Hock Lian Seng: Ready to break resistance?

Hock Lian Seng isn't the most exciting counter in the market, for sure. However, today, volume expanded as all shares transacted were traded at one price and one price only, 30c.  To me, this suggests that all the weak holders have been weeded out.  If anyone wants to buy shares of this company now, buying at 30c per share is the only choice.  This is a resistance level which has been tested a few times before in the last one month.  Could this resistance level be taken out soon? I believe so as the massive 30c sell queue was wiped out today.

We could draw an uptrend support line from 15 July and this would approximate the rising 20dMA.  Nice. Could we be seeing the formation of an ascending triangle? Possibly.  If this is this case, could we see price rising to 34c? We could but I would expect rather strong resistance at 32c.

The MFI has successfully stayed above 50% and the uptrend is still intact.  The OBV has risen very gently and consistently. Demand and accumulation are present. With this fundamentally sound counter, patience is definitely required.

Related post:
Hock Lian Seng: Steady accumulation.

Golden Agriculture: Triangle.

Accumulation of shares in Golden Agriculture seems to have come to a halt as the OBV flattens. Over a shorter term, momentum oscillators are still rising but this could change quickly.  The MACD histogram has turned red and volume shrank dramatically today as price action formed a doji, suggesting indecision.

The technicals are somewhat ambivalent at this stage.  Up or down?  The probability seems to be quite even either way.  If we look at the bigger picture, we would understand why.  It seems that price action is forming a large symmetrical triangle. Volume has also been declining.  Which way would its price go?  Being in a symmetrical triangle, price could go either way.

Personally, I am vested in Golden Agriculture because I believe in its fundamentals.  CPO price is up again today at RM2,674. This is an increase of 1.75%.  However, for anyone who is in doubt and feeling unsure, staying out is the best thing to do.

CapitaMalls Asia: Upgraded by Daiwa.

CapitaMalls Asia broke out of a downtrend on 2 Sep and touched a high of $2.25.  Today, Daiwa upgraded CapitaMalls Asia to outperform but the share price fell instead to $2.20.  Could price fall further?

The MACD histogram has turned red. This is a sell signal. MFI has formed a lower high which suggests weakening demand. OBV shows a slowdown in accumulation but there isn't any serious reversal.  RSI has dipped and left the overbought territory behind.  The current weakness could just be a correction from overbought conditions. If so, where is the next support?

I see the next support at $2.14, a many times tested candlestick resistance level and should be a strong support. This is also where we find the downtrend resistance line which the counter broke out of on 2 Sep. This price level is likely to be fresh on the minds of market participants.

CapitaMalls Asia upgraded to Outperform by Daiwa... says property group’s recent $788.9 million joint acquisition with CapitaLand (C31.SG) of Singapore’s Bedok Town Centre site, which can be developed into residential-cum-retail property, reinforces CMA’s dominance in local retail property market.

Wednesday, 08 September 2010

© 2010 - The Edge Singapore

China Hongxing: New target.

Yesterday, when Edmond asked if we should set a higher target for China Hongxing at 22c, I replied "22c is what could be the eventual target if 19.5c is taken out convincingly (ie. volume has to expand significantly as price rises). However, along the way to 22c, there are many minor resistance levels to overcome."

Well, 19.5c was demolished as the price touched a high of 20.5c before closing at 20c today. This was achieved on very high volume. 20.5c was a resistance level that broke in early January.  Based on Fibo lines, it looks like a minor resistance and we could see 22c tested next (138.2% Fibo line). Congratulations, Edmond. :)

OBV is still rising strongly signalling continuing accumulation. The uptrend in the MFI is intact as it formed higher lows.  Demand is still strong.  It is however on the verge of being overbought but this does not really mean anything apart from suggesting that we stay vigilant, especially with such strong underlying momentum.

This is possibly the reason for the breakout:

China Hongxing Sports bags $198m worth of orders from Xiamen trade fair. The order book of RMB 1 billion represented a 12.6% increase as compared to that held in August 2009.
Wednesday, 08 September 2010

© 2010 - The Edge Singapore

Related post:
China Hongxing: Pushing upwards.