Tuesday, February 28, 2012

Some thoughts on charting

The market has been adrift for the past few days. I know that you know it only too well if you have been staring at the screen the whole day. While I had been saying that the market would be coming up against strong resistance for a while (okay, let's make that a long while!), you can never be too sure when it will consolidate or even reverse. Even today, the market could be going through a correction, albeit longer than what we have been accustomed too in the past 3-4 months.

We have to screen through our list of stocks & assess their technical outlook. Take the first two examples of Kianjoo & Sapcres . They have tested their uptrend line and rebounded slightly. That's good news!

Chart 1: Kianjoo's daily chart as at Feb 28, 2012 (Source: Quickcharts)

Chart 2: Sapcres's daily chart as at Feb 28, 2012 (Source: Quickcharts)

Note: Earlier, I had mistakenly identified Chart 2 as the daily chart for Timecom. Hat tip to David, who had highlighted this error to me.

Canone & Cocolnd have broken above their downtrend line and they are safe stocks to buy. Canone's chart is an intra-day chart, which may suitable for trading, while Cocolnd's chart is a weekly chart, which is more suitable for investing purpose.

Chart 3: Canone's 60-min chart as at Feb 28, 2012 (Source: Quickcharts)

Chart 4: Cocolnd's weekly chart as at Feb 28, 2012 (Source: Quickcharts)

Two of the recent strong runners, Mudajya & Unisem failed to surpass their downtrend line & are now drifting lower. If you have looked at the charts earlier, you could have taken profit when the stocks failed to surpass their downtrend line. Now, you can position to buyback these stocks at the various horizontal support levels.

Chart 5: Mudajya's weekly chart as at Feb 28, 2012 (Source: Quickcharts)

Chart 6: Unisem's weekly chart as at Feb 28, 2012 (Source: Quickcharts)

Make it a habit to look at the chart of the stock that you are interested in, before acting on your investment. Soon, it will become an unshakeable habit as you learn the usefulness of charting or technical analysis.


moon said...

I bought Timecom at 0.74.

What can I expect in short term ?
Can this share hold for longer term?

billyboy said...

Hi Alex,

Recently I am looking monitoring PIE (7095).

Any view on this stock? Good for long term?


limcc said...

Hi Alex,

What's the prospect of YTL maintaining its uptrend? Can GPACKET recover?



David said...

That;s a sapuracrest chart instead of Timecom chart.

xr said...

Hi Alex,

I see that you always put ADX indicator for charting. Can I know how do u use the ADX? Like RSI, we are looking for the stock to be oversold then only we buy.

For ADX, we are looking for trend. +DI indicates uptrend and downtrend -DI. Thus, we buy when +DI cross -DI. (i read somewhere for the use of indicator)

Do you use it in the way above? Or you just look for the trend to develop? Thanks

Alex Lu said...

hi moon

I was wrong about the chart for Timecom. Chart 2 is actually the chart for Sapcres.

Timecom is now moving sideway, with support at RM0.67-0.68. If it breaks below this level, it may go into a downtrend. Its resistance is at RM0.75-0.76.

Fundamentally, Timecom is a decent stock. The bad old days are behind it. For it to go higher, it needs to improve its earning further. At RM0.685, it is trading at a PE of 15 times now. The higher earning may come from the new businesses that it is acquiring from the major shareholder.

Alex Lu said...

Hi billyboy

PIE had a very good set of results for QE31/12/2011. Earning rose but revenue declined.

It broke above its recent high of RM4.30 this week. It may revisit its Dec 2007 high of RM5.00.

It could be a trading BUY.

Alex Lu said...

Hi limcc

YTL broke above its horizontal resistance at RM1.54 and it may test its next horizontal resistance at RM1.67. However, you must be cautious with YTL because the price movement may be "manufactured" to induce YTLCement shareholders to accept the takeover of that stock. The takeover is by way of share exchange.

GPACKET is a hard one to get right. It may have broken above its long-term downtrend line. It may have a short-term uptrend line with support at RM0.60. As long as it stays above the RM0.60 mark, its outlook is mildly positive.

Alex Lu said...

Hi Xiang Rong

ADX is very useful to gauge the strength of the underlying trend. It is a difficult concept to explain & even more difficult to apply. I am afraid I am going to leave it at that. Please google for it and read up on your own.

moon said...

Hi, Alex.

I bought Gefung at 0.20 based on friend tips , is this stock still in "play?"

Or I need to cut loss?