Monday, 23 August 2010

Chart - Beng Kuang

Beng Kuang closed with a doji and on high volume.

Doji is formed when the opening price is the same (or close to) the closing price. Alone, doji are neutral patterns. Any bullish or bearish bias is based on preceding price action and future confirmation. Thus we will need the price action on Tuesday to determine if the upward price pattern is ready to reverse downwards. The extremely high volume traded but with no significant price movement is also a warning sign and signals that ‘distribution’ has taken place. Traders who are long on this stock will start to tighten their moving stops.

With the resistance at around 30c and oversold indicators, my personal view is that the uptrend is going to end soon and correction back to 24c is on the cards in the near term. Happy trading.

Valuation wise, at current price, the historical PER is around 13.1x, which in my view, is at fair valuation.

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