Update 3 - Commercial Bank Plc - Buy when others fear, and when blood is on the street.

Update 3 - We have completed 3 weeks since the entry to Combank position based on the strategy named STOCK ACCUMULATION.  Current holding is 40,000 shares at an average of 98.06. I noticed that the price of the stock took support above 95.90 and tried to test 98, and failed. But trying to settle around 97. As the overall market the ASI moved above 6100, the price action on COMB will not hold behind in the opposite direction. MSCI Sri Lanka Index which is frequently watched by some of the big wigs comprises of only 2 stocks (constituents) i.e. COMB and JKH.  If you are interested in that try to read the pdf update of it dated 27th of Nov 2019, you can look at it here... It says that 85% of the whole market of Sri Lanka comprises of these 2 stocks. As such those who are guided by this index and are interested in entering the Sri Lankan Market will certainly own COMB. If you are interested, take a look at the MSCI chart given here and understand the present price action of it vis a vis constituents and the ASI.

MSCI SRI LANKA vs ASI,JKH and COMB

Some of those who read my previous updates were of the opinion that this counter will see selling at lower levels (Also a Rights Issue). They may be the best informed people about it but I am not. I believe in the capacity of this stock to reach my target given in this INVESTMENT STRATEGY. So I am going to stick with it. Those who are waiting until it comes down, may wait and buy then. There is a section among this lot that will wait until it rises above 110. They say that level will confirm an uptrend for the counter. As long as those are there strategies we need to respect them. But if they are just saying without any strategy then they are in trouble (So Sad).

Another important event for the counter will be the dividend payment that is usually around late Jan to early February. That will be an added benefit for this strategy but that is not the only reason that has made me track the progress of this strategy. Ironically the ASI collapsed just after COMB gave the dividend during 2019. The dismal events that we witnessed during that period may be history, but that period in 2020 will be very important for the ASI and the counter. Lets see....

My earlier report can be accessed Here

ASI successfully defended 6050. Rose above 6100!!!

Naysayers are there every where. Going down the memory lane of eradicating the terrorist menace back in 2008-2009 period, how many laughed and mocked. But what happened? This time the same players who took the risk of hostilities are testing different possibilities in making the economy work. Moratorium was one such tested possibilities. If it works it will be good to many sectors, thereby Banks. After the end of terrorism in Sri Lanka, people of all walks of life feels the importance of having a strong mechanism to build a strong structure to make the Economy rolling. Looks like the important elite of the society including those at the top  of institutions (Including Banks) are rallying round the Policy Makers to make it happen. Business leaders have realized the importance of a Strong Structure to have a Strong Economy like never before (I Hope).

Critics had reservations on the impact of tax rebates, and the moratorium, no sooner they were announced. This brought sellers into the market during this week of 4 trading days. When investors/traders saw clarity they took the opportunity of this selling to accumulate further. If many of the new options that are being tried by the policy makers succeed, the breaking out of all time highs in the next few years will not be a surprise. Stock Market needs participation, both local and foreign, and that participation needs to happen in large Turnovers. Not for a short period, but it has to happen in the near term. That near term could be as near as 3 months to as long as 12 months. If the money flow to the market is not going to happen in that 3 to 12 months, expecting better times in the bourse  could be another dream not coming true. In that context these strategies of the Policy Makers will be interesting, and hope that they will succeed.

Since the Index successfully defended the support area of 6050, it will now try to take support above 6100, and try to form a base in the present resistance zone of 6122 to 6185. If the index succeed in holding that area it will be the stepping stone for the trend continuation which could make the ASI rise above 6200 to test higher highs. The bullish divergence witnessed in the RSI had to rise above 50 points for the rising momentum. This happened during the week. But the rise was too aggressive which could fluctuate during behaviour of the index within the aforementioned area of resistance.

Click here of my post on the ASI on 14/12/2019

Click here for 18/12/2019 post on the ASI

Click here for 20/12/2019 update on the ASI

Merry Christmas and Happy New Year.......

AEL - If you had the guts, you would have bought at least some!!!

AEL is one of those stocks that will be in the limelight in 2020.  In my earlier posts on this counter, I have been mentioning to buy this if you had Guts. Hope you did then keep adding on Dips.

Going by the price action of the counter we can see that it has taken support at 21.00, and headed back upto the lower end of the preset resistance zone between 21.80 and 24.10. You don't need rocket science to figure out that this zone itself will have gains if you buy at 21.80 and sell at 24.10, which is an 8.10% return. IF you get this in a month that is a 97%+ return annualized, and if you get that in 4 months it will be 24.3% annualized and if you get it in 6 months it will be 16.2% annualized. That is only if you want to trade between the low of the zone and the high of the zone.

If we see a breakout above 24.10 with volumes we will see the prices testing 25.00 which incidentally was the IPO price.

After a strong consolidation within the present resistance zone we will see higher highs with strong profit growths and increased activity in their order books. That needs time. Hence let's keep tracking AEL along the way.

My 1st post on this counter is given here, which is worth a read

RCL - Update 2 - Strategy - Buy on Dips

30th of November I expected the RCL price to retrace and find support between 89 and 93. This has happened and in fact moved a bit below the low of 89 in the one I mentioned. However the price did not test the next support zone between 80.70 and 85, as the price took support at 86.20. The range it traded on the 20th was between 87.50 and 89.70, as such the price has moved again to the support zone between 89 and 93. There is a small recovery but not at all important for a strong reversal. Yet for any one to Buy on Dips this is a good period.

