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Golden Agriculture: Breaking resistance.

Monday, November 8, 2010

CPO hit a 27 month high and this has pushed the prices of CPO counters higher on expectations that they would report better than expected results.  Golden Agriculture is the most levered to CPO prices and could be the biggest beneficiary of higher CPO prices.

On 5 Nov, I mentioned that "On 4 Nov, the following session, this counter traded the whole day at 70c or higher. Closing at 70c seems to have confirmed it as the new support." and that "With improving CPO price now a reality, it seems less risky loading up on CPO counters and that is precisely what market participants have done. Loading up on a pullback would be the prudent thing to do, however."

I still think that loading up on a pullback is more prudent but the rising wedge pattern has failed and price has pushed higher. 70c support is confirmed and should be something to watch out for in case of a pullback in price.

Golden Agriculture will be reporting its results on 11 Nov. If results disappoint, we could see the 70c support tested.  If results are better than expected, we might see its share price go even higher.

Even though a very long white candle formed today to close at the day's high of 78c, it is worth noting that volume was not as high as 13 Oct. The picture of negative divergence between volume and price is still present. Price moved higher today due to a lack of sellers and not an abundance of buyers. It would take a very brave person to load up to go long at this stage.


Raelynn said...

i was reading create wealth's article one "Investors hum to frenzied beat of the IPO gold rush", and i was very shocked when the remiser said "who understands logistics anyway? i just tell them to buy. i dont even look at the financial statements". my blood ran cold.

AK71 said...

Hi Raelynn,

Well, remisiers make money whether we make or lose money. As long as we buy or sell, they are happy. ;p

If we do not do our own homework and rely on remisiers to make the calls for us, we cannot blame them if we lose money.

There is much more optimism in the air now. That's for sure. We just have to stay on our toes.

We might want to tell ourselves: "I might not make money but at least I am not losing money."

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