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