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Although analysts from Citibank, OCBC and more have given CapitaMalls Asia glowing reports, the long black candle which was formed yesterday on the back of very high volume was ominous.
Breaking immediate support provided by the 20d MA earlier in the week, the bearishness was confirmed as trading started under the 20d MA. It then went on to hit the 50d MA at $2.06 before recovering a bit to close at $2.08.
The question to ask now is whether the 50d MA, the new immediate support, would hold. The MFI has formed a lower high. The MACD has formed a lower high. Negative divergences aplenty and bearing in mind that prices go down a river of hope, I put in an overnight sell order at $2.12 to reduce exposure.
If we look at the weekly chart which provides a longer term picture, the 20w MA is still under $2.00. Currently, it is at $1.93. So, in the event of further high volume selling, we could well see the share price going lower to this longer term support.
The longer term uptrend is still intact but we cannot discount the possibility of a stronger correction in the shorter term. So, as I try to be pragmatic instead of being overly bullish or bearish, I have reduced exposure at what I think is the support turned resistance at $2.12.
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4 comments:
Piecing cloud and a bearish engulfing before the plunge. There was ample warning to run actually. But there is much volatility in the market.
Nevertheless concur with your TA read. Time to have a hair cut LOL
Hi seefei,
I agree. I took action one day late. Opening below the 20d MA at $2.16 was the confirmation of the previous day's bearing engulfing that traders were looking for to sell down the stock.
Technically weak, now, expectations are for share price to go lower in the short run but could Mr. Market pull a hat trick?
I have seen cases where negative divergences formed over a period of several months before a more significant correction.
Bearish engulfing started around $1.90 level. Sold some then and the irrational exuberance stage of the market took over and push the stock higher.
It is good your stock run but but keeping a watch over bearish signal is necessary to protect your capital. Anyway candle bearish signal can be short term and once the selling stop it is good to pick up some bargain.
Market is too volatile for my liking now. Will take this time off and enjoy my CNY holidays. Will decide what action to take after all this exuberance fizzle out.
Hi seefei,
Candlesticks analysis is generally revealing but ever since reading Michael Kahn's book, I try to look out for divergences as well. Anyway, TA is not a crystal ball and we have to do what we feel is right for us, of course. :)
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