Healthway Medical needs a break?

A friend sms me this morning and asked me for a new eventual target price for Healthway Medical as it was last done at 19.5c. I was driving at that point in time and I was amazed at how quickly the counter moved to hit the target price I identified. In slightly more than half an hour from the opening bell, Healthway advanced 2c from 17.5c to 19.5c. However, the eventual target price of 19.5c is based on chart pattern and proved too strong to be taken out so quickly and price closed at 18.5c today.

Most of the time, chart patterns are accurate windows into probable future price movements, resistance and support levels. Our FA says that Healthway is worth a lot more than 19.5c but TA, as a measure of the mass psychology of market participants, tells us where the probable stops are in the meantime.

Healthway Medical has a white candle with a wick on top that is as long as the candle's body. In spite of increased volume today, price closed only 1c higher. OBV still shows accumulation. There is no sell signal on the MACD but this is usually lagging. MFI is levelling off which shows a slow down in buying momentum and remember, it is still in the overbought region. Is a correction due?

Taking a peek at the weekly chart, the MFI has moved sharply into the overbought region. The last time it did this was in April 2009. Technically, there is more downside risk now. I would accumulate after the counter has done either a correction in price or a correction using time. Incidentally, I have divested more of my position in Healthway Medical today.

Golden Agriculture still burning bright?

I have always disliked candles with long wicks on top. They suggest to me that the candles are burning up and that not much burning time is left. There is no gap up for Golden Agriculture today and price action formed a white candle with a wick on top which is almost as long as the body of the candle. There is increased trading volume today but that managed to push the price up to close only 1c higher. That the buying momentum is slowing down can be inferred from the levelling MFI, which is still firmly entrenched in the overbought region.

The price of crude palm oil (CPO) fell today to RM 2,630, down RM 72 or 2.66%. This likely dampened sentiments. A correction is expected after a strong run up but I feel that any correction should be short term in nature and presents opportunity for accumulation.

Eventual target price for Golden Agriculture remains at 62c but with weakened sentiments, flattening momentum and the many minor resistance levels along the way, it would be wise to reduce exposure as a hedge. Gap support is at 54c and this coincides with the 123.6% Fibo line.