Tuesday, July 24, 2012

CMSB- poised for a quick rally?

CMSB broke above its 'horizontal' line at RM2.50 on July 19. It immediately went into a harp rally which put to stock at RM2.80 now. See Chart 1.

Chart 1: CMSB's daily chart as at July 24, 2012_12.00pm (Source: Quickcharts)

The weekly chart (Chart 2) shows that CMSB is finally pulling away from its 2-year old downtrend line, R2-R2. The last time, CMSB broke above a similar intermediate downtrend line, R1-R1a was in April 2009. That earlier downtrend  breakout was followed by a consolidation that lasted for 9 months before it broke out & rallied to a high of RM2.77 in April 2010. The current downtrend breakout was also followed by a consolidation which lasted about 4 months. CMSB seems to be repeating itself with the current strong rally which broke above the 'horizontal' line, R1-R1 at RM2.72.

Chart 2: CMSB's weekly chart as at July 24, 2012_12.00pm (Source: Quickcharts)

For a slightly different perspective, I have appended below the monthly chart which shows the next resistance will be the horizontal line at RM3.00 & then at RM3.20.

Chart 3: CMSB's monthly chart as at July 23, 2012_log scale (Source: Tradesignum)

Based on the above technical breakout, CMSB could be a good trading BUY. However, the potential gain is fairly limited (maybe as little as RM0.20) as its strong resistance at RM3.00. Finally, you have to be careful to avoid a sharp pullback after a sharp rise of the past few days. In fact, the start of the upleg in early 2010 was preceded by a sharp pullback after the breakout of the 9-month consolidation. If the same thing were to repeat, then the current breakout could suffer a correction back to RM2.60 before the rally can finally take off. That would then be a good entry to the stock.

1 comment:

luckystock2 said...

Hi Alex ,
What do you think about CPO price and plantation counters ? They are weak recently despite the drought in US which cause the price of soy bean to increase.