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China Minzhong: Opportunity in slowing momentum.

Tuesday, October 16, 2012

A big part of my portfolio is invested for income while the remainder is invested for capital gains. In both instances, once I stop adding to my long positions, the main thing to do is to wait. Wait to collect regular income in the first instance and wait to lock in gains in the second.

I will have more income distributions from S-REITs in November and December. Possibly, there will be dividends to be collected from some stocks as well. I am not too sure as I have not noted the precise dates for some time now.

I also invested in a few stocks, believing that they could deliver some nice capital gains. One such stock is China Minzhong and the last time I blogged about it was about a month ago, declaring that its stock price was emerging from a downtrend. Since then, its stock price has moved to touch a high of 85c.

OBV shows continuing accumulation while the RSI shows the formation of higher lows. There is some support. However, the lower high on the MACD which formed as a higher high formed in stock price, together with the reducing volume as price pushed higher, suggest a weaker positive momentum.

A rising wedge also seems to have formed and this suggests that the stock price could see a retreat in the near term. However, wedges are not terribly reliable patterns and the bearish signal we see here could be negated if volume should simply expand with an upward movement in stock price.

In the event that the rising wedge should deliver, we could expect a correction to see the share price retreat to 68.5c thereabouts. Before that, we could see some support at 75c. The immediate support is at 80c.

The weekly chart is somewhat more encouraging as the MACD has just moved into positive territory. Unlike the daily chart, there is no negative divergence observed here. The longer term picture suggests that any pull back in price is an opportunity to accumulate. The 100w MA, approximately at $1.10 now, could put an eventual cap to any upward movement in stock price in case it should happen.

Related post:
China Minzhong: Emerging from a down trend.


B said...

Hi AK71

Perhaps someone might have asked you this before, but what percentages of your portfolio are invested for capital gains (and not/less for income)?

AK71 said...

Hi B,

There isn't a hard and fast number but, generally, less than half of my portfolio is invested for possible capital gains.

So, I am mostly invested for income.

JCK said...

i have been waiting for some significant correction since i sold ALL at 0.75......

Pretty strong

AK71 said...


Well, the daily chart suggests that you could have a chance at buying again at a lower price. :)

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