ComfortDelgro - Break Out Nearing?

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? =)

Comfort Cab Speeding Up Too Fast?

On the 24th of Dec, I took a look at ComforDelgro's chart. Refer to Comfort Delgro's Climb to Resistance Looking a Tad Weak.  This was what I said I feel would happen, "my opinion is that prices may drop in the near term to its next support at $1.52 - $1.51." On hindsight now, this didn't happen. The 14 day moving average played a stronger support that I expected. I did also state that the ADX showed the selling trend was weak. This was probably a good clue that prices would hold up at the 14dma. A lesson on my part. That said, it did take one more dip back to the 14dma support despite crossing through the noted resistance at $1.57 showing that the initial challenge was indeed "a tad weak" and therefore heading for a mini-pullback.

I also stated that "as the market sentiment seems to be getting more bullish, my guess is that it would only be a matter of time before they push through the $1.57 resistance." Here's how that played out so far.

On the 06th of Jan, the resistance was finally taken out after hovering around the resistance for another week. If you notice, the 14dma has been providing strong support through the whole affair. Like any other breakout, this cause share price to spike leading it now to challenge its next resistance at $1.63. 14dma though, has yet to catch up. Some bulls are mighty optimistic. In the longer term, I'm convinced that they've every reason to be as the market sentiment is still bullish but in the short term, lets take a look at the indicators to gather the information.

Stochastics for one, is in the overbought region. Also, it has given a sell signal. RSI and MFI looks to be heading into overbought region as well. MACD however is still trending upwards, along with OBV. ADX indicates that buy momentum is rising but the trend strength is currently weak.

My take: As the 14dma has been providing strong support thus far, I expect this to continue. However as momentum is still positive, it is likely that instead of prices 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. My estimate is for prices to bounce between $1.59 - $1.63. I do not expect the $1.63 resistance to be taken out just yet. 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.

Not vested in either,

~K

Comfort Delgro's Climb To Resistance Looking A Tad Weak

Good evening everyone,

Today the world's second largest transport company and Asia's largest, Comfort Delgro, price movement caught my eye.

Macro view of the chart without the clutter of the indicators, shows prices are up looking like its trying to overcome resistance at $1.57 with prices closing at its 14 day moving average at $1.54 acting as support. The last time it encountered this resistance on the 17th of Nov, the bears won, dropping prices drastically to $1.45. However, we see that the bulls have been driving the price back up. However take note the divergence between volume and price movement. Danger sign no. 1. This was the same issue with Ascott REIT which I pointed out in my previous posts - Ascott REIT Making A Weak Leap and Ascott's Bounce Unsuccessful - which was proven correct. Does it always work this way? No. But it's a reason to be cautious.

Turning our attention to the indicators of the chart, we see Parabolic indicating buying momentum which is true since price has been ascending. Also, 50dma looks like it intends to form a golden cross  with the 200dma, which is a good thing but it doesn't look like it's going to cross by the end of this week. Stochastics however, seemed to have turned up looking like it'll cross and give a buy signal tomorrow. It has also been forming higher lows, a good sign. That's good news folks.

Next, the bad news. RSI, MACD, OBV and MFI all look to be heading down. Furthermore, despite the positive cut from Stochastics, MACD is cutting negatively. The bars are also inverting into negative territory. MFI looks to be forming lower lows, which is also a divergence from the price uptrend. Another danger sign. Lastly ADX shows selling indicator climbing a possible sign that selling is strengthening. The bright side to this is that the trend is weak so far.

My take: From the looks of it, my opinion is that prices may drop in the near term possibly to its next support at $1.52 - $1.51. However, as the market sentiment seems to be getting more bullish, my guess is that it would only be a matter of time before they push through the $1.57 resistance. However, though unlikely, a break below this could send prices to $1.49 and then to $1.45 if the bulls don't show up by then. Personally with a yield of only 3.4%, I wouldn't think of investing into this for income just yet. I like the company but I'm patiently waiting for another crash before being vested. I'm in no hurry. The waiting game allows me to build up my cash till then.

Not vested (like you didn't figure that out by now haha)

Cheers,

~K