Tanjong had a sharp drop today- losing 62 sen to close at RM18.34. Its immediate support is the horizontal line RM18.00 & the medium-term uptrend line (in blue) at RM17.80. The second uptrend line (in black) support is at RM17.40.


Chart 1: Tanjong's weekly chart as at Apr 7, 2010_4.45pm (Source: Quickcharts)

From the weekly chart, we can see Tanjong failed in its attempt to surpass the RM19.00 horizontal line. It may get support from the horizontal line at RM18.00, failing which it may get support from the medium-term uptrend line at RM17.40-50.


Chart 2: Tanjong's weekly chart as at Apr 7, 2010 (Source: Quickcharts)

The sudden sharp drop in Tanjong makes me hesitant to call a trading BUY if the stock were to test the support at RM18.00 (or lower support level). The selloff happened in the afternoon (after 3.00pm). To be safe, let's wait & see whether the stock can recruit sufficient support & rebound off the highlighted support level before making our entry.

The drop in Tanjong could be a sign that some funds managers are beginning to take profit on their share portfolio after a long & rewarding rally. This could however be an isolated case, but if more blue chip stocks experienced similar selloff, we may have to re-examine our position.