Tuesday, April 20, 2010

MISC may have a bullish breakout

On April 16, MISC announced that it had entered into a Joint Venture Agreement (“JVA”) with Petromin PNG Shipping Limited (“PETROMIN”), a company incorporated in Papua New Guinea (“PNG”) to set up a joint venture company (“JVC”) the purpose of providing shipping solutions to meet the liquefied natural gas projects requirements and to also support other general shipping requirements of PNG. The JVC shall have an authorized share capital of USD10,000,000.00 comprised of 10,000,000 ordinary shares of USD1.00 each and paid-up capital of USD250,000.00 comprised of 250,000 ordinary shares of USD1.00 each. MISC shall hold 60% stake in the JVC, while PETROMIN shall hold the remaining 40%. For more, go here.

Could this be the reason for the present activity in MISC? In early April, I have commented that "MISC seems to be forming a Head-&-Shoulders formation with the neckline support at RM7.30-40. I expect fairly strong resistance from the 30-month SMA line (at RM8.51-52 then). Best to watch this stock from the sideline for now". Go here.

While anticipating a bearish breakdown of the neckline of the Head-&-Shoulder formation (a potential reversal pattern), MISC has instead rebounded off the neckline. A Head-&-Shoulder failure would turn a potential reversal pattern into a continuation pattern. This coupled with the upside breakout above the 30-month SMA line (at RM8.49 now)- which coincided with the resistance posed by the 3 years old downtrend line- means that MISC is likely to go higher.


Chart: MISC's monthly chart as at Apr 1, 2010 (Source: Tradesignum)

Based on technical analysis, I believe MISC could be a good medium-term investment.
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2 comments:

  1. AnonymousTuesday, April 20, 2010 1:53:00 PM

    hi alex. need ur advice on Baswell. will it testing 50sen soon?

    ReplyDelete
  2. Alex LuWednesday, April 21, 2010 1:56:00 PM

    Hi wong,

    Baswell is a loss-making company. For FYE30/9/2009, it reported a net loss of RM19 million on sale of RM21 million. The previous year, it also reported a net loss of RM9 million on sale of RM39 million. For 1Q2010, it again reported a net loss of RM2 million on sale of RM4 million.

    The stock was played up to RM0.84 in January this year. Since then, it has corrected back sharply. It should have good support at the short-term uptrend line at RM0.32-33.

    ReplyDelete