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A friend sent me a SMS to say he bought some at $1.96 (the IPO price) in the morning and it closed at $1.93 for lunch. Then, it went on to touch $1.88 when another friend who was in the queue got his buy order filled. GLP closed at $1.93 in the end.
Is this stock going to rebound or would it decline further? After a huge sell-off, it is reasonable to expect a rebound. Short sellers would want to cover their short positions if the bulls are emboldened to push the price higher for some reason. However, the truth is no one knows what would happen next week.
TA is useful in that it lets us know where are the supports and resistance and we have to plan accordingly. TA simply gives us a glimpse into what could be and there are always two sides to a coin. Of course, sometimes, it is nifty enough to give us probabilities as well but they remain probabilities and never certainties.
What is the chart for GLP saying?
What is obvious is that GLP has been in a worsening downtrend since 1 Nov 2010. Look at the three orange lines I have drawn and you would realise this. The latest trendline resistance is rather steep and approximates the declining 20dMA. $2.06 thereabouts. Selling at resistance in a downtrend is a sound strategy.
The immediate support is at $1.88. If this were to break in the next session, we won't know where is the next floor although employing Fibo lines could give us a clue. $1.82, anyone? The technicals are weak and so is my heart. I shall abstain.
STI down 1.2%; Kim Eng Securities suggests switching to yield plays. “We are stringent in our selection, picking only stocks with stable businesses and the ability to sustain a good dividend payout,” the house says.
Friday, 11 February 2011
Friday, 11 February 2011
© 2011 - The Edge Singapore
Related post:
What's my take on MIT and GLP?
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2 comments:
The concept of TA is in using historical data to predict future movements. GLP is relatively "new" to the market so there is only a very limited amount of historical data that one can rely one. As such, your last statement seems to be the best advice. Abstain from it.
Hi Journalist,
It is, of course, debatable as to how much history is required before we could do any TA or, for that matter, FA.
I did the analysis out of curiosity. No one should think of my blog posts as advice of any kind. :)
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