Tuesday 15 May 2012

Singapore Stock Tip: CWT and Genting contrasting fortunes after Earnings

1) CWT – Good earnings causes gap up on 8 May – Consider Buying

CWT Ltd breaks above the short term down trendline (Black line) after reporting a net profit of $26.4 million for January-March, up from S$8.4 million a year ago, driven by its new commodities trading business. This is what we called, the type of stock to watch this quarter as strong fundamental earnings will drive the stock price.

From the chart, we can see that this stock is travelling in the long term up trend Channel, now it just bounced off the support and break the Short term trend line. This signifies the bullishness in this stock. The fundamental rule of technical analysis teaches us to buy at support and sell at resistance. The support is at $1.21 hence stop loss can be placed at $1.18, below the support. Target price can be set at the resistance $1.38.

2) Genting SP – Poor earnings causes gap down – Hold and see

Genting SP suffered a sharp dip after announcing their Q1 result on Friday, the price fell to the low of $1.595 during the day and came back to $1.625 at closing. Before the announcement, the technical view of this stock is still good compared to most stocks in the market as the price of Genting Sp was staying strong above the 200MA, furthermore, the 20MA and 40MA is also sloping up. 

From the chart, we can see that the price is travelling in the upward sloping price channel (black line) which has been supported for several times previously and it is also hanging on the 200ma(Red line). The long term trend is still strong but the mid-term trend is weak. Will we see the short-term rebound soon? Although this might be a good time to buy at support, but the risk of falling further is equally high. For short term, the trend is down as we see a lower low and a lower high recently.  

It is to better WAIT for the candle to stand above the supporting trendline before we go long.


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