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)


Ivan said...

Good day Sir,

Do we go back to Genting Bhd as the stock has close above RM9.00 yesterday?

Thank you

Alex Lu said...

Hi Ivan,

Genting recovered back above RM9.00. To negate my earlier call, Genting would have to go above 10-month SMA line at RM9.60, preferably the 20-mpnth SMA line at RM10.10.