Please note that this is an idea that I am sharing in order to show the reader how an idea is to be structured and followed up till the completion. Using it for the readers personal Investment or Trading goals needs to be on the Strategy. This strategy is not only confined to the stock given here, it can be applied to a stock of your own as well. Buy on Dips is the Strategy and the risk must be something that must be decided well before buying the stock. Get more expert advise about the Risk Reward management and increase your knowledge and confidence before buying any stock.

Link to my earlier post is given Here

Update 2 - Commercial Bank Plc - Buy when others fear, and when blood is on the street.

Update 2 as at : 21.12.2019

We have completed 15 days since I started this investment idea. During this period we have completed 10 market days. An important part of tracking an Investment or Trading position is that a lot of emotional obstacles that you will encounter from the time you enter into a position until you exit. You do not know what is going inside your Brain. You might agree with me when I say that our biggest enemy is our mind. It is the mind that will cheat on you, betray you, discourage you, scare you, bring fear and greed into you more than others.  You are not your mind. Mind is only a body part in you. so you need to own it and take control of it. How do you do that when it comes to your Investing or Trading Journey? by controlling your mind. How? just write down the present state of the position. Before moving into a position you write all the conditions, rules and strategies, and keep updating frequently. It could be every week, month,quarter, six months or every year. The more you update the more successful you will be. If capital markets is your livelihood, updating daily will be a good idea.

During the week ending 20th Dec '19 we added 15000 shares into the position. The present holding therefore is 30000 shares at an average of 98.19. One of the major developments that took place during the week is the moratorium the Government wanted the banks to give to their borrowers upto Rs. 300 million. So for me this is an interesting event. Why? There will be those who would sell below, arguing that this decision will be negative for Banks. I personally do not think so. But that is my opinion. That's why I would wait like a vulture till they sell. This strategy is telling me to focus on collecting shares at or below Rs. 100/=. So as long as the price is below that I will keep on buying, as per the plan. Because I respect it. I'm committed to it. I also believe that this counter is trading at historical bargains. I also believe that our economy is going to do better  and that will be Stock positive. As such one of the best stocks in the market is COMB.  So as long as the price is below 100.00  I will collect based on the plan. Anytime it is over 100.00 accumulation will stop and wait for the exit. That will also be based on the rule given in the strategy.

Please note that this is a strategy and I'm showing it off for the reader to understand the importance of having a strategy to move in to a position of share ownership.  I encourage you who is reading this to take note of the various points explained to help you to be consistent and succeed in your investment or trading activities.  

Chart with a new update is given below:

Update 1 as at : 15.12.2019
On the 7th of December I started this post on Commercial Bank. Now it is 9 days old, and have completed 5 market days as Wednesday the 11th was a Poya Day. During the short week ,  I covered 10,000 shares, 5000 each on Monday and Friday.  as such the present status is given in the chart below:

I would like to stress that the Name of the Strategy is STOCK ACCUMULATION. This is not a strategy that many would agree with. Reason is that the Buy and Sell Rules are so basic, and one might think that it's too good to be true. Yes updating a strategy for a stock that has a lot of negative news is so hard. Basically I am putting my imagination on the line. I myself feel stupid for starting this. But that's perfectly alright. Because when a stock is bleeding and all are running for shelter, and the blood is seeping through the prices almost daily, who would want to report? But the key point here is that this counter is one of the Best and Strong Counters in the Sri Lankan Market. Also it is one of the important stocks if we believe in the upward trend in the ASI. It is also the only counter that has been in many major Emerging Market indices, always. Also it is well managed, and has a rock solid brand name. 

Let's see how this is unfolding. So far we have collected 15000 shares at a cost of 98.56. I am aware of the fact that someone would argue that this is all hypothetical, and you can't do it in reality. Yes the amount of shares given here may be so, but this is done in real time with smaller volumes. The value could be 5, 50, 500 or 5000 but it is a chart I am plotting every day in the real market, as I firmly believe that any thing that an investor or a trader should do must happen in reality, than just back testing by looking at the past data. Back testing a strategy is quite normal, yet tracking it real time with real trades is not. Let's come back again after a week and see where we stand on this stock.

If I may add another point here, I must emphasize that the number of shares in this strategy must be in line with the amount of risk you can bare. As you can buy volumes from 1 share to millions of shares, you have to decide on the amount of shares that you can comfortably collect as long as you need to accumulate. That is a key criteria in this Strategy. 

First post as Reported on : 7.12.2019
There are zillions of ways to buy stocks. But if you can have a simple way to do so, your investment adventure will be rewarding beyond imagination. Let's see how a simple strategy is going to work real time. The commencement of this strategy was from yesterday the 6th of December 2019. The details of the Strategy and the plan is as follows:

Strategy - Stock Accumulation
Counter - COMB
Buying Rule: Buy only if the stock is below 100.00
Intervals of Accumulation: 3 times a week. i.e. Mon,Wed and Fri.
Start Date: 06.12.2019
Sell Rule: only if the P/E ratio is 9.8, OR the ROI is above 50%
Note: the ROI mentioned is without cash and scrip dividends OR splits (All these are added returns)
Trade is still open as at:07.12.2019
1st Purchase: 06.12.2019 - 5000@98

Given below is the Daily chart of COMB. We shall be tracking the progress of accumulation and performance of the chart frequently. The chart will show how the accumulation is happening throughout till the time of stopping the accumulation to the time the prices move to the target.

ASI - Hourly Chart has a bullish formation, but how many naysayers are out there due to the SME Moratorium

Descending Triangles by definition are bearish, but it comes in handy to track during a trend  reversal. So much important when the momentum is turning up to be bullish amidst the bearish sentiments, in the overall market. That's exactly what is happening at the Colombo Stock Market right now. When all sounds bearish we need to look closely for reversals to move out of the pack and think out of the box. The hourly chart which is tracked at the moment indicates a bullish divergence simply because of this bearish formation on the Index line whilst the RSI is showing a bullish trajectory. As the Index is forming a base between 6000 and 6100 the present behaviour allows bargain hunters to BUY the DIPS.

