Kulim: Something is Cooking

Kulim broke above its 3 years old downtrend line, RR at RM2.85 on September 17. After a short correction, the stock charged through the high of RM2.97 (recorded on September 17 & 18) as well as the RM3.00 mark today.


Chart 2: Kulim's monthly chart as at Sept 28, 2015_3.30pm (Source: ShareInvestor.com)

What's more exciting is the sharp rise of its warrant, Kulim-WC. This warrant, which has only 151 days to expiry, is now trading at a premium of 20%! Not many traders nor investors would pay a stiff premium for a short-dated warrant (or, hold onto such a warrant) in a bearish market unless they have a bullish outlook on the stock. What could make them so bullish?


Chart 2: Kulim-WC's weekly chart as at Sept 28, 2015_3.30pm (Source: ShareInvestor.com)

Based on technical consideration alone, I believe Kulim could be a Trading BUY. I would avoid the warrant due to short tenor, stiff premium and the likelihood of a failing to breakout above the existing downtrend line.As always, please exercise careful discretion in the market...

Note: 
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Kulim & Kulim-WC.