Thursday, August 21, 2008

Sime at its strong horizontal support

From the daily chart (Chart 1) below, we can see that the Parabolic SAR has just moved below the CPO price [see the 'blue dot' at the bottom right-hand corner of the price chart]. Thus, a buy signal has been issued using this indicator (go here for more information). I viewed this as a short-term rebound at this stage of the market, but this rebound could be quite strong.

Chart 1: CPO's daily chart as at August 20th (source:

In view of the above, I believe that plantation stocks could also put in a decent rebound. While I am still very cautious about the present state of our stock market overall, I find Sime at the current price of RM6.35 to be very attractive. As noted in an earlier post (go here), Sime has a strong horizontal support at RM6.30. This could be a safe entry into this stock for medium to long-term investment, as well as being a potential trading buy. A decent 10-20% rebound from this price support is possible. From the weekly chart (chart 2) below, we can see that resistance at the horizontal line of RM7.00 & RM8.50 as well as resistance at the downtrend line of RM8.00-20.

Chart 2: Sime's weekly chart as at August 20th (source: Quickcharts)

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