Buying the Dips is for those who think the way forward of the ASI is bullish. An important role towards this will be played by the Banking Sector Sellers in the next week. Why? Because the Government requested the Banks to suspend the recovery of loans given to the SME sector. Naysayers as usual is preaching doom, obviously this is a challenge and a concern. It will be interesting to see how many naysayers are going to  come running to sell from Monday. Those who would think about this whole new thing Pro-Actively would come in for bargain hunting. Therefore the fight is between the bearish naysayers and the buy low bargain hunters during the next week and beyond  till sanity prevails.

RSI on the ASI shows a bullish divergence on the Hourly Chart

6050 was a level that got respected during the present consolidation of the ASI. During this period we saw the RSI going up in the opposite direction of the down trending ASI on the hourly chart. This is a bullish sign for the Index, But need to see the RSI breaking above 50 points to add strength for the ASI to make a trend reversal.

AEL - Buy if you have the guts!!!

My last post on AEL on the 1st of December I shared chart given below. It was mentioned that the area between 21.80 and 24.10 was an area that witnessed a long consolidation that lasted over 200 market days, between 2012 and 2014. Thereafter the Prices climbed to a staggering all time high of 40.20 on the 13th of November 2014.

Given the rejuvenation injected towards the Construction Sector by the present Government, AEL will certainly break that level of 24.10 and trend higher, perhaps much faster than what we saw in 2012 to 2014 period. However Volumes must change hands more than 2.8 million if we were to go by the present moving average of the 20 day volumes. This is an important trigger, but comparatively the volumes that are being traded now are like ants in front of elephants. Next is the change of momentum from a bearish bias to bullish. That too is not seen just yet. This is the time for Gutty Players to get busy. Keep accumulating and be rewarded once those block hunters get into the market. If you are buying now then you must have the guts to wait till you get a sizable return. The present price action is given the the following chart. Please study that to get a better picture of the current situation. Happy Accumulation!!!

ASI was successfully defended at 6050. But the strength of the Bulls are at check!!!

 Last update on the ASI, the expectation was to defend 6134. But it failed. Ironically the index took support at 6050. In actual fact this area of 6050 was first tested on the 30th July 2019. Once the uptrend at that time stopped to continue, the Index could not defend the biggest level of 6000 points. It took almost 4 months for the index to re-test this major area of 6000 and 6050 when both those barriers were shattered in a single run on the 18th of November. The Big day after the Presidential elections. Up until the 10th of  December the ASI was trending above this area. On the 10th the present retracement brought it down to 6050. Whilst many thought it will come down to test 6000 before any reversal, the index thought otherwise. It took hold of that major level of 6050, which was tested more than 4 months ago. Although we the humans forgot, the price action of the index did not fail to remember that major level. Is it funny or something to give credit for the Price action behaviour of the Market.  This is given in the Hourly chart I have displayed in this post. As such I tend to respect Price Action, until we see the 6000 points are tested. I also notice a mild bullish divergence in the RSI, which makes it even more important to show respect to the Price action of the index. It is absolutely important for the index to form a strong base between 6000 and 6100 before the next bullish trend continuation. Till then the strength of the bulls are under check!!!

UPDATE 1 - RCL - Strategy - Buy on Dips

In my post on RCL dated 30th November 2019, I mentioned that a support is expected between 89 and 93 before the next reversal to move up and test 100 to 101 area. By the 5th of Dec '19 price came and closed at 93, and the next day the 6th it closed down at 92. Thus moving into the support zone I discussed. As the stock is now moving within bearish territory we can now wait for a trend reversal to initiate entry OR we can start collecting within this support zone of 89 to 93. Who ever is following this stock based on the said  strategy of Buying on Dips, must stick to that. Until we see the bullish reversal I will look for the present resistance between 100 and 101, as the level for someone to take profit. If that's the case then it is a profit margin of Rs. 11/- between 89 and 100, or Rs. 8/- between 93 and 101/-. If these returns are met within a month it will be 74 to 118% annualized (after cost), whilst if this is achieved within 3 months the annualized returns will be between 25 to 39% (after cost). In that sense it will be worth buying within the zone with an exit target between 100 and 101.
My previous post of 30.11.2019 can be viewed here

RCL Daily Chart as at 06.12.2019

Update 2 - Commercial Bank Plc - Buy when others fear, and when blood is on the street.

Update 2 as at : 21.12.2019

We have completed 15 days since I started this investment idea. During this period we have completed 10 market days. An important part of tracking an Investment or Trading position is that a lot of emotional obstacles that you will encounter from the time you enter into a position until you exit. You do not know what is going inside your Brain. You might agree with me when I say that our biggest enemy is our mind. It is the mind that will cheat on you, betray you, discourage you, scare you, bring fear and greed into you more than others.  You are not your mind. Mind is only a body part in you. so you need to own it and take control of it. How do you do that when it comes to your Investing or Trading Journey? by controlling your mind. How? just write down the present state of the position. Before moving into a position you write all the conditions, rules and strategies, and keep updating frequently. It could be every week, month,quarter, six months or every year. The more you update the more successful you will be. If capital markets is your livelihood, updating daily will be a good idea.

