A reader asked me if I am buying more shares of Wilmar as I said before that the time to buy is when the selling has dried up. Has the selling dried up?
Well, the trend is still obviously down and my investment is in the red. My long position in Wilmar is my biggest money losing investment on paper this year.
However, I have bought more shares of Wilmar as the MACD is rising while share price declined. Momentum is still negative but with a rising MACD, the negative momentum is weakening.
There is no obvious sign of accumulation or distribution with the OBV flat as the share price languished more or less at the 61.8% Fibo line.
Volume has been relatively low as the Bollinger bands begin to squeeze, confirming the picture of low volatility. A big move in Wilmar's share price could be on the horizon. Which direction? That is anybody's guess.
If the move is to the upside, overcoming the 20d MA on high volume would signal a breakout. If the move is to the downside, the low of $3.04 touched on 15 Aug is the support to watch.
A sign that things might have bottomed is when there is massive pessimism and no one is interested in buying anymore. In fact, there would be more who would sell even at a big loss because they believe the share price could move much lower over time. Then, there are the increasing number of "sell" calls by the research houses all offering much lower 12 months target prices.
The relatively low volumes, the gently rising MACD and the flat OBV tell me that there is currently a stalemate between the bulls and the bears, pending a possible big move in price with the constriction seen in the Bollinger bands. The trend is, however, still in the bears' favour.
Now, no one should tell you what you should do. You have to decide for yourself.
Related post:
Wilmar: Touched a new low.
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