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Hock Lian Seng: 30c support.

Tuesday, October 12, 2010

I mentioned on 5 Oct that I sold off some shares of Hock Lian Seng at the 32c target.  On 8 Oct, I said "notice that the 20dMA has been guiding the price of this counter higher? See the uptrend support is in between the 20dMA and 50dMA? This would be at about 30c.  The 50dMA is at 29.5c.  I would buy more at these price levels." Today, I bought some at 30c as price retreated.


Although the uptrend is still intact, could prices weaken further? Why not? The MFI is still in overbought territory while the MACD has just completed a bearish crossover with the signal line.  We could see price weakening to test the 50dMA at 29.5c or even the 200dMA at 29c. The latter being a long term MA should provide a rather strong support and I would probably buy more at 29c, if ever tested.

Fundamentally, this company is sound and investors are accumulating shares in the company which is quite obvious when we look at the OBV.  The recent price weakness as the counter retreated from a high of 32.5c on relatively low volume is an opportunity to accumulate.  What we are witnessing is a low volume pull back which shakes out the weaker holders.

Related post:
Hock Lian Seng: Retreating.

2 comments:

LZY said...

Hi AK,

Don't know if my previous comment was captured. Anyway i am using the same strategy as you. Got HLS @ .265 but didn't sell off @ .32. Will be adding 1/2 or 1/3 of my buying tomorrow @.3. If it drops further i will add accordingly.

Anyway another construction counter which is of interest to me is Tiong Seng. Bought @ .235 and Sold @ .28. Currently Prices are dipping again and it looks like time to load may come soon. This counter is of particular interest to me because it has the highest order book among all the other construction counters. Its current order book stands at Approx $1.1 Billion.

In any case, enjoy reading your blog!

Regards
LZY

AK71 said...

Hi LZY,

Yup, the earlier comment was captured but awaiting moderation. I will delete it since this second comment of yours has the same content and more. ;)

I bought into Hock Lian Seng twice: at 28.5c and 26.5c. Managed to sell off some at 32c which I identified correctly as resistance. Lucky. ;p

You made a nice 20% gain on Tiong Seng. Congratulations! :)

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