During the week ending 20th Dec '19 we added 15000 shares into the position. The present holding therefore is 30000 shares at an average of 98.19. One of the major developments that took place during the week is the moratorium the Government wanted the banks to give to their borrowers upto Rs. 300 million. So for me this is an interesting event. Why? There will be those who would sell below, arguing that this decision will be negative for Banks. I personally do not think so. But that is my opinion. That's why I would wait like a vulture till they sell. This strategy is telling me to focus on collecting shares at or below Rs. 100/=. So as long as the price is below that I will keep on buying, as per the plan. Because I respect it. I'm committed to it. I also believe that this counter is trading at historical bargains. I also believe that our economy is going to do better  and that will be Stock positive. As such one of the best stocks in the market is COMB.  So as long as the price is below 100.00  I will collect based on the plan. Anytime it is over 100.00 accumulation will stop and wait for the exit. That will also be based on the rule given in the strategy.

Please note that this is a strategy and I'm showing it off for the reader to understand the importance of having a strategy to move in to a position of share ownership.  I encourage you who is reading this to take note of the various points explained to help you to be consistent and succeed in your investment or trading activities.  

Chart with a new update is given below:

Update 1 as at : 15.12.2019
On the 7th of December I started this post on Commercial Bank. Now it is 9 days old, and have completed 5 market days as Wednesday the 11th was a Poya Day. During the short week ,  I covered 10,000 shares, 5000 each on Monday and Friday.  as such the present status is given in the chart below:

I would like to stress that the Name of the Strategy is STOCK ACCUMULATION. This is not a strategy that many would agree with. Reason is that the Buy and Sell Rules are so basic, and one might think that it's too good to be true. Yes updating a strategy for a stock that has a lot of negative news is so hard. Basically I am putting my imagination on the line. I myself feel stupid for starting this. But that's perfectly alright. Because when a stock is bleeding and all are running for shelter, and the blood is seeping through the prices almost daily, who would want to report? But the key point here is that this counter is one of the Best and Strong Counters in the Sri Lankan Market. Also it is one of the important stocks if we believe in the upward trend in the ASI. It is also the only counter that has been in many major Emerging Market indices, always. Also it is well managed, and has a rock solid brand name. 

Let's see how this is unfolding. So far we have collected 15000 shares at a cost of 98.56. I am aware of the fact that someone would argue that this is all hypothetical, and you can't do it in reality. Yes the amount of shares given here may be so, but this is done in real time with smaller volumes. The value could be 5, 50, 500 or 5000 but it is a chart I am plotting every day in the real market, as I firmly believe that any thing that an investor or a trader should do must happen in reality, than just back testing by looking at the past data. Back testing a strategy is quite normal, yet tracking it real time with real trades is not. Let's come back again after a week and see where we stand on this stock.

If I may add another point here, I must emphasize that the number of shares in this strategy must be in line with the amount of risk you can bare. As you can buy volumes from 1 share to millions of shares, you have to decide on the amount of shares that you can comfortably collect as long as you need to accumulate. That is a key criteria in this Strategy. 

First post as Reported on : 7.12.2019
There are zillions of ways to buy stocks. But if you can have a simple way to do so, your investment adventure will be rewarding beyond imagination. Let's see how a simple strategy is going to work real time. The commencement of this strategy was from yesterday the 6th of December 2019. The details of the Strategy and the plan is as follows:

Strategy - Stock Accumulation
Counter - COMB
Buying Rule: Buy only if the stock is below 100.00
Intervals of Accumulation: 3 times a week. i.e. Mon,Wed and Fri.
Start Date: 06.12.2019
Sell Rule: only if the P/E ratio is 9.8, OR the ROI is above 50%
Note: the ROI mentioned is without cash and scrip dividends OR splits (All these are added returns)
Trade is still open as at:07.12.2019
1st Purchase: 06.12.2019 - 5000@98

Given below is the Daily chart of COMB. We shall be tracking the progress of accumulation and performance of the chart frequently. The chart will show how the accumulation is happening throughout till the time of stopping the accumulation to the time the prices move to the target.

ASI - If 6134 is not supported, Strength of the 6000 - 6100 zone will be tested

ASI from a low of 5199 in mid May moved up a little more than 1000 points by the end of Nov. That's more or less 6 months. Moving beyond this needs a lot of strong base formation. We are happy to see many structural changes are taking place in the economy, which will certainly help the Stock Market to test new highs in the next 6 to 12 months. However no market in the world has gone up in one straight line, so would the ASI. We now see that the index is trying to form a strong base above or around 6000 points. As such it has to defend the area around 6130 to 6135. Failure to stay above the brownish trend line shown in the chart will test the strength of the bulls in defending the zone between 6000 and 6100. Personally I like to see the area around 6100 to be strongly defended, but it is up to the BIG BULLS to do so. Till the making of a strong base above 6000 the index will head towards the south. Take this as a rewarding message for those who have still not got on board. Your chance to get in has arrived.

AEL - Heading towards 20 - 21 support zone. Positive for Buying on Dips

On the 30th of Nov we noticed that the prices of AEL were in a historically important consolidation zone between 21.80 and 24.10. The image is below:

Now we can see a break down below 21.80 and heading towards the 20 - 21 support zone. The Main triggers for a trend reversal now will be the Volumes and a reversal of the RSI. This is very important for Traders.

But as suggested in our post on the 30th ultimo, this is an ideal counter to buy on dips. Accumulate between 20 and 21. With a short term target of 22 to 24.10, and a medium term target above 24.10.

