Since my
last post on May 21, where I'd warned about the impending correction in CPO prices, the same has dropped from RM2700 to its current price of RM2400. A close study of the daily chart revealed the price correction has taken the shape of a Head-and-Shoulder (H-&-S) formation. As all chartists are well aware that a reading from a H-&-S formation is a very reliable reading. CPO's future direction lays in the outcome of the test of the neckline of the H-&-S formation. A break below the neckline of an upright H-&-S formation will be a bearish reversal, while a break above the neckline of an inverted H-&-S formation would be a bullish reversal. In the case of CPO, we are awaiting the former, where a bearish reversal would be flagged if CPO prices broke below the RM2320 level. The opposite could happen, whereby CPO prices could rebound off the neckline & march higher.
Chart 1: CPO's daily chart as at June 15, 2009 (source: ifs.marketcenter.com)If CPO were to break below the neckline of the H-&-S formation, then it would likely to drop to its short-term uptrend line support of RM2100. At lower level, it may find support at the horizontal line of RM2000.
Chart 2: CPO's weekly chart as at June 15, 2009 (source: ifs.marketcenter.com)
Hi Alex,
ReplyDeleteI have a IOICORP in hand do uthink i should sell it out?
I keep it for 9 months adi but stil in 4.5 to 4.7 althought i bought RM5.
Hi teh,
ReplyDeleteIOICorp rallied off the low in October 2008- all the way to early January this year. After a short bout of correction, the stock has been inching upward very slowly. I think IOICorp is likely to drift lower & will only find support at the 100-day SMA of RM4.30-40 before we see any recovery. You may hold onto this blue chips as long-term investment or you may sell it & deplore the funds to something a bit more nimble.