Chart 1: CIMB's daily chart as at Jan 27, 2010_4.50pm (Source: Quickcharts)
One stock that tends to track our stock market very well is Bursa, the listed company that owns our stock exchange. From Chart 2, we can see that Bursa share price has been moving sideway for the past 3 months after hitting a high of RM8.59 on Oct 20 last year. When we compared this to the steady uptrend in the FBM-KLCI (denoted by 'A'), we should have noted this bearish divergence (denoted by 'B') & the danger it forewarned.
We note that Bursa has now broken below its very strong horizontal support of RM8.00 yesterday. At the close today, Bursa lost 12 sen to end at RM7.68. Its next horizontal support is at RM7.50. I have displayed Bursa's weekly chart together with FBM-KLCI's weekly chart to show how well the FBM-KLCI has performed vis-a-vis Bursa. The reverse of the coin would be the potential downside for FBM-KLCI if & when the players give up & cash in their chips.
Chart 2: FBM-KLCI & Bursa's weekly chart as at 26/1/2010 (Source: Tradesignum)
hi alex,
ReplyDeletewhat do you think of misc-or?
thanks
mbge7clt
Hi Maxwealth88,
ReplyDeleteMISC's financial performance has been quite pedestrian these days. For 1H2010 (ended 30/9/2009), it recorded a net profit of RM315.5 million on turnover of RM7.42 billion. Its annualized EPS for FY2010 would be about 17 sen (or, 13.6 sen based on the enlarged capital base after the recent Rights Issue). Based on yesterday's closing price of RM8.17, MISC is now trading at a PER of 60 times.
Things may change if shipping rates improved, but the signs are that the rates are more likely to drop than to go up due a huge delivery of new ships ordered in the heydays in 2008. A recent article in Business Insider has highlighted this problem:
"... Icap expects 1,400 vessels to be delivered in 2010, which equates to 120 vessels per month on average. (Even if in reality they won't be spread out evenly) How bad is 120 ships per month relative to what the market has had to deal with so far? At no point during 2009 did the rate of delivery exceed 60 vessels in one month – but even if this rate of delivery were maintained throughout 2010 it would still equate to slippage of around 50 per cent. However, in light of the sheer size of the orderbook, and despite high levels of slippage, the market still faces the prospect of continued tonnage growth." [See the link below]
Back to the MISC-OR. This arose due to the aforesaid Rights Issue of 1-for-5 at RM7.00. If you buy one MISC-OR now at RM0.95 & thereafter subscribe for the Rights share by paying RM7.00 each, your cost would come to RM7.95. There is some saving when compared to the market price of RM8.18 now- a saving of about 23 sen. If things remained unchanged, you could potentially see a profit of 2.9%. Alas, the only constant in the stock market is that nothing is constant. In this volatile market, it is better to give this trade a miss.
http://www.businessinsider.com/why-the-baltic-dry-index-will-collapse-again-over-the-next-2-years-2010-1
thanks Alex.
ReplyDeleteregards
maxwealth88
Hi Alex,
ReplyDeleteAny comment about Kencana?
Thanks!
Remus