TChong- time for some profit-taking

The call to stay invested in TChong was one of the best calls I've made last year. As you may recall, I had earlier called for profit taking on TChong on December 8, 2009 (here). TChong then surprised me by breaking above the high of RM2.70 recorded on Nov 18. More importantly, it has also surpassed the rising 'horizontal' line connecting the peak or 'high' for this stock since 1993. Go here. I then extrapolated that TChong could potentially reach a high of RM6.00. This it did on September 17, 2010 and thereafter TChong entered into a correction. From Chart 1 below, we can see the following:

1) Based on the linear chart (on the left), TChong has broken below its 20-week SMA line (or, 100-day SMA line) at RM5.44;
2) Based on the logarithmic chart (on the right), TChong has broken below its uptrend line at RM5.35-5.40; and
3) The MACD & ADX indicators are flashing negative signals, with MACD hooking down & -DMI crossing above +DMI.

TChong (currently at RM5.19) could reverse these negative technical readings if it has a strong rebound & recover above RM5.45 over the next few days. Failing which, TChong could have peaked & it could enter into a sideway trend or even a downtrend.


Chart: TChong's weekly chart as at Dec 13, 2010 (Source: Tradesignum)

Based on the above technical reading, I think it is time to take some profit on TChong by reducing your position in this stock (say, 20-30%).