The image of the present Daily chart is given below:

Buy on Dips - with Seylan Non voting Shares

Seylan Bank Plc just completed its Right issue, tipped to be raising 4.38 Billion. This could take their Total Asset Base above 500 Billion for the 1st time. Their NAV will be 100.00 and above. However the Voting Stock Price is at 53.80, whilst the Non Voting is at 35.00. Converted new shares will hit the market within 2 weeks from now.  Some think both stocks will be volatile up until the new shares get traded in the market. In the mean time I like to suggest for those who would want to Buy on Dips to try it out with Selyan Bank non Voting shares. Despite the rights issue of this counter was at 24.50, given the massive spread between its NAV of 100.00+, and the Stock price, it is very hard to imagine that any one would be selling it below 31.00 once the new shares start trading in the market. Buying on dips as such suits fine for this counter, as who ever would enter a trade on the stock will be prepared to accumulate on price weakness. Based on the price action we saw in the last few weeks we can see that a support between 31.00 and 32.50 will be strong. Anyone who would want to enter or accumulate on dips can get in within that zone if it were to come down and test that area. In the next few days and weeks the price will fluctuate within the inside bar of the 29th Nov '19, that's between 33.20 and 36.00. A Break above 36.00 will push it to test 37.00 in the short term. A break down below 33.20 will allow the prices to test the 31.00 to 32.50 zone.

  

RCL - Need to form a base before the next high

Quarter Ending Sept'19, the NAV of RCL.N.0000 was 211.00. The EPS for 6 months is 8.33, and 5.24 for the 3 months. Going forward we could expect their profits to keep moving higher given the improved business out look for their sector. Incidentally they finished 2019 FY with an EPS of 23.75, despite them showing only 7.12 for the 6 months. Given these scenarios, we could see a better profit outlook for the counter for the 12 months. More importantly this had been one of the best dividend paying counters in the bourse, but with subdued business out look during the past the payout saw a reduction. They have been paying 2 dividend payments anywhere between January and May of every year. That's about 1 to 6 months from now. Only thing is that their total dividend payout per share during the last FY was a meager 4.00. If they feel that the business out look is better, they might increase that amount this year around.

Like many counters RCL too moved into a new Up Trend, but it started only from September whilst the overall market was from May'19. However it is now trading in front of a major resistance zone of 100.00 to 101.00. Going by the momentum in the counter, I expect a short term support any where between 89.00 and 93.00, before the next test of the said resistance zone of 100.00 to 101.00. Price and volume action during that breakout will determine their next move forward.

Strategy - Buy on Dips. Wait for the retracement.
No stop loss as the out look is Bullish.

AEL - Long Consolidation anticipated. Do Not hold if You have no GUTS. Buy on Dips

AEL as a Company in the Construction Space is poised to out perform the KPI's in the Sector. This expectation is bringing in a lot of attention to the counter in an unprecedented way. Huge volumes are changed hands during the lower levels in May to the present highs. But we now see a critical area of resistance for the counter. During the 900 days long rally we saw during May 2012 to June 2014 when the prices rose from a low of 13.50 to the all time high of 40.20, the prices went through a long and tiring consolidation around the same zone that it has now moved into. I expect it to trend side ways in this zone between 21.80 and 24.10 with occasional tests in the zone between 20.00 and 21.00. Until a breakout above 24.10 on closing basis coupled with massive volumes, the next levels of resistance points will not be tested.

Strategy - Buy on Dips.
No Stop Loss is needed as the Forward Out Look is Bullish.
Most Importantly note that if You do not have the guts then please don't buy.
An ideal time to accumulate in stages if you are holding the stock at a higher average cost. Also if you have got into it after May'19 and wandering what to do, be patient and do not exit in full. If you have exited or sold in part, collecting at lower end of the zone or within the next support zone of 20.00 to 21.00, is not a bad idea at all.

DPL - Dankotuwa Porcelain PLC - 2017තේ මාර්තු සිට ජූලි දක්වා තිබුන රැලි එකෙ රෙසිස්ටන්ස් ඒරියාස් වල නැවතත්. Prices are testing the Resistance Areas of 2017 March to July Rally

DPL Prices 2017තේ මර්තු මාසේ සිට ජූලි මාසය දක්වා රු. 5/30 සිට 10/40 (96%) දක්වා ඉහල ගියා. එම කාලය තුල මිල ගණන් වතාවල් කිහිපයකදීම Resistance Areas වල consolidate වෙමින් සහ එම Channels strong volumes එක්ක Breakout කරමින් ඉහල ගිය බව අපිට දකින්න පුලුවන්. මම පහත share කර තිබෙන chart එකේ දකුනු පස කහ පැහැති box එක ඇතුලේ එම Rally එකේ mirror image එකක් දකින්න පුලුවන්. එම Rally එකේ අපිට පෙනෙනවා රු. 8/00 ත්, රු. 8/60 ත් අතර Consolidation එකක් වෙලා තියෙන බව. ගිය සතියෙ (18.11.2019 - 22.11.2019), අපි දැක්ක DPL prices රු. 8/00 breakout කරලා රු. 8/60 test කරන බව. ඉන් පසු රු. 8/00 support කරන්න දැන් උත්සහ දරනවා. රු. 8/00 ත්, රු. 8/60 ත් අතර support area එක මිලෙහි ඉදිරි ගමනට ඉතා වැදගත්. රු. 7/40 ත් රු. 7/50 ත් අතර gap එකක් පිහිටලා තියෙන බව ඕනෑ  කමින් chart එක බලන කෙනෙක්ට තේරුම් ගන්න පුලුවන්.  එම area එක present support එක බව විශේෂ‍යෙන් මතක තියා ගන්න ඕනෙ. කවුරු හරි DPL එක්කහු කරන

