This is a personal weblog, reflecting my personal views and not the views of anyone or any organization, which I may be affiliated to. All information provided here, including recommendations (if any), should be treated for informational purposes only. The author should not be held liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein.
Friday, December 30, 2011
CPO- short-term weakness could be a buying opportunity
Last month, I had posted that CPO was testing its intermediate downtrend line at RM3050-3070. In fact, it later broke above that downtrend line and rallied to a high of RM3300. Since then, it had corrected back to RM3000- breaching the earlier downtrend line. The question to ask is whether CPO has broken its intermediate downtrend or not.
I have drawn two possible downtrend line for CPO. The earlier downtrend line is RR and the alternative downtrend kine is R1-R1. If we used downtrend line, RR, we can conclude that CPO has in fact achieved a bullish breakout- albeit the recent pullback that went marginally below the downtrend line. On the other hand, if we assume the downtrend line to be R1-R1, CPO is still in a downtrend. My preferred downtrend line is RR and as such, I believe CPO has broken above its intermediate downtrend. It is likely to go higher after a short correction.
Chart 1: CPO's weekly chart as at dec 29, 2011 (Source: iFS.marketcenter.com)
Looking at the daily chart below, we can see the short-term uptrend line for CPO is at RM3025-3030. After a good run last 2 weeks, I expect CPO to weaken & test the short-term uptrend line support over the next few days.
Chart 2: CPO's daily chart as at dec 29, 2011 (Source: iFS.marketcenter.com)
Based on the positive outlook for CPO for the medium-term, which is however buttressed by an expected weakness over the next few days, I think we can nibble into the plantation stocks in anticipation of a rally in CPO & plantation stocks in 1Q2012.
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2 comments:
Hi Alex ,
What do you think about Hsplant ? It finally broke above RM2.75 but i think the volume is not that convincing.
Tx!
Hi luckystock2
Hsplant may have broken above a "wedge" formation at RM2.76. If it can clear the RM2.80 level- the recent high, the stock may swing to RM3.00 & then RM3.50. I would rate it as mildly bullish at this stage.
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