MTD Walkers - Stock code KAPI.N.0000

MTD Walkers is one of the longstanding Construction Companies in Sri Lanka. This had been one of the active counters on the bourse for a long time now. As of the 3rd Quarter of 2013 it has a beta value of 1.83, which confirms that it is an active stock even during the latter stages of the year.

If you look at the chart you'll notice that it had gone up twice, and come down thrice, during the last 12 months, and the latest been an up trend. From 10th of September 2013 the stock has rallied till 21st October 2013, for a period of  27 days, from a low of 22.90, to a high of 32.50, which translates to a profit of 43%. The RSI on the 21st Oct was 77.08.

From the 22nd of Oct '13, the stock had retraced from a high of 32.00 to a low of 26.00, up to 26.11.2013. A drop of 18.75%.

From the 27th of Nov'13, the stock once again had rallied for another 21 days till yesterday the 30th instant. During this period it had given a return of 22.52%. The price range had been a low of 26.20 to a high of 32.10. The RSI had moved to a high of 78.97.

Based on the trend, it can be noticed that the low on the 10th of September had been 22.90, and the low of the 26th of Nov '13, was 26.00 to 26.20. This shows that the low has been higher, which suggests an up trend. However the high during the period of 10th Sept to date has been around 32.00(32.50 on the 21st Oct '13, and 32.10 on the 30th Dec'13. This shows that the present resistance is at the 32.00 area. The pivot point based on the high,low,close during the 27th Nov'13 to 30 Dec'13, is 30.00. Any opportunity to enter in to the stock around that price can be viewed, as fair by looking at the uptrend in the Stock coupled with the fundamentals for the stock, along with positive sentiments in and around the overall market.

JKH - Update 2

26th was my last update on JKH. That day the price tested the support area of 219, with a small amount of 62 shares. The average daily volume was 241,000 shares, but the last several days before 27th we saw only small volumes changing hands. Also with an inverted hammer then a normal hammer within 3 days confirmed the unclear direction for the stock, yet the short term direction was up, with a support at 219.00 and a resistance at 223.50. On the 27th the stock pushed up very strongly, beating the average daily volume and finishing the day with a total volume of 370,501 shares. The price broke the resistance of 223.50, and closed at 225.20, after reaching a high of 225.50. This is a very bullish development for the stock, if continued, the next resistance is the psychological figure of 230, and a Fibonacci 23.6% figure of 226.70, based on the high of 21st May 2013, to the low of 10th September 2013. The range was a high of 299.80 and a low of 204.10. The resistance of 226.70, could be broken in a matter of minutes, as it is only an upside of .67%, as such the most interesting barrier will be 230.00. If this is gonna be broken, convincingly then the next to test will be the Fib 38.2% of 240.50 or thereabouts. From the present 225.20 to 230.00, the price has to increase 2.13%, and up to 240.00 it is an increase of 6.57%.

But for this to move like this in the short term, there must obviously be some solid fundamentals, which must be closely monitored. As of now the only positive sentiment is the low interest rates. The next is the Cabinet approval for the Water Front Project to go forward uninterrupted.

Also how the RSI is gonna behave when the price turns bullish. If the RSI hits over the over bought area, when the stock moves to 230.00, and beyond, then exit strategies must be worked out.

Another important point to ponder
Before the stock hammered upto 299.80 on the 21st May 2013, the stock rallied for 46 Days. Then for 13 days it had come down to 202.10, before it has made a long rally till 21 May 2013. A period of 110 days. But this was prior to the Rights issue, and that was a major event.

What is the strategy
It's very simple just follow the trend, with strong stop loss options.

Market looks Bullish......Market Update - 27/12/2013

The above chart was posted on the 20th in my last market update. Here I mentioned that the market was heading to break 5875.77, the close of the Dec '12 rally which ended on the 18th Jan '13. We have just passed this by closing the index at 5876.66. The present trend is gearing up to be a bullish rally which may go on to repeat a trend similar to the trend we saw between Dec'12 to Jan'13. This time around it could be much stronger than the previous, if the profitability, lower interest rates, and strong global economic recovery, will continue to prevail.

as the 5875.77 turns out to be the support, the next resistance appears to be 5946.65, which was the close of the 21st Oct '13. Based on the present sentiment this could be broken, in the present rally, and move towards breaking 6100. If not the trend could retrace to the present strong support area of 5840.

