SoundGlobal: Breaking out of resistance.

I last added to my long position at 49.5c on 5 November 2012. For the reasons why I added to my long position then, please see my last blog post on the company.

Today, Sound Global's share price broke resistance and formed a long white candle on relatively high volume. A long upper wick was formed towards the end of the session. This tempers the bullish picture somewhat.

On the daily chart, the positive divergence which was spotted earlier is playing out. So, we had an early indication of a possible uplift in share price. Therefore, it should not surprise us that resistance was finally taken out although it was anyone's guess when it was to happen.

On the weekly chart, the MACD, a pure price momentum oscillator, looks to be on the verge of a bullish crossover with the signal line in negative territory. A rebound in price could meet with resistance presented by the flat 50w MA at 56c and the declining 100w MA which is currently at 60c.

Now, whether the counter's share price is able to finally form a higher high is anyone's guess although the higher lows formed in the MACDs of both the daily and weekly charts are very encouraging.

Fundamentally, SoundGlobal's valuation is undemanding. Technically, it does seem as if its share price has bottomed although we cannot say that for sure until a higher high in price is seen.

Related post:
SoundGlobal: Smart money is buying.

China Minzhong: Gap down black candle day.

China Minzhong's share price gapped down today and formed a long black candle on the back of very high volume.

Apparently, "one party sold 57.23 million shares at S$0.80 each.

"A trader said one of China Minzhong's shareholders had sold its entire stake in the company through a private placement.

"According to Thomson Reuters data, Olympus Capital Holdings Asia, is the company's third largest shareholder, with 57.23 million shares or a 10.3 per cent stake.

Franklin Templeton Investments Corp is the second largest shareholder with a 12.2 per cent stake, or 68.13 million shares." (Source: REUTERS, 6 Dec 12.)

I do not know why the investor decided to sell especially when the fundamentals of the company have been improving. However, if there is no material deterioration in fundamentals, this correction is an opportunity to accumulate shares of the company cheaper.

Technically, the negative divergence between the share price and MACD is playing out. So, it is not as if we didn't get some kind of warning. However, the intensity of the decline has been stunning.

I decided to draw a Fibo Fan and it is interesting to see how nicely the 38.2% Fibo line approximates the rising 100d MA. 38.2% is a golden ratio but with such a high volume sell down today, we could see persistent weakness tomorrow. If immediate support should be compromised, then, we could see a test of the next two golden ratios of 50% and 61.8% for support.

Related post:
China Minzhong: Accumulate on weakness.