My ill fated investments in Wilmar and China Minzhong are 30% and 45% down, respectively. The decision to be vested in these two counters were based on macro ideas and technically, they looked like they were resting on supports.
As regular readers know, I do not have cut loss prices and would seek to add to long positions if the technicals are favourable. Favourable? Yes, I look for higher lows in the momentum oscillators as share prices move lower.
Today, I added to my long positions in Wilmar and China Minzhong as their charts show me rising momentum oscillators while their share prices are retreating. The trading volumes have dwindled as well which led me to think that a floor could possibly be forming, if not the bottom.
Wilmar's share price is currently sitting on a golden ratio and if this should break, we could see $3.30 or even $3.08 tested next. Although the momentum oscillators are rising, the OBV is in decline which suggests that distribution activity is ongoing. I won't be too ambitious in adding to long positions.
China Minzhong's chart is similar to Wilmar's and if the Fibo lines I have drawn are any good, we could see 51.5c tested next. We could be seeing more selling although the the trading volume suggests that the action might not be as intense as before.
In both cases, it is not a good time to sell. Indeed, it would make more sense to stay vigilant for opportunities to buy in.
My strategy is to nibble and increase my additional purchases at lower prices if the technicals suggest that it could be a good idea. Of course, there is no way we can be absolutely sure and we can only call a bottom after it has been formed.
Posts
Bloggy Award