Two weeks ago, in my last observation of ComfortDelgro (refer to Comfort Cab Speeding Up Too Fast?), I gave the opinion that "instead of...dropping back to its 14dma at $1.57, prices will continue hovering for the next couple of days while awaiting the 14dma to catch up with it" and prices would likely "bounce between $1.59 - $1.63" and that "I do not expect resistance to be taken out just yet." Here's the current chart to see how that turned out.
As we can see, prices bouncing around the mentioned range did occur and is still ongoing with resistance yet to be broken. On the downside, my estimate was short of 1 cent, with prices bouncing to $1.64 instead of $1.63. A mild underestimation I feel. However, upon experimenting with the moving averages, I realized that the 20 day moving average was more suitable as it seemed to provide more support compared to the 14dma. Here's the chart below:
That said, it leaves more room for prices to bounce while waiting for the 14dma and 20dma to catch up before breaking out. However, sometimes prices seem to just break without waiting for their moving averages. So to determine if a break out is nearing indicators would provide some clues.
As we can see, prices have moved into the overbought region in Stochastics and Williams%R, with RSI just bordering it for quite awhile now, showing good momentum in this stock. Furthermore OBV has yet to dip. MACD however, looks like it intends to intersect, which may led to some buying. However that said, the OBV and W%R has flattened out. Normally, when W%R flattens out, it is likely to head down.
A quick check with the chart below shows that the ADX indicates that the trend is very weak with neither buying and selling gaining any upper hand. Futhermore, the GMMA shows that there's some pressure ongoing in the short term moving averages as the lines have yet to separate proper. However, the lines do seem like they're beginning to spread indicating positive momentum starting up.
My take:
It is possible that resistance will be taken out. However, I expect prices to remain trapped by the $1.64 - $1.61 range a bit longer supported by first the 14dma and then the 20dma, perhaps till mid or end of next week before clearer signals present themselves if a break out will occur. But for now, I don't think that will happen yet.
Again as mentioned in the last post, with "a P/E of 15 and yield of 3.25%, anyone buying into this for dividend yield may find SBS Transit a more enticing buy at the moment with a lower P/E and a better yield." That said, it may be better to find yields outside the transport sector.
Not vested in either,
~K
P. S. I'm trying to decide is breakout one word or is it two? Does anyone know? =)
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