කෙනෙක් ඉන්නවානම් මේ support area එක ඉතා ව්දැගත්. ඒ වගේම ඇරන් ඉන්න අය තව එකතු කරන්න අදහස් කරනවානම් රු. 8/00 ත් රු.7/40 ත් අතර එක්කහු කරගන්න පුලුවන් කම තියෙනවා. Trader කෙනෙක් නම් රු. 7/40 ත් රු. 7/20 අතර stop loss එක දාන්න බලාගන්න ඕනේ.
රු. 8/60 breakout වුනාට පස්සෙ 2017 next resistance එක වන රු. 9/20 ත්, fib trend extensions වල 100% extension එක වන රු. 9/80 area එක test කරන්න වෑයම් කරයි. ඉන් පස්සෙ breakout වුනොත් රු. 10/40 ටෙස්ට් කරන්න පුලුවන් කම තියෙනවා. එය සිදු වන්න Company performance සහ overall market sentiment එකේ වර්දනයන් වදගත් වෙනවා. ඒවාගෙම NAV සහ EPS මේ chart එකේ සදහන් කර තියෙනවා. ඒ තුලින් company එක 2017 සහ 2019 perform කරල තියෙන හැටි බලාගන්න පොඩි පිටුවහලක් වෙනවා. ඒ ratios තව තේරුම් කරගන්න ඕනේ නම් තම තමාගේ Stock Broker ගෙන් විමසා දැන ගන්න පුලුවන්. Technical Analysis පාවිච්චි කරන අය Trading Rules අනුව Trade කරනවා නම් මේ ratios guidance එකක් හටියට පාවිච්චි කරන්න පුලුවන්.

DPL had a rally in March to July 2017 between a price range of 5/30 and 10/40 (96%). During this rally prices had made several consolidations and breakouts with strong volumes. We can see a mirror image of this rally in the light yellow box on the right side within the chart given here. One major Consolidation had been between 8/00 and 8/60. If you fast forward to the present we can see that the prices have tested both 8/00 and 8/60 during the week ended on the 22nd November 2019. The next major consolidation would occur once a breakout happens above 8/60 with strong volumes. After the breakout the price could test 9/20 and may extend upto 9/80. The consolidation range therefore will be between these levels of 9/20 and 9/80. A breakout thereafter could test the 2017 high of 10/40. Strong Company performance and increased confidence in the overall market will certainly help the said breakout. You can see the NAV and EPS levels during 2017 rally and during 2019 for you to get a basic idea of the ratios during important periods. This is primarily for traders to decide on the trading plan. Investors may contact their respective brokers for  further research on fundamentals pertaining to the stock. If you pay close attention to the chart, you will see that there is a gap between 7/40 and 7/50, which is a key support area for the counter. Those who wish to enter now, you may accumulate between 8/00 and 7/40. This area is important for those who intend buying on dips as well. For traders however must use the range between 7/20 and 7/40 as the stop loss.

CFVF - Gap Fill will take place, but need to breakout of 54/40 with volumes

CFVF came up with a valuable dividend of 4/= per share. The day after the Div the price gapped from 53/= to 50/=. This gap was tested on the 16th. If the gap is filled and test 53/= once again it will be short term bullish. However a close above 54/40 which is the present high with volumes needs to take place. Hence you need to have your stop loss in place, and prepare to close the trade. Here too you have stories and rumours. One needs to understand that these stories only warrants trading until the event has happened. Till then there can be a lot of volatility. As such be humble enough to have Buy, Sell and Stop rules.

JINS - Short Term Bullish - Support above 32/= with Volumes, ELSE possible retracement to between 30/20 and 31/50

JINS - Mostly moves with news and rumours. Which is understandable because of its illiquidness. The free float of the Counter is 19.72%. Therefore many theories and stories afloat from time to time. Now it has become frequent.

If you have bought for stories, don't blame yourself, but be concerned of your strategy if you did not enter with a Stop Loss and a Target. Did you know that when ever you want to trade that if you ask yourself 3 simple question about why you buy? What Price to Sell? and If the plan goes against At what Price to Stop Loss? Then you will be a satisfied Trader, not once, not twice, ALWAYS.

Ofcourse if you are a longterm investor who are prepared to hold and are certain of something big is going to happen, then your strategy is not a stop loss. It can be a different strategy.

However for the Traders, JINS need to hold above 32/= with Volumes, worst case it must hold above 31/20 in the short term. So your stop loss can be any thing from 32/= to a low of 31/20. The Zone given in pinkish colour between 30/=, and 31/50 is an important area of support. Price action there will tell us whether the counter is going to really hit higher.

AEL - 19/50 to 20/= support with Volumes, the LAUNCHING PAD for the next RALLY!!!

A member in my FB group wanted me to post some charts in that group. On the 9th therefore I shared a chart on AEL.N.0000 and in my 1st Target was 21/90, and said that the price above could test 23/50 to 24/=.  The image of that chart is given below.

As you can see the price tested the 22/= area but did not close. It retraced below the 1st support of 20/10, but took support in the area of the 29th and 30th July higher range of 19/60. Thereafter it is now testing to stay above 20/=. A consolidation above 19/50 to 20/= with higher volumes will position itself to pierce above 22/= in the next trend reversal. However a breakdown below 18/30 will be bearish for the present bullish trend. The present chart is given below.

ASI Weekly Report - Be aware of false trend setters

Colombo Stock Exchange is the only Stock Market in this beautiful Country. Alongside the transformation of the the Nation the Many great Companies that are listed in the CSE are transforming themselves. How the Capital Markets would grow within this space is yet to be known. As such the Market Makers or Trend Setters are not regularised yet.

Therefore you see many players with genuine and in-genuine agendas taking huge risks when setting the trends. Various words are listed in the Dictionaries of the world to describe those who are in-genuine. They are bad, bogus, false, put on, inauthentic, pseudo, mock, pretended, fictitious, counterfeit, pinchbeck, synthetic, imitative, fictive, fake, phoney, unauthentic, ostensive, insincere, phony, bastard, sham, forged, assumed, spurious, base, ostensible.