JKH - Update 1

During my last post on JKH I mentioned, that an average daily volume was 241,000 shares, The support was 219.90. During the last 3 days of trading todate, the volumes are as follows: 23rd - 5696 shares, 24th - 246 shares, and so far today - 4743 shares. Price range was - High - 223.50, Low - 219.00.
As expected the support at 219.90 was tested today with a mere 62 shares being traded at 219.00 out of the total of 4743.
The candles during the 3 days under review, 23rd candle shows a an inverted hammer, signaling a trend reversal, interestingly today's candle shows a hammer, which gives a mixed signal.

At this moment the stock is going hither and thither, with low volumes.

Because of the play you have on this with the Water front Project, this could be collected ideally around 210. If you are not getting it there you have to follow the present support of 219 to 220, and place your entry around this range.  If you want to take a trading look at this, it is highly recommended to have a stop loss at a minimum of 215.00.

CUT LOSS vs RSI

One of the most important disciplines in trading is to cut your loss, thereby you preserve cash for future trading. This is a RULE. The most famous adage for cutting loss is "CUT YOUR LOSSES AND LET THE PROFITS RUN".This is true, without a shadow of a doubt. But when a stock is trending sideways and the fundamentals are showing positive performance of a company, the above saying must be taken with a different approach.

If the Ratios are good you must collect
When you analyse the fundamentals, and they are good, the question is to know whether the price is safe to go into an entry position. This could be identified by knowing whether stock is oversold or overbought. RSI or the relative strength Index is one of the indicators that you can use to figure this out. If the RSI is on the oversold region then you can decide entering your position, and keep collecting. The question is what you should do if the stock keeps falling even after you enter on the oversold region. This happens most of the time, but your decision was made not just because of the RSI, instead you only used it to enter a fundamentally positive company.

Then when should you cut your loss?
You cut your loss on an entry decision as above, is when the fundamentals become negative. Based on this, does the Rule on CUT LOSS undermined? certainly not. Instead you define the true meaning of cut loss. That is cut loss is not something to be decided just by looking at a chart, but it has a broader meaning.

Technical Trading and the Colombo Stock Market

Based on the level of interest back in 2007 for technical trading,compared to  the level of  interest today it has increased. But the enthusiasm is yet to improve, which will happen for sure.

Believe that Technicals work in the CSE
The most important aspect to be improved is the belief, that technicals really work. When compared to forex, and also the Stock Markets with short selling, the pace of the Colombo Stock Market is relatively slow. As such it is not for the high volume ( volumes of millions and millions of shares trading in seconds and minutes) high turnover guys. But on the positive side, it is ideal for individuals or institutions who feel their size is too small for big markets. As the pace is slow you can obviously take a risk more cautiously, than becoming more aggressive.

Daytrading is not Daily Trading
Even technicals are not every day useful for daytraders. I use to always believe that the CSE is not for daily traders but for daytraders. This may be the case in other markets or forex as well. But this difference must be clearly defined in your brains, that daytrading is not daily trading.

Stocks tracked on technicals do make money
On the belief that stocks make money based on technicals, it could be said that you really can make money here in the CSE. Just take the 2 stocks I've covered during my last few posts. For the month of Dec '13, Jkh has given a little over 6%, from the 3rd to the 20th, that's 13 days. JKH w23 has made a good 29% from 2nd to the 19th, again 13 days.

My present charts
Presently I'm looking at Tokyo Cement voting, and Colombo Fort Land charts. These are fundamentally sound stocks, and the prices a trending relatively sideways, which gives me room to decide on the entry position quite comfortably.

Merry Christmas

JKH Warrant 23 - sideways on thin volumes

I very strongly believe that the charts, indicators, data and time periods, that we monitor in our technical charts our unique to each and every one of us. No one chart will be the basis to buy or sell for all of us.

Therefore I try my level best only to give you data, and information that I gather for different stocks, ASI and SL20.

In that light I would like to provide you with the movement of the JKH warrant 23 chart.

