PChem has broken above its horizontal resistance at RM6.40 in the afternoon session. With this breakout, the stock could potentially go to RM6.80-7.00. Is the rally in PChem due to better demand for its products? I don't know. However, we can see that the listed subsidiaries of Petronas, such as Petgas & Petdag are all relatively stronger than other stocks in the market. Is this due to buying support from local funds? I believe so.
Chart: PChem's daily chart as at Mar 8, 2011_3.20pm (Source: Quickcharts)
For those who want to punt on this bullish breakout, you may try the CWs (see the table below). Needless to say, CWs are leverage instruments that will give an outsize return if the trade goes your way. If not, it will give you an outsize loss. Of the 4 CWs listed below, I prefer PChem-CA. Do exercise discretion in the current cautious market.
Table: PChem's CWs' terms & valuation
13 comments:
Hi Alex
Can you comment on P.I.E? Its final quarter result seem regain my confident on these stock that its future prospect is quite promising.
Thanks Alex.
Pchem seem to enjoy for the ETP that annouced today.
Yes. CA seem better among the others CW due to low premium. Anyhow, at 33cen trading, I doubt not many investor keen to trade for this CW.
Perhaps once can consider to trade for Pchem-CC. Do check the issuer style and volume for each cw before buy for trading.
Good luck all!
ps:I am not in..capital lock with other cw.
Alex,
Would like ur piece of advice/opinion on KFC-CA & OSKVI?
thanks
Hi bro Alex. Please comment on TIMECOM. I heard it will goreng up to RM1.00 soon. How its technical ?? Thx Bro.
Hi wong
TIMECOM has fundamentally improved under the new management. The stock is in an uptrend with support at RM0.73-0.74. Its overhead resistance is at RM0.81-0.82 & then at RM0.85-0.89.
Good entry is at RM0.73-0.74.
Hi DidiNGerGer
OSKVI is in a long-term downtrend. It may have broken above that downtrend line in mid-Nov 2010 but that breakout did not go anywhere. It is sliding again. Avoid this stock.
Since completing its bonus issue in mid-Nov 2010, KFC has been in a downtrend. However, it managed to stage a rebound in February when it hit the longer term uptrend line which began in May 2010. Its horizontal support & resistance are at RM3.45 & RM3.85. A break above or below these 2 levels would signal the price direction for the stock. KFC-WA will follow this price trend.
Hi Ivan,
Thank for sharing. Would you like to share your thought on "the issuer style and volume for each cw before buy for trading"?
Hi hng
P.I.E maintained its bottom-line for FY2010 at RM25.7 mil (compared to RM25.3 mil in FY2009). Turnover increased by 28% to RM287 mil. With FY2010 EPS of 40.1 sen, P.I.E. (closed at RM4.04 yesterday) is trading at a PE of 10 times.
Based on its monthly chart (plotted on log scale), P.I.E. is in a long-term uptrend with support at RM3.00-3.10 but faces a medium-term downtrend with resistance at RM4.10-4.20. If it can break above the RM4.20 level, the stock may continue its long-term uptrend. The stock is presently trapped with a symmetrical triangle & it is fast reaching the apex of that triangle. Without a breakout, the price would exit the apex & thereafter the stock will move sideway. Its future price performance is likely to track the overall market.
Hi Alex,
Issuer style ~ cw issuer = market issuer for provide liquidity which mean they can buy and sell at diff price (prop trading).
I had seen some issuer play “dirty”. They block the cw price to going high by “keep supply” the cw at discount price with huge lots; and on the same time buy back at 1 bid lower their bid.
Eg: buy at 10cen; sell at 10.5cen (each size 10k lot) to block the price moving. Thus cw seller who wants to sell, will sell to the issuer and vice versa.
Let us choice the cw that almost 100% follow the underlying share; or else it will be a painful trading. I did experience buy at premium but sell at discount. Does it fair to small retails?
Perhaps SC shall amend the regulation, CW issuer shall provide liquidity at least at or above intrinsic value of cw.
Volume is important. Some cw doesn’t have volume. When you want to sell; u may hardly get a buyer; pls avoid this type of cw; or else you might been trap when want to exit. Thanks for sharing
Hi Ivan
I have seen similar scenario that you have described. However, I am not too sure whether it is a bad thing or otherwise.
Market making is crucial to ensure that CWs trade at a fair price. Our market is still not sophisticated & price discovery is slow & inefficient. The role of the market maker is to facilitate trading at a fair price. This leads to prices being offered like the example given by you. Since the market maker is normally the issuer, the presumption is that under-handed method may be employed. I do not think so. However, you should never view the issuer as your 'friend'. He is the exact opposite of a friend & there is no win-win situation when you look at CWs.
Nevertheless, I am in favor of having a market maker for each CW. Without a market maker, the CW may not have sufficient bid or offer to facilitate our trading. Imagine buying 10,000 lots of a CW! How to get into such a large position? If that's hard to do, imagine trying to get out of a position of 10,000 lots! Without a sizable buyer or seller, CWs will be instruments played by small players. That will not be good for the development of this instrument. Structured warrants are an important product in more sophisticated markets, such as Hong Kong.
Hi Alex,
Thanks for the sharing. But that is what happened in Msia share mkt. I think market issuer did not do the right job. How SC define a fair price from guideline perspective?
For me, I think fair price of cw shall at least trade at or above theoretical price according to the underlying market price.
I love thus cw market maker that can provide liquidity at market price (theoretical price). But in real trading, they are prop trader behind the screen to make more money (capital gain) and volume contribute to the group.
It seems unfair for small retailer buy at premium but when we want to exit, we need to sell at discount.
Perhaps SC shall amend the guideline to ensure all participants are fair. By the way, will SC allow OSK issuer buy CIMB issuer, part of hedging/ prop trading strategy? What happened if prop trader allow to short sell some high premium cw :) . It might increase bursa volume and our market may be well developing from time-to-time.
Thanks for sharing, Alex.
HI Ivan,
You asked:
1) can prop traders get into a CW which is market-made by another firm?
2) can prop traders short CWs with high premium?
The answer for the first question is 'YES'. Why not? If the CW is tradable according to whatever method you have adopted (technical or fundamental), you get in. The prop desk of an investment bank probably has a budget for profit contribution.
As for the 2nd question, I don't think so. Just suppose that you discover a CW trading at a ridiculous premium of 50% and you proceed to short 1 million units. You cannot borrow for the purpose of shorting because you find the a lender. So, you do an illegal short sale, where you need to buyback at the same day. The issuer cum market maker will know your activity & he will ramp up the price. You have to buyback whatever you have shorted at higher prices.
Hi Bro Alex. Please comment on ACOMLB. I noticed that this stock climb up gradually, will it rise to 21sen ?? Thx.
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