Friday, August 03, 2012
Genting may have crossed the tipping point
A reader asked whether Genting is a good BUY at the current price. After looking at the chart, I was struck by the close connection between the crossover or cross-under of the 10-month SMA line & the 20-month SMA line & the stock's next price direction. You can see from the monthly chart below that there were three instances of the faster SMA line cutting above the slower SMA line (what I called the crossover & it is denoted with a green upward arrow). All three crossovers were followed by rally in share price.
There were four instances of the faster SMA line cutting below the slower SMA line (what I called the cross-under & it is denoted with a red downward arrow). Prior to the current cross-under, all three earlier cross-unders were followed by decline in the share price.
When an indicator gives 100% correct reading, you have to sit up & pay attention. Genting's immedaite support is at RM8.80-9.00. If Genting violates this last support, I think the next downtrend for Genting will set in. If you have this stock, you should consider reducing your position.
Chart: Genting's monthly chart as at August 3, 2012 (Source: Tradesignum)