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.