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China Hongxing: Prime for a breakout?

Friday, April 16, 2010

I first blogged about China Hongxing on 6 March 2010.  In that post, I said: "Analysts are downgrading the prospects of the company en masse despite the company reporting a net cash position of 22c per share. The share price closed at 14c on 5 March. CIMB-GK and Kim Eng Securities even ceased coverage of the company altogether."  Please see: China Hongxing: Another S-chip bites the dust.

On 14 March 2010, I blogged about the company again.  In that post, I said: "The decline in China Hongxing's price seems to have halted and rebounded as it was supported by the channel support at 14c. The decline in price has been accompanied by a decline in trading volume. The Stochastics has just turned up from the oversold region. These indicators suggest that downward pressure is limited but it might be a temporary respite." Please see: China Hongxing: Downside target.

As it turns out, the limited downward pressure allowed China Hongxing to bottom at 14c. Its price made a bullish move up to touch a high of 16.5c before closing at 16c on 7 April on the back of very high volume.  The 20dMA has been rising gently and the counter has been trading above it since 7 April.  Immediate support is now at 15c, provided by the 20dMA.  Immediate resistance is at 15.5c, provided by the descending 50dMA.




Since 8 April, volume has been reducing as price was capped by the declining 50dMA.  Yesterday, volume expanded as price broke resistance to touch 16c but ultimately closed at 15.5c.  The MACD has been rising and seems poised to cross zero to herald the return of positive momentum.  Strictly speaking, I do not see a buy signal yet. However, technically, this counter might be prime for a breakout.  A breakout would see the 100d and 200d MAs acting as resistance at 17.5c and 18.5c respectively.  Might the current setup be good for a trade?

3 comments:

ezinvest said...

55 day channel breakout by the turtles

AK71 said...

Turtle investors? I would like to get one of these books but I cannot find them in Singapore. I might have to get one from Amazon.com.

Would you to elaborate on your one liner? Thanks. :)

AK71 said...

For anyone who is interested in what ezinvest's one liner meant, I have been reading the book, "The Complete Turtle Trader", courtesy of LP and I found the answer on page 71. I would like to share with you here:

"If a stock ... made a fifty-five-day breakout to the upside (long), meaning that its current price was the highest price of the last fifty- five days, Turtles would buy."

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