Technical Analysis of Uttara Finance on 3 Dec 2016

Technical Analysis of Uttara Finance on 3 Dec 2016

This is no buy/sell recommendation - just a trial to see if Technical Analysis (works to an extent) in Dhaka Stock Exchange.

In this article, I would like to discuss a strategy (or tactic) of trading (based on Technical Analysis) using the example of Uttara Finance.

I am not an expert at Fundamental Analysis – but what little I know of, I can say that Uttara Finance is a Fundamentally good company.

The last two years the “fourth” quarter has been a problem with “losses” being reported – for which profit of Uttara Finance is not growing. However, it has been giving at least 20% Cash Dividend in last four years. The low PE of 6.5 seems attractive – and the quarterly profits of this year seem promising.

Profit	2012	2013	2014	2015	2016
Q1	185	215	251	250	251
Q2	241	273	264	330	401
Q3	266	247	290	280	190
Q4	123	118	-629	-308
Year	815	853	177	552	843
Growth		5%	-79%	213%
EPS	7.84	7.48	1.55	4.42	6.74
Dividends	20% C + 10% B	30% C	20% C + 10% B	30% C
NOCFPS	6.2	11.6	19	-4

Now to the Technicals:

It had an initial run from around Low of 48 to 60 and then retraced to 51.

After some consolidation (which was either accumulation or distribution), it has another run from 51 to 66 (with hindsight, we can say that previous consolidation was accumulation probably).

Currently, there is consolidation again (whether accumulation or distribution I don’t know yet; could say after the next run, but it will be of no use then) but the daily chart and indicators are not “optimistic”. 

However, weekly chart still offers some “hope”.

Another positive pattern might be the “up channel” – if it holds – then there is chance of it touching the top of the channel in future.

To summarize the situation:

(+) Fundamentally good (with low PE – meaning there is an up possibility)
(+) It has two runs – Elliot Wave Technicians will be counting on a third positive wave
(-) Daily chart does not look optimistic

Now as an analyst, we could prepare for the following scenarios:

• It consolidates (monitor Uttara Fin and trade other stocks as there are some bulls flying around)
• If it breaks down, forget it (especially if it goes below 55)
• If it breaks up, be prepared to ride the wave

The inter-mediate moves depends on Q4 performance - Who knows? Any guesses?

Proponents of Random Walk and/or Efficient Market Hypothesis would be glad to see the Confusion of this Technical Analyst.

But as it is said: Plan your trade and trade your plan.

Best wishes and be prepared with plans to execute when the scenario arises ...