The Alpha Trader

TECHNICAL ANALYSIS UPDATE ON TOP 3 PICKS OF 2024

TheAlphaTrader
Publish date: Sat, 18 May 2024, 04:17 PM
With over 20 years of trading experience in financial markets, this blog is intended to share with fellow traders how I identify good trade setups from a combination of fundamental, technical and situational considerations

Bursa Malaysia is currently in a very bullish phase as indicated by the strong performance of the FBM KLCI index, which is up 11 percent year-to-date. Back in February, when we drew parallel of a super bull market the likes of during the 1993, the benchmark index has gone up a further 5 percent since that posting. Sector and thematic rotation has kept the market buoyant with certain stocks going limit up on a daily basis, something we have not to seen for a very long time and indicative of a super speculative phase in the markets.


We have stayed true to ourselves and have kept to the stocks that we know well and are largely concentrated in the small cap sector. In the current super bullish environment, it is easy to get carried away with so many ‘hot’ stocks and market rumours that could lead to over speculation and complacent money management behaviour. We are reviewing our top 3 stock picks for 2024 and see how they have fared, as well as looking at how their charts are setting up.


Just to emphasise, this post is strictly based on the technical aspect of the stocks. Our fundamental view remains bullish on these 3 stocks in the medium to long term.


AWC BERHAD


AWC is one of the most beautiful text book charts to study! We first highlighted AWC in Dec 2023 when the price was trading at only RM0.64. Dissecting the daily chart, we can see a clear range-bound price action between RM0.55 and RM0.675 for almost 4 months between Nov 2023 to April 2024. 

It made a decisive break above the upper range of RM0.675, with massive volume on the 3 April 2024 and closing near the day high of RM0.82. It has not even retraced to test the breakout zone since then, which is of significant importance. This implies that the move is motive in nature and warrants a price discovery exercise to determine what is the true value of an asset. In AWC’s case, it would mean the market has finally realised the undervaluation of the stock and has decided to rerate the stock accordingly.

Is the motive move to re-rate AWC done yet? Judging from the close on Friday at a new 52 week high of RM1.15, it seems like the answer is clearly NO! The last time the stock was trading at the current levels was in 2017. when AWC made a significant high of RM1.17. This time round, given the current momentum and price structure it seems likely that RM1.17 is set to be broken with the next resistance levels seen at RM1.60 to RM1.80 levels.


LAGENDA PROPERTIES BHD


Lagenda was first highlighted on this blog back in Aug 2023 at RM1.23 as a laggard property stock and very undervalued versus its peers, trading at only a FYE24 PE of 4x. It has since made a very impressive gain of 39 percent since then, and chart wise it is still on a solid uptrend with a likely test of its all-time-high of RM1.80 last seen in Feb 2021. 

The latest move accelerated after a decisive breach of the pivot breakout point of RM1.55 on 8 May 2024. Support zone is now well defined at RM1.40 to RM1.55 level while next resistance of RM1.80 and the psychological level of RM2.00 could be in sight.


PARAGON UNION BERHAD


Paragon was at RM3.32 when we first highlighted the stock on 21 February 2024. It had made a very nice motive move shortly after, reaching a high of RM4.05 by 26 February 2024. Our interpretation of the Elliott wave count had suggested that it was in a motive Wave 3 move targeting a minimum of RM7.08. However, it lost tremendous momentum the day after making a new all-time-high of RM4.05. 

With the sideways pattern in March 2024 and April 2024 formed an asymmetrical triangle pattern which we highlighted, would be resolved by a decisive move above or below the pivot point of RM3.70. In early May, the price moved decisively down after failing to break RM3.70 on several occasions. This move has invalidated the Elliott wave 3 count temporarily, and a breakdown of the major support at RM3.45 on 17 May 2024 warrants caution. 

Technically, a test of next critical support is at the RM2.90 to RM3.10 zone, which happens to be the fibonacci 50% and 61.8% retracement levels, from the lows of RM2.20 in Feb 2023 to the high of RM4.05 in Feb 2024 could be on the cards.



SUMMARY

We continue to like all 3 stocks from a fundamental perspective. AWC and Lagenda price charts are moving nicely in tandem with their strong fundamentals. Meanwhile we continue to like Paragon as a proxy to the high aluminium prices, although the short term price chart seems to be showing some signs of weakness. As with all trading or investment plans, set your own rules and follow them religiously. If you have stop losses set in a trade, respect them and execute them accordingly. If you still like the stock fundamentally, look for the next support level and re-enter at better prices.




Disclaimer: This blog is created for sharing of trading ideas only. It is not in any way or form meant to be an inducement or recommendation to buy or sell any stocks.Consult your financial consultant before making any financial investments.


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2 people like this. Showing 2 of 2 comments

Dkk08

Tq AT..

4 weeks ago

raizalmyinvests

Good contents!

4 weeks ago

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