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Genting SP: When is it safer to buy?

Thursday, March 4, 2010

On 25 Feb, I wrote the following about Genting SP:

"Genting SP continues to weaken as expected. The highest it got to this week was 98c to give stale bulls a chance to reduce exposure. Closing at 91c today hugs the lower limits of the Bollinger bands. The downtrend seems ready to continue as the MFI continues to decline indicating reducing buying momentum. In the unlikely even that the price moves up in the next session, resistance is at 98c.

"Looking at the weekly chart, we see a precarious situation. Price is hugging the lower limits of the Bollinger bands and the MFI continues to decline just like in the daily chart. However, what is important is that it has closed below the rising 50wMA which is at 92.5c. If price is unable to recapture this support level to close at or above 92.5c in the next session, which is the last trading day of the week, the chart would look very ugly. The ultimate downside target would be 74c, a support level provided by the rising 100wMA. Although there would be intial support at 80c, such a potentially huge fall in price would be too tempting for short sellers to ignore."

Today, Genting SP continued its downward slide, closing at 84.5c.  Momentum oscillators such as the MFI and Stochastics show that the counter is oversold.  The MACD plunges deeper into negative territory.  Longer term MAs are descending with the exception of the 200dMA which now acts as resistance in the event of any rebound.  This is at 98.5c. 

The MFI on the weekly chart is not oversold yet while the MACD is on the verge of plunging below zero.  On a weekly basis, there is a strong suggestion of more downside as well.  Trying to make some money from this counter by punting on the long side is going to require a lot of courage and luck at this juncture.  Having said this, the downside would probably be reaching an inflection point in the near future. 

The proximity of the rising 100wMA and the 200wMA to each other would provide a very strong support at 74c and 70c, respectively.    For investors who really like this counter for some reason, they could consider accumulating then, especially if the MFI and Stochastics indicate heavily oversold conditions by then.


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