Chart 1: CPO's weekly chart as at Oct 20, 2009 (Source: ifs.marketcenter.com)
I have appended below the daily chart (Chart 2) where you can clearly see that CPO prices have been rising steadily from October 20 until today.
Chart 2: CPO's daily chart as at Nov 16, 2009 (Source: ifs.marketcenter.com)
Based on the bullish breakout, I expect CPO to continue in its present uptrend. This would benefit plantation stocks in general. You may take a look at IJMPLant, which has corrected from its August 8 high of RM3.10 to a recent low of RM2.39. This is partly due to the issuance of warrants which should not lead to such an large adjustment, if at all there is any. So, I think IJMPlant is at an attractive price now (presently, trading at RM2.48).
Errata noted: IJMPlant has a Rights Issue of 160.2 million shares together with 80.1 million warrants on the basis of 2 Rights Shares together with 1 free Warrant for every 8 existing shares held as at 5.00 p.m. on 15 October 2009, at an Issue Price of RM2.10 per Rights Share. Based on this, the adjusted high for IJMPlant is RM2.90 (instead of unadjusted high of RM3.10). As such, the statement that [the sharp drop] "is partly due to the issuance of warrants which should not lead to such an large adjustment, if at all there is any" is incorrect. However, IJMPlant is still my preferred stock for a plantation sector play.
Hi Mr. Alex
ReplyDeleteWill the current trend be short or long term ? Possible trading oppurtunity for plantation counters?
Thanks for your feedback.
BR.
I'm looking for a long term UPtrend in both stock and commodity markets
ReplyDeleteHi JR & Trader,
ReplyDeleteThe breakout in the CPO prices could lead to much longer uptrend, say 1 year. The short-term uptrend that we had witnessed in the past 12 months were corrective moves within a downtrend which has just been broken. I have pointed out each of the breakout in the preceding 3 corrective moves (see links below).
Links:
1) Dec'08- http://nexttrade.blogspot.com/2008/12/cpo-prices-likely-to-move-higher.html
2) Apr'09- http://nexttrade.blogspot.com/2009/04/cpo-could-rise-further.html
3) Jul'09- http://nexttrade.blogspot.com/2009/07/cpo-prices-set-to-recover.html
CPO uptrend is due to downtrend of
ReplyDeleteUS$. Nothing to do with demand & supply of CPO output. All commodities have rise together during the weakness of US$. Could this trend be extended in short-term
or long term is unpredictable.
Hi Gamelion,
ReplyDeleteYou may be right. However, CPO is priced in RM, not USD. Still, you may say that the weakness of fiat currencies in general is one of the factors leading to the appreciation of the prices of commodities.
In technical analysis, we do not have to ascertain the underlying reason for the price movement. An upside breakout means that the buyers have an edge over the sellers & the price is likely to rise, or vice versa.
MR Alex,
ReplyDeleteThank you for giving me your opinion about sunrise. I totally agree with your view which sunrise is very weak now. Do u agree me to let go at the price rm2.3-2.35 for cutting loss? However, i bought at the price rm2.52.
next, may i ask Mr alex your opinion about Drbhcom and tchong?
the price for the drbhcom rm1.04 now is the acceptable price to buy in?
how about tchong? is it a risky act to buy in as the current peak price?
thanks
Hi Alex,
ReplyDeleteKfima, does the chart shows a bullish breakout?
Grace
Hi Grace,
ReplyDeleteKFima seems to be moving upwards in a bullish price channel. The channel line will act as a resistance at RM0.98-99. In the past 7-8 years, the highest price attained is RM0.98 on (July 23, 2007).
Early this morning, it made a high of RM0.94. It has since pulled back to RM0.89. I feel that some profit-taking maybe appropriate at the present price.