Trader’s Note #93: Winners during market slumps…
KLCI followed the forecast of Elliot wave and completing its final downtrend wave from and cut through its strong support from the previous low, the market sentiment is very bearish amid the spreading of 1MDB issues that beat hardly on the national credit and reputation.
The support at 1750 has keep the index rebounded, and the next move of KLCI pertaining to the local issue and market sentiment, the index is seriously downward. The sellers has gone weak by the past few days but neither the buyers coming in strong, this iss due to the seriously lack of investment theme in Malaysia and the spreading of woriness throughout the economy and politic system.
Obviously it is too costly to support the index from the heavy selling, and the 1MDB issues are not looking to settle in near term, in additional of crisis arises from Europe countries, and the saturation of U.S. market yield more anxiety in the overall market. Index seeks to rebound upon oversold but it is seriously lack of even a little bit of stimulation and any bad case will easily drive it lower after this consolidation.
Traders can use put warrant to hedge against the risk, when the market rebound with weak pace, these put warrants will react faster than before due to index oversold, so to accumulate some put warrants during the rebound of index (in this case, put warrants will go down faster) can effectively hedge the portfolio with better margin.
These are some counters that has been showing good resistance nature during weaker market.
Strong business growth still on sound track despite the change of director and disposal of foreign fund. In fact, a solid business should keep on performing regardless of the change of directors or management system, for Wellcall, the declaration of dividend of 23 cents for this quarter and continuous of its operating style indicates the payout policy and company direction remains the same after the change of director. As long as company fundamental still growing and remains strong, accumulating this company’s share from bottom is workable and wise.
This counter remains consolidate at its higher side despite market downturn, accumulation is still staying in place as announcement of its new business will be coming up in June. Wide range of consolidation suggests a support at RM0.735, the volatility will likely to shrink and breakout to overcome its previous high at RM0.795 upon the announcement.
Uptrend backed by profit improvement and forms a typical operated spike with volume. Monitor the pullback to happen for next step and use if Fibonacci retracement to gauge the pullback, RM0.405 would be a strategic entry. Opensys is one of the counters that may fulfill the criteria of main board listing and this sound more possible when the net profit of the last quarter sky-rocketed, the main board proposal will likely to make the price soar up to RM0.80.
GHLSYS have its on-going theme same like Mpay, weak market unable to drag it below its support, if it is maintaining above its support, it is a good signal for further upside, first mid- term target is RM1.80, still 60% apart from current price. Any rebound that brings the price over the middle Bollinger band will signal sustainable strength of the bull.
SCICOM did not affect much by the broad market, still on bullish side and its earning remains promising as usual. Perhaps the only drawback for Scicom is its lower liquidity. Long term target for Scicom is RM3.50, and it gives bullish signal by staying above RM2.08, monitor the opening of its Bollinger band for the next entry signal.
Electronic theme leader Inari never fear about the market sentiments, the pullback amid market sell off unable to create lower low and it takes merely a day recover the wholle week losses and continue its uptrend to its historical high level, this is probabl due to stronger export and Ringgit depreciation with USD. Mid-term target price of Inari is up to RM5, target entry price around RM3.40.
Similar to Inari, the pullback of Harbour during market sell off is very light, it even stay above half of the long green candle, this will create a support near RM1.92, note that the trading volume is decrease very fast toward its price consolidation, this will likely to ignite another wave of buying activities after market start to stabilize. The bullish outlook will turn weak if the it violate RM1.85.
Shaky movement during market sell off but still stay above its major support line at RM0.29, this shows a bullish character of Solutn if compared among those penny stocks. After so many ups and downs, the current price of Solutn still stay intact with the rising channel, mainly contributed by strong earning. Monitor this counter to break RM0.35 soon.