Post Reply
1-4 of 4
If you are a long term investor or fundamentals analyst then make up your own mind about whether to hold this stock, but one thing's for sure, from a technical analyis perspective this stock is looking weaker (by the week!) See attached chart.
My analysis showed this stock as a sell on week ending 21Oct05 after it had broken below a strong uptrend band for 2 consecutive weeks. After 11 weeks of downtrending movement I have drawn a down trend band, which has now been accelerated, and will be accelerated even further once some more technical signals are met.
On a weekly basis, it showed some support from around 1.55 (a previous support level during some consolidation from Jan-May 2005) but then broke down very strongly from this level starting 15May onwards... and the fall has just kept on going.
For the short to medium term investor I think there are 2 good lessons here:
1) Some well respected brokers and fundamentals analysts keep saying that this stock is undervalued and a buy - yet it keeps dropping...and by the way it started to head south long before the STI did a few weeks back so I don't see it's initial downturn related to broader market sentiment.
2) Once a stock, no matter how good the fundamentals are, is established in a downtrend, (defined in my particular methodology of 11 downwards weeks of peaks and troughs) there is no limit to how far it can fall.. and it is impossible to say when it becomes a "cheap buy". That will be determined by the market when it breaks out of its strong downtrend, whenever that may be.
But of course if you are a long term investor and believe in the fundamentals if this stock then maybe it's a different story for you..
