Wednesday, December 05, 2012

Astro- to test the RM3.00 resistance soon

Astro has surprised many by staging a strong rally in the past 3-4 days. The rally gathered strength after a few positive analysts' reports that valued the stock between RM3.00 & RM3.70. Maybank valued it at RM3.70 while CIMB valued it at RM3.30. See this report in the Star.

Chartwise, we can see that the stock has formed a short-term uptrend, with immediate resistance at RM3.00. The RM3.00 is both a psychological resistance as well as the point where the stock gap down shortly after its listing. Astro will attempt to close this gap today or tomorrow. While it may close above the RM3.00 mark- turning the resistance into a support- it is more likely to test the RM3.00 mark & then close below the RM3.00 mark. It would probably enter into a short consolidation phase, with support at the RM2.90 level.

Some of the reasons given by analysts for a higher price for Astro didn't strike me as something new or extraordinary that would justify the strong rally. These include the successful extension of the Barclays Premier League football rights and the launching of a new Internet Protocol Television product early next year, riding on Maxis' fibre network, which were either expected or already public knowledge. However, those who seek to get into the stock can do so either when the stock consolidates its gain at the RM2.90 level or at the RM3.00 when it has overcome the RM3.00 ressitance.

Chart: Astro's daily chart as at Dec 5, 2012_11am (Source: Quickcharts)

Note: Astro is trading at RM2.98 as at 3.00pm.

In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Astro.


Anonymous said...

Hi Alex

Can your comment on SP setia? Current level is almost trade at all year low.

Alex Lu said...

HI Hng,

The RM3.00 psychological level will be tested again. As stated, the stock has broken its uptrend line. In such situation, the stock may go into a downtrend or it may just trade sideway. Assuming the latter, then you may choose to accumulate slowly at RM3.00 but RM2.85 is actually the stronger support level.

Of course, if you are very negative and you think the stock will go into a downtrend - a difficult case to make in the current environment- then you may choose to step aside.