US markets remain in an uptrend, there are some signs that the upside may be quite limited (see Chart 3). These include:

1) The American Association Of Individual Investors (AAII) compiles a chart of Bearish % which indicates individual investor bears as a percentage of the total. The AAII Bearish % remains 2 standard deviations away from its one-year average, something that has led to trouble in the past (see Chart 4 below).
2) As pointed out by Jeffrey Saut in his latest message dated Jan 19, "the number of stocks above their 10-day moving averages (DMAs) continues to shrink, which is the type of action typically seen preceding a stock market correction. Also, the 25-day put/call ratios are at levels consistent with short-term negative conditions, while Friday's close left the SPX below its recent reaction lows, not to mention below its 10-DMA".


Chart 3: DJIA's daily chart as at 20/1/2010 (Source: Stockcharts.com)


Chart 4: AAII's Bearish % as at Jan 7, 2010 (Source: SentimenTrader)

Based on the above, we have to be more cautious in the market. From my observation over the past few days, the anticipated CNY rally may be running out of steam. Instead of a broad base rally, the market is only serving up fairly random, short & sharp rallies, which are quickly followed by equally sharp correction.

Tuesday, January 19, 2010

PMetal may have a bullish breakout

Background

Press Metal Berhad ('PMetal') is an integrated aluminium producer, with an annal remelt capacity of 200,000 metric tonnes and an annual aluminium extrusion capacity of 160,000 metric tonnes. For more, go here.

Financial results

PMetal's results rebounded after incurring losses for QE31/12/2008 & QE31/3/2009. The net loss incurred was RM23.1 million for QE31/12/2008 due mainly to forex losses of RM16.4 million while that incurred for QE31/3/2009 was due to provision for inventory impairment loss as aluminium prices deteriorated as well as additional cost to re-start a smelting plant in China.



Financial Position

PMetal's financial position as at 30/9/2009 is marginal, with adequate liquidity position as reflected by a current ratio of 1.1 times but fairly high leverage position as shown by total borrowings to shareholders' funds of 1.5 times.

Valuation

PMetal (at RM1.37 as at 4.20pm) is trading at a current PER of 11 times. This is based on full-year EPS estimated at 12.5 sen (derived from the annualization of the last 2 qaurters' EPS of 2.51 sen & 3.76 sen, respectively). At this PER, PMetal is fully priced.

Technical Outlook

PMetal has just broken to the upside of a medium-term downtrend line at RM1.33 (see Chart 1). Its immediate horizontal resistance is at RM1.42 & thereafter at RM1.55. Its warrant has similar done an upside breakout at RM0.83 (see Chart 2).


Chart 1: PMetal's daily chart as at Jan 19, 2010_3.20pm (Source: Quickcharts)


Chart 2: PMetal-WB's daily chart as at Jan 19, 2010_3.22pm (Source: Quickcharts)

Conclusion

Based on technical consideration, PMetal could be a good trading BUY.

Monday, January 18, 2010

Mamee surpassed its recent high of RM2.30

Mamee has just broken above its recent high of RM2.30. From Chart 1, we can see that Mamee surpassed its horizontal resistance of RM2.20-21 & then the recent high of RM2.30. As at 3.45pm, Mamee is trading at RM2.45.


Chart 1: Mamee's daily chart as at Jan 18, 2010 (Source: Tradesignum)

From the monthly chart (Chart 2) below, we can see Mamee broke above its long-term downtrend line (RR) at RM1.45 in August last year. With the breakout above the recent high of RM2.30, Mamee's next horizontal resistance will be at RM3.00. I feel that Mamee's uptrend from October 2008 until today fits quite nicely into 5 waves according to the Elliot Waves theory. The stock could be in the fifth wave, i.e. the final impulse wave before the uptrend reaches its peak (unless there are wave extensions). The fifth wave is a very tricky wave & often doesn't unravel perfectly. While it may overshoot, it may also drop suddenly & sharply.


Chart 2: Mamee's monthly chart as at Jan 18, 2010 (Source: Tradesignum)

If you have strong nerve, you can consider Mamee, especially if it pulls back to RM2.30. For more on Mamee, go to my earlier post. Mamee had completed a 4-for-5 Bonus Issue in November last year.

Friday, January 15, 2010

CNY rally- play it smart!!!

Traders look forward to the beginning of each calender year in the hope that the Lunar New Year (or, Chinese New Year [in short, CNY]) will bring a rally in stock prices. However, the probability of a CNY rally is not very high. So far, the sign of a CNY rally taking place this year looks quite promising.

