Chart 1: FBMKLCI's daily chart as at April 22, 2015 (Source: ShareInvestors)
FBMEMAS has finally tested but failed to surpass its intermediate downtrend line, RR at 12750 a few days ago. It is likely to rest at the horizontal line 12700 before mounting another attempt.
Chart 2: FBMEMAS's daily chart as at April 22, 2015 (Source: ShareInvestors)
The rally amongst the big-cap (ie. FBMKLCI) and the braoder market (ie. FBMEMAS) pale in comparison to the strong rally seen in FBMACE and FBMFLG. These 2 indices had recovered substantially back to their August-September 2014 high due to a multitude of factors, such as:
1. Better earnings & business outlook for some
2. Mere affiliation helps
3. Risk taking activities by emboldened retail players
With Nasdaq surpassing its 2000 high, there is a good chance that FBMACE may continue to its uptrend after it surpassed its 2014 high a few days ago. However, it is worth noting that there are signs of weakness in 2 indicators: Slow Stochastics is showing bearish divergence while ADX & ADXR are showing a slight dip in uptrend momentum.
Chart 3: FBMACE's daily chart as at April 22, 2015 (Source: ShareInvestors)
While FBMFLG is 600 points away from its August 2014 high, its uptrend momentum is picking up. At this scorching pace, it wouldn't be a big surprise if it tests the 2014 high soon before taking a breather.
Chart 4: FBMFLG's daily chart as at April 22, 2015 (Source: ShareInvestors)
While the rally amongst the smallcap stocks should bring cheers to many retail players, we must bear in mind that this rally could be the siren song after a long bull market. This year marks the 7th year of a rally that began in 2009. Who would have thought that after the devastating 2008 Financial Crisis, we would have such a fine rally!
Hi Alex,
ReplyDeletethis reminds me of an old sage: Lao Tzu teaching...
Those who predict dont have knowledge, those who have knowledge dont predict.
Alex, what do you think of tecnic after the exercise, is it worth buying?
ReplyDeleteHi lai
ReplyDeleteI hope you don't mean what i think you've meant...
Hi Ks
ReplyDeleteBased on yesterday's price for SKPres of RM0.895, the entire distribution of RM2.64 cash & 4.26 SKPres for every 1 Tecnic owned would amount to a payout of RM6.45.
Thus, the theoretical ex-right value should be RM0.14 (arrived at by deducting RM6.45 from Tecnic's closing price of RM6.59).
Your unspoken question is whether Tecnic will be another Jobst? Who knows?
While the major shareholders own SKPres directly, should be a positive for SKPres, the same shareholders still own Tecnic. Now they would have to find a business to sustain the listing. We can only hope that the new business is exciting and profitable.
Hi Ks
ReplyDeleteOn second thought, I think Tecnic is a BUY. I think the Jobst scenario is not so accurate to describe the split. The better scenario is Telekom split into TM & Axiata.
In the latter case, what happened was the investors zoomed into Axiata and gave a low value for TM. Look at how well TM perform after the split.
So, Tecnic is doing a reverse of 5=2+2. In addition, there is a possibility that if you value SKPRes too highly, you would assign a low value to Tecnic. Thus, another TM is created. I suspect that's the case for Tecnic.
So, if you have Tecnic, you should hold onto it.
no worries Alex.
ReplyDeleteyou are doing fine.
pls continue writing great article