As we know the JKH W23, commenced trading on the 12th of November 2013. That is 30 days to date. During this period, there have been 9 bear candles, and 21 bullish candles. Altogether 4.3 million shares had traded during this period. Out of which 42% had traded on the 1st 2 days. At a high of 75, and a low of 53. During the next 12 days it had trended between a high of 66.70 and a low of 61.50. The volume for these 12 days had been around 803,000, which is about 19%. The next 5 days it has trended up from a high of 63.10 to a high of 75.50, thereby breaking the previous resistance of 75.00. A volume of 647,000 has changed hands during this period. After breaking the resistance of 75.00 it had consolidated between a low of 73.20 and a high of 76.00, for another 5 days with 487,000 shares being traded. From there for the next 3 days it had pushed over the 76.00 barrier, moving it to 80.00, with a volume of 459,000. The final 2 days it hit  a high of 86.80, but dropped to  a low of   82.10, with a volume of 175,000 shares.

Trend reversal

20th December, the day it hit the present high of 86.80, and came to a low of 82.10, to finally close at 82.50, created an inverted hammer. This candle formed an ideal trend reversal for the time being. Just keep an eye on it.

JKH - Voting is trending but will be the back bone of the ASI

During the month of December, thus far JKH had 15 trading days. During this period it came to a low of 209.30, and a high of 223.50. The present trend is upward bias, and if continued it could breach the next resistance of 225.40 which was the high on the 4th of Nov '13, else the present support of 219.90, could be tested.

Volume by Price

It is interesting to note how the volumes have changed hands during the last 20 days, from 23rd Nov '13 to date, which is roughly a month of trading days. A total of 4,506,055 shares had traded during this period. A consolidation of 4 days, can be seen between a low of 209.90 to a high of 212 between 3rd to the 6th of Dec '13, with a share volume of 1.17 million shares. There after prices have started trending up to 216.00 in 2 days with a volume of 282,000 shares. Then between a low 214.10 to a high of 216, the stock had moved sideways for 5 days, with a volume of 1.32 million shares, between 10th to the 17th of Dec '13. Interestingly the volume of the 17th being 751,000 shares or 57% of the volume during this period. From here the stock has propelled itself towards the next rally for 3 days from 18th to the 20th, from a low of 215.50 to a high of 223.50. If you take the 14 day period between 3rd to the 23rd of Dec, the stock has moved up 6.48%. That's when annualized is a 169% increase. Today's inverted hammer may trigger a trend reversal, and the volume traded was a mere 5696 shares, which is well below the daily average volume of 241,000 shares.

 JKH will no doubt make or break the trend and sentiment of the ASI in the coming days and weeks, hence a close watch will be needed.

John Keells Holdings voting, warrants 22 and warrant 23

Ever since the biggest Conglomerate in the country went into the biggest project of its entire history, Investors and traders alike, have started to grab a part of the action of the Stock and the warrants. It is clearly visible, when you analyze the volumes that are changing hands from the time they started to trade soon after the rights. Though on fundamentals  the prices seem to be really over bloated, technically these counters are been traded very interestingly. In my next post I will show you the charts, with the present trend.

Market Report - 20/12/2013

Week ending 20th Dec 2013 the index closed at 5857.36 which was a retracement of  .16% from the 19th close of 5867.00. However  wow it was an increase of .78% as the previous week's close was 5811.88.

Something of Interest
The present up trend was  initiated on the 28th of November 2013, in that period of 16 days we saw 4 bear candles and 12 bull candles, whilst the last been a bear candle. The index had increased from an open of 5744.29 on the 28th of Nov to a close of 5857.36 on the 20th of Dec. An increase of  113.07 points or 1.97%. As many would suggest the  period towards the latter part of an year the market tends to backtrack, but interestingly both this year and the last it has not been so. On the 6th of Dec 2012 the market had gone into a bull trend, which lasted for a period of 29 days till the 18thof Jan 2013. The index that was 5783.33 on the 6th of Dec '12 had gone upto 5875.77 by the 18th of Jan'13. That is an increase of 92.44 points(+1.6%). The present situation is interesting for 2 reasons. 1. Market has already gone up 113.07 points(+1.97), in 16 days. 2. We are just around the peak of the said up trend.