Re-rating of Chartered

CSM ($1.41) ? poised to succeed in breaking out of $1.40-45 resistance and test $1.50-60 area in February-March

Although the stock is at the higher end of its $1.20-40 consolidation band, it has not really recovered from the mid-year 45% plunge from $1.87 to $1.03 as evident from rallies falling short of the half way mark at $1.45.

This trend of consolidation at a higher plane but still within a set broad limit is healthy as it strengthens the base for an elevation to the $1.49-61 historical resistance zone.

While a repeat of last year?s strong Jan-May performance when CSM, which had enjoyed a steep recovery from Oct 2005, almost doubling from 94 cents low all the way to $1.86-87 in April-May, may be too much to expect, a modest rally in coming weeks is within reach.

Having given up almost all of those gains when the stock plummeted to $1.03 in July-Aug, traders have been extra-cautious ensuring frequent profit taking accompanies all rebounds to prevent overheating conditions developing.

This can be seen from the weekly RSI (currently around 57) never even touching 60 during last Nov rebound and in the latest fortnight, unlike in late 2005 to May 2006 when it stayed above 60 all the time reaching 75 at the $1.87 peak.

After the Nov rally following the Nov 16 trading idea at $1.23, placing a target of $1.40-45 in 4-8 weeks, the stock touched $1.41 in early Dec but came off again for much of Dec and Jan as well.

But now emboldened by the strong $1.15-25 base from mid-Aug to mid-Nov on top of the $1.23-32 higher layer in Dec-Jan, there is no reason for CSM not to break out of the $1.40-45 resistance this month.

This is further backed by the latest series of higher weekly lows from $1.21 to $1.24 and $1.31 this week. Moreover, not only is the weekly RSI not overbought, the MACD and bollinger bands too are giving out bullish signals.

The half way mark between $1.87 and $1.03 ie $1.45 should be taken out soon followed by the 61.8% recovery at $1.55. There is a multi year hurdle at $1.49 (2005 high) with further quarterly obstacles at $1.57, $1.58 and $1.61. Good support belt lies within $1.28-35.

The Company's Stock Trading Account is not allowed to buy or sell security contrary to the recommendation in this report for 3 market days from the date of this report, Feb 1 2007.

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