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Wednesday, September 20, 2017

CIMB: Broke the Intermediate Uptrend Line

CIMB surprised the market this morning with a sharp drop to RM6.22. A quick look at the press revealed that one of its big shareholders, Mitsubishi UFJ Financial Group Inc has sold off 412.5 million shares in CIMB in a range of RM6.15-6.30 yesterday. Institutional investors are like any other investor out there; If the price is right, they will sell.

Beyond the big block changing hand, we can see that CIMB has now broken below its 9-month old uptrend line at RM6.70 (see Chart 1). Recently, CIMB tested its 7-year old downtrend line at RM7.00-7.10 (see Chart 2). Both developments tang the bell for a period of price consolidation for CIMB. I think the stock is likely to trade sideways between RM6.00 and RM6.50 for the next few weeks until the next price direction has been determined by the market. I rate CIMB as a HOLD unless you can sell it above RM6.50 and switch to a cheaper banking stock.


Chart 1: CIMB weekly chart as at Sep 20, 2017_10.00 (Source: Malaysiastock.biz)


Chart 2: CIMB monthly chart as at Sep 20, 2017_10.00 (Source: Shareinvestor.com)

Note:
I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

2 comments:

Unknown said...

Could the weakness in share price be due to selling by parties on insider information of the planned placement?

Alex Lu said...

Hi Unknown,

The insiders would have sold earlier before the price drop. To sell now when the event is in the news is not insiders action.