Sime broke below the horizontal support of RM8.90

Sime has broken below its horizontal support of RM8.90 at about 11.00 am today (see Chart 1). Presently, Sime is trading at RM8.70-75 level. The next support is the horizontal and long-term uptrend line support at RM8.60 (see Chart 2 below). If this support is violated convincingly, the uptrend for Sime is most likely over.


Chart 1: Sime's daily chart as at April 2, 2008 (courtesy of Quickcharts)



Chart 2: Sime's weekly chart as at April 2, 2008 (courtesy of Quickcharts)

While one may be tempted to buy at these support levels, the present weakness in the price of CPO should be taken into consideration. Taking a small position maybe acceptable, but for large position, you may want to see some rebound in both the price of the share as well as the CPO.

Note: As at 12.00 noon, the CPO June contract was trading at RM3260 (up RM90 from yesterday's close of RM3170). JKSE dropped 4.0% or 94 points to 2248, while our KLCI was down 1.3% or 16 points to 1223.