Normally, the rally would begin about 1 month before the CNY and would slowly tapper off towards the CNY. Based on this, some say that the next two weeks would be relatively 'safe' period for trading while the following two weeks could be relatively 'dangerous' period for trading. This simplistic approach is misleading & can be very dangerous. See Table 1 below.

I believe the better approach is to ask these questions:
1) Is there a strong reason for the rise in this stock? If yes, then the rally may continue even after the CNY. The rally in semiconductor stocks comes to mind.
2) If not, the rise of the stock is probably due to a 'push' to take advantage of the CNY period. Once a stock has been set for a 'push', the clock would start to tick. A stock that is being 'pushed' today would not be 'pushed' all the way to CNY. For these stocks, you should approach them as short-term trades applying strict money management rules (such as, protective stops etc). To be sure, it would not be a bad idea to take profit for any gain above 20%.


Table: 4 weeks to CNY

I must admit that I'm very wary of CNY rallies. I tend to equate them to sardine runs or salmon runs. Most traders think of themselves as the predators, but more often than not, they are the poor preys who would be eaten by others. I believe that for every trader who would make a gain, there are nine other traders out there who would be nursing a loss. The trick is not to get greedy & chase after every stock that moves. Of course, that's easier said than done. Good luck, out there!!!


Source: Farm4


Source: Tinypic.com

Please note that the 1300 level on the FBM-KLCI is a very strong horizontal resistance. There is a very high chance that it will not break on the first attempt (which took place early this morning).

PJDev's uptrend continues...

PJDev has just broken above its horizontal resistance at RM0.82-83. Its immediate resistance is RM0.95-1.00.


Chart: PJDev's daily chart as at Jan 15, 2010_9.45am (Source: Quickcharts)

With this bullish breakout, PJDev could be a trading BUY.

Thursday, January 14, 2010

Rubber glove stocks- time to take profit again

We have seen a strong rally for all stocks related to the rubber glove sector in the last 3 weeks. This was prompted by the terrific results of Topglove for QE30/11/2009 (go here). How much longer can the rally go? Nobody knows, but judging from signs such as the participation in the rally by smallish glove producers (such as, IRC & Rubberex) and also the appearance of the inverted hammer in the chart of Kossan & possibly Supermx, the top may be very near. I believe it is time to take some profit in this sector.


Chart 1: Kossan's daily chart as at Jan 14, 2010_4.20pm (Source: Quickcharts)


Chart 2: Supermx's daily chart as at Jan 14, 2010_4.20pm (Source: Quickcharts)


Chart 3: Topglove's daily chart as at Jan 14, 2010_4.20pm (Source: Quickcharts)

Wednesday, January 13, 2010

SSEC dropped 3.1% today

SSEC index closed at 3173- down 101 points or 3.1% today. Investors turned skittish after China raised the bank reserve ratio yesterday in an attempt to cool inflation and unsustainable gains in property and stock prices.

From Chart 1, we can see that SSEC may soon be testing its medium-term uptrend line (SS) support at 3150.


Chart 1: SSEC's daily chart as at 12/1/2010 (Source: Stockcharts.com)

Another index to watch is the Hang Seng China Enterprises Index ('HSCEI'). HSCEI is a freefloat capitalization-weighted index comprised of H-Shares listed on the Hong Kong Stock Exchange and included in the Hang Seng Mainland Composite Index.

I have appended a chart of HSCEI below. The medium-term uptrend line (SS) support for HSCEI is at 12650. AS at 3.01pm local time, HSCEI was trading at 12482- down 485 points or 3.7%. This means that HSCEI is marginally below the medium-term uptrend line.


Chart 2: HSCEI's daily chart as at 12/1/2010 (Source: Stockcharts.com)

We will have to wait & see whether HSCEI & SSECI can rebound tomorrow. A failure to do so could have a very negative effect on other regional markets, including Malaysia.

Steel producers rallying...

Steel producers, led by AnnJoo, rallied today. AnnJoo trades at RM3.15 as at 3.54pm-a gain of 15 sen. See Chart 1.


Chart 1: AnnJoo's daily chart as at Jan 13, 2010_3.45pm (Source: Quickcharts)

Some other steel producers which have just broken above their respective downtrend lines are Kinstel, Perwaja & LionCor. See the charts below.


Chart 2: Kinstel's daily chart as at Jan 13, 2010_3.45pm (Source: Quickcharts)


Chart 3: Perwaja's daily chart as at Jan 13, 2010_3.45pm (Source: Quickcharts)


Chart 4: Lioncor's daily chart as at Jan 13, 2010_3.45pm (Source: Quickcharts)