Thursday, June 16, 2011

Muhibah- feel the wrath of a hungry bear!

What happened in Muhibah today is depressing. You have an upside breakout which was swiftly followed by a selldown. This is not the exception. We have seen quite a number of such bull trap sprung on traders in the past few weeks. Be careful out there. With each passing day, one feels the wrath of a hungry bear breathing down your neck.

Back to Muhibah- we can expect support at the medium-term uptrend line at RM1.55-1.60 and the 100-day SMA line at RM1.60 (so soon!!!). Overhead resistance at horizontal line of RM1.65 & then RM1.75. Since the play is over, we should aim to sell into this rebound. Aim for RM1.75 or near to it.


Chart: Muhibah's 30-min chart as at June 16, 2011_12.00pm (Source: Quickcharts)

Note: The drop in Muhibah is attributable to the downgrading of this stock by a few research houses. One of them is Kenanga, which posited:

News reported that CIMB Bank is pulling out the financing for APH. This could lead the potential write off for Muhibbah amount due from APH amounted up to RM370m as per audited account 2010. Based on the report, to date APH has drawn down up to RM840m loan from the RM1.4b bridging loan facility by CIMB, which secured in 2006. At present, APH’s main shareholders are KIC Sdn Bhd (40%), PTP Sdn Bhd (35%) and Trek Perintis Sdn Bhd (15%). We view this news as negative to Muhibbah in the short-term. As such, we downgrade our call from BUY to HOLD (due to the uncertainties) but maintain our Target Price of RM2.24, as we keep our forecast unchanged at this juncture, pending for further clarification on the issue.

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19 comments:

  1. AlwaysWinThursday, June 16, 2011 2:49:00 PM

    Hi Alex
    Could the recent gap be sn exhaustion gap?

    ReplyDelete
  2. Alex LuThursday, June 16, 2011 3:45:00 PM

    Hi AlwaysWin

    What recent gap? How recent?

    ReplyDelete
  3. AlwaysWinThursday, June 16, 2011 4:16:00 PM

    Hi Alex
    On 10jun there was a gap up with volume

    ReplyDelete
  4. Alex LuThursday, June 16, 2011 4:29:00 PM

    This comment has been removed by the author.

    ReplyDelete
  5. Alex LuThursday, June 16, 2011 4:36:00 PM

    Hi AlwaysWin,

    There was a gap on June 10. It could be interpreted as a breakaway gap or an exhaustion gap. Normally, a gap would provide some support on a re-test. This one totally collapsed today. We can only say that it was an exhaustion gap.

    ReplyDelete
  6. dinThursday, June 16, 2011 7:19:00 PM

    gua beli 1.72 cut loss 1.42..rugi 4k plus...

    ReplyDelete
  7. primepengThursday, June 16, 2011 8:24:00 PM

    I seldom see this kind of fall in a single day. like may seven crash

    I got out of it at RM1.70 from RM1.80 purchased price after hearing weird thing happening that morning. I believe it might still go back up to RM1.9 giving it some time to adjust.

    ReplyDelete
  8. Alex LuThursday, June 16, 2011 8:27:00 PM

    Hi din

    Sorry to hear about your loss.

    ReplyDelete
  9. Alex LuThursday, June 16, 2011 8:33:00 PM

    Hi primepeng

    I agree. It was very sudden & extreme. I can imagine everyone rushing out to sell - from the new buyers as well as the 'older' shareholders. This created a vacuum where the share just plummeted. A very ugly scene!

    ReplyDelete
  10. benThursday, June 16, 2011 8:36:00 PM

    Alex, you did no wrong. For all fellow investors, Alex is giving is opinion. No one is point a gun to your head to trade on the shares he covers. If there is free $$ to be earned do you think people will still be working at their 9 to 5 jobs and facing the crappy jams in KL?

    ReplyDelete
  11. AlwaysWinThursday, June 16, 2011 9:49:00 PM

    Alex
    Anyone who trades via TA would have agreed your reading on Muhibah was a correct one.
    The price did move out from 1.78 to 1.91. I had wanted to trade on the gap up, the thing that held me back was the weak US market(which you did warned us on 02jun11)
    Hence you pointed out to us the probability of a trade, and the choice was 100% our own.
    I am pointing this out before that Ass... Samgoss gloat about this ...
    Alex , keep up the good work... You are good in what you are doing.
    We need more people like you...
    Thank you

    ReplyDelete
  12. AlwaysWinThursday, June 16, 2011 10:01:00 PM

    Alex
    Every who trades should know that there is no perfect trade. We do not know what news is coming out tomorrow. If we do then we do not need fundamentals and TA at all.
    If we had been watching the trade maybe the gap down at open with Muhibah in oversold area should have prompted us to be careful. As usual it is the greed factor that kept one in the trade.
    Alex, do you think this will impact CIMB in a way, cos they do some financing for APH

    ReplyDelete
  13. AnonymousFriday, June 17, 2011 8:33:00 AM

    Hi Alex,

    I would like to ask whether is it worth to continue to keep the muhibbah share in hand or sell it out since the impact of yesterday APH's news was quite "dangerous"
    Thx.!!

    ReplyDelete
  14. Alex LuFriday, June 17, 2011 10:08:00 AM

    Hi Simon Low

    Many may have gotten into Muhibah as a trade. While cutting loss is the proper thing to do, most people may not notice the plunge until much later. For these people, I would recommend that you hold for a period of 4-5 weeks in order to allow the share to recover some of its losses before you make your exit (which will probably be at a loss). To exit at the present depressed prices is not sensible as the worst case scenario has already happened. Everyone who is holding this stock was thinking of selling yesterday & will probably think the same today & next week. After the selling has subsided, the price should recover somewhat & then you may exit.

    ReplyDelete
  15. DavidFriday, June 17, 2011 10:35:00 AM

    Muhibah is coming back to life!

    ReplyDelete
  16. dinFriday, June 17, 2011 11:05:00 AM

    apa mahu buat saya sudah banyak takut,1 hari sudah rugi banyak..kalau tunggu beberapa hari tak rugi ini macam.
    kadang kadang panic bikin orang takut.
    saya takut dulu sudah kena sama scomi,ingat ini pun sama.
    4k plus ...

    ReplyDelete
  17. AnonymousFriday, June 17, 2011 2:00:00 PM

    Hi Alex,

    Thanks for replying.
    We can see that the news released that APH is getting other investors and share of muhibbah rise back till 1.63 at this moment.
    Just feel like muhibbah isnt that stable although they has lot of big project under their hand. I waiting for price RM1.70 then may sell it off.
    What do you thk? thx!!

    ReplyDelete
  18. LooFriday, June 17, 2011 2:21:00 PM

    The most logical thing to do is not to panic in such a situation. Panic give rise to irrational decisions and may cause ppl to panic sell at the lowest price. Looking at the charts, yesterday's drop was severe but did not close below the strong support at RM1.44. Looks like the stock has somewhat recovered today. Resistance is at RM1.90

    ReplyDelete
  19. Cool tak cool sangatTuesday, June 21, 2011 3:33:00 PM

    Hi alex, lookin at its ups and downs, im wonderin whether it is wise to collect some during its latest drop by today, muhibah down to 1.45 from the highest 1.53
    What do u think abt this cntr?

    ReplyDelete