Strangely the synonyms for the word Genuine are literal, actual, real, unfeigned, echt, true.

As you can see the number of synonyms against the antonyms are so few and far between.

Remember my friend who read thus far, that in the Stock Market too you have many ingenuine players as against a few genuine ones. Do you feel satisfied when you read through the ingenue words which are many OR do you feel relaxed when you read the few genuine words.

Our task is not to know who they are. But to be aware of this reality and plan out to overcome the challenges and be victorious.

The week we passed was an important week as far as the Presidential Elections are concerned. An event that the entire nation was wanting to know happened on the 11th Sunday. The movie makers made that a Major Event. Since that Major event is behind our back the market is now looking for a another major event.

Until then the Market will be bearish. Just because the market is bearish, do you think that you want to bearish as well? Yes some are wanting to be so. But be careful since being bearish or bullish must be for valid reasons.

ASI weekly chart shows that we are now trending within a new resistance zone. Remember it is a resistance zone, not a support zone. The low of the zone is around 5871 and the high is around 6200 points. So the Index is at the lower base of the Resistance Zone. There are only 2 things that can happen here. One will be that the Index will test around 5871 area and reverse to the up. Second is a break down below 5871 and retrace further. As we are near the low base, we have to watch what will happen. If there is a break down, then there are a few psychological areas of support that will be tested, namely 5850, 5800, 5750. These areas represent strength by the Buyers.

The market is yet to move away from the fearfulness amongst so many. That is because it is the Sentiments that have brought many Traders and Investors into the Market at the moment. Some are upset that the June Quarter results of many listed companies are bad. They have fallen short of remembering the Bad Experience the entire Country went through in the latter part of April. That impacted the Economy in no uncertain terms. Hence we had to be prudent in expecting a hit on profits in that quarter.

But we saw the Interest rates both deposits and lending were allowed to be brought down by the Central Bank, when they brought the Interest rates down.This will prevail into the medium term if the Central Bank is serious enough to see increased activity in the Economy. We need to believe that. But some might think that the CBSL is also like the Politicians. Well that's their thinking. Who can change that. But normally the CBSL means business ALWAYS.

Then here and there the Cabinet reduced taxes as well. The hysterical way of increasing taxes and having a close tab on tax payers in the past 4+ years, has a leverage that can be compromised if the present or the future policy makers would like to. That too is something to hope for.

LFIN - how it has benefitted a Long Term Investor!!!

There are a few Stocks in the CSE that have given commendable returns to Long Term Shareholders. One such Stock is LB Finance Plc (LFIN.N.0000).

In the history of this Company we have seen a several Share Splits, and annual Dividend payouts Right through out since early 2000s.

The last Split was made in May 2015. At the time they had a split of 1 to 2, meaning if you had one share of LFIN, you would end up having 2 shares after the split is complete. In addition to the split, they have been paying a decent amount of Dividends every year.  

This post will help you to understand how would a long term shareholder have gained by investing into this Stock had he bought one share at the time of the said Split in May 2015.

On the 20th of May 2015 they made the announcement to split the share from 1 to 2. But the announcement was made in the evening.

The following day which is the 21st of May 2015, you could have bought one share at 203/= rupees. Your Average Cost including commissions would have been 205/27 rupees.The next day, that's the 22nd they announced a dividend of 10/= rupees. So you are now entitled to that dividend as well. The stock was split and commenced trading on the 14th of July 2015. As a result of the split your one share has become 2. On the 14th of July when it commenced trading, the price range was 110/= to 117/= rupees. If you are a Long Term Investor you wouldn't have sold even if you had a profit, instead you will decide to hold.

The next year (2016) they gave a dividend of 7/50 per share. Since you had two shares you would've received 15/= rupees. So with the earlier dividend of 10/= rupees that you received immediately after you bought your one share, now you have received 10/= plus 15/= equals 25/= rupees by way of dividends. The following year (2017) they paid a dividend of 9/= rupees per share. That time too, since you now have 2 shares you received 18/= rupees, increasing your dividends received amount to 43/=. In 2018 they paid a dividend of 11/= per share, hence your effective dividend is 22/=. As such you have received 65/= rupees by way of dividends. The dividend in 2019 was 12/= per share. That works out to a dividend of 24/= rupees. This way you have now received 89/= rupees of dividends.

Remember your initial cost was 205/27, and for that you now have received 89/= rupees of dividends. That is a percentage return of 43.36%. Since you have been holding that for 4 years it works out an annual return of 10.84%. The Stock is now trading between 131 and 135 as at 9th of August 2019. Say you take a price of 130/=, your present market value for the 2 shares will be 257/09 after taking the commissions away. Therefore the present market gain for your price of 205/27 rupees will be 257/09 minus 205/27 equals 51/81 rupees. As such your total profit from market price gain which is called the capital gain and the dividends will be 89/= plus 51/81, which is a total of 140/81 rupees. If you take out the withholding tax out of the dividends your total return will be 130/95 rupees. Your present ROI therefore is 130/95 divided by 205/25 equals 63.8%. As you have been holding it for 4 years, the annualised return will be 63.8% divided by 4 equals 15.95%. This ROI was calculated only to see the present value, and you have not sold the 2 shares you own as yet.

LFIN has been splitting its share on several occasions, therefore you can't rule out them doing it in the future as well. As such if you still want to hold on to this stock, your value will increase even further.

Also if you closely look at the chart given here you will notice that it is trading within a channel where the present resistance line in green is at around 136/80. This area needs to be broken out, to test the area highlighted in yellow. From there onwards we will see new highs. But as the history of this stock has shown, the major price action has happened during the time of a split. Since they have not made a decision to split for 4 years, we may be nearing the year of decision making for the split. But that decision will happen only at the right time based on the thinking of the Board of Directors.

For any one who are thinking of building a long term investment portfolio, LFIN is a must have stock.

ASI Weekly Report - Market is up because the Saviour of Mother Lanka is to come!!!

Last time, when the Presidential Election was around, 62Mn voted for a new President. What a load of hopes and dreams he gave. His term is about to end, and we Sri Lankans are yearning to see another new President.
The hopes are on FIRE, burning to the brink of electing that New Saviour with a stupendous victory. How cunning are those Dream Makers are, in creating a Drama that all the voters are knowingly and some unknowingly glued to the Movie.
Share markets anywhere in the Globe are revolved on 3 main pillars, i.e. Fundamentals, Technicals and Sentiments. Both Fundamentals, and Technicals are no match for the Emotions that strangles and bind the other Pillar - Sentiments.
Without Sentiments, without emotions that controls sentiments there is NO MARKET. But the funny thing is that emotions are not reliable not only in the Stock Market, but in all parts of life. It goes up and comes down in split seconds.
As long as the emotions are good the sentiments are good, if the sentiments are good whether or not Fundamentals or Technicals are bad, Who Cares? Where there is emotions caution takes a back seat.

But the present status is Unique. The Government made the Country and the Economy go through grinding. They followed a tightening of the Monitory Policy, Currency management and Consolidating the Fiscal side, which was the need of the hour. Unfortunately the need was only for an hour for the general public, but the need was for years for the Government and the Policy Makers. Any way both the monitory and fiscal side are now getting relaxed after 4 years. Then the Terror attacks made the valuations more attractive. Then came the Elections to its door-step. All these made the Emotions run high. As such the "Feeling Good" feeling is an all-round factor.

There were 37,873 trades during the week, which was a drop from 56,698 of the previous week. Index continued to witness more selling during the first 2 days of the week, and recovered to close higher on Friday. Although the selling pressure tried to pull the index down to the present low of 5815, that didn't happen. Thus the 5815 has managed to stand as the present support. The market is now gathering its steam to test the present high of 6047. If the sentiments and the momentum we saw on Friday and right throughout the on going rally, it could be tested in a day. However we need to see the index heavy counters leading the way with strength and volume. As the index closed at 5943, there is another 104 points to test the high of 6047.

As the market is bullish both with Sentiments, and Fundamentals are helping it in a mediocre way, One need to keep tracking the Technicals, as the trend will have wide swings. Even if you do not rely on Technicals it will be prudent to have a good awareness of the Risk involved in the market. If you don't have the mature mind set, start learning at least this time around. Always talk to your broker for sound advise, and follow your friends or others who will help you to improve your knowledge and practice in Investing and Trading.

ASI Weekly Report - What Goes Up, Comes Down....Then Goes up and Comes Down too!!!

But need to always remember that Stock Prices fall for reasons beyond your control...... I had this sentence in my Weekly report of the last week. I also wondered in that report whether we will break 5900, and 6000 during the week between the 29th of July to the 2nd of August. All be hold it happened in 1 single day i.e. 29th. The next day opened with the same vigour but failed to hold. This is what happens when the RSI is extremely high in the overbought area. You lose steam in no time, and find the cooling off effect. If you are a strong believer of the Bullish Trend Extensions, then you had a fantastic opportunity to buy on the dip. But if you do not believe, yet want some action in the market, then you need to have a plan with a stop loss included. Otherwise why are you in the Market?You either have to believe or dis-believe. Either way you need a plan. Otherwise please keep your money in the Bank or put that valuable part of your wealth to something else BUT the stock market.

Nonetheless the Market closed higher on WoW basis with an increase of 21.81 points (.37%). The Trades too hit a high of 56,698 from 43,154 of the last week. This indicates that the power of the bulls succeeded in withstanding the power of the Sellers, despite it being strong. The Market PE is edged up to 9.46 times.

Did you know that the PE is also an important value to check whether the Market is over heated or not? If RSI is the indicator for Technical analysts, the PE could be the indicator for the Fundamental Analysts, to check whether the Market is over heated or not. Generally when the PE is at 15 or 20 times you will hear many analysts highlighting the dangers of the market. But just keep a look at the Table given on the left to track the PE as and when the ASI moves to the levels given there. Of course the PE is based on the last financial year, hence it will change based on the Earnings of the present fiscal year. If you think that earnings of the overall market will increase/decrease, then the PE values will vary this way or that. You are free to track it or not, but I think it gives you a valuable message in this bullish trend culminating with the 2 Major Elections.

ASI weekly shows that if the reversal from the minor pull back is held and move up, it will re-test 6050. Depending on the strength in terms of price and volume we will see a break out to test 6200.

We also may see a re-test of 6050 then a re-test of the area between 5950 and 6000, and confirm it as a strong support area and break 6050,6100 and test 6200. If we see the same euphoria that we saw from the 2nd week of July, then all these will happen in no time. Else we will see consolidations between 5750 and 6000 and extend. That will drag the level of activity, which will slow down the pace of the Trend extension. If none of these were to happen, we will see the index breaking down form 5750 and put more pressure on the rally.

However the Bulls need not panic just yet, as the DAILY and WEEKLY charts indicate a Strong Buy.
Let's be bold to obey the present trend.

It is your valuable money that your are investing. Therefore if you believe that the trend will hold buy on dips. If you do not then please have stop loss rules in place. There is no point blaming others once you loose. Also be prepared to take profits based on your own methods. Please feel free to talk to your broker as he is trained to serve you better. On a side note check my RCA strategy which is to understand, and the RVA strategy if you think that's better. Both these strategies will help you to Trade/Invest with controls. You can read it here