Technical Analysis of Keya: Part 2 on 31 Jan 2017

Technical Analysis of Keya: Part 2 on 31 Jan 2017 (after trading hours)

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

This is a bit nostalgic as I evaluate my first post on Technical Analysis of a company – Keya published on 19 Nov 2016: http://imti77az.blogspot.com/2016/11/technical-analysis-of-keya-on-19-nov.html 

I think I tried to be too precise – TA not being an exact science, I need to be a bit flexible (with the use of numbers).

Suggested buy rate was around 10 and target was around 12.5-13. The crazy bull exceeded my expectation of “13” and went on to 16.8! I would give it pass marks – especially considering the profit it returned (around 70% return in 11 weeks).

Brave were those who held to the peak - I bailed out earlier :-[

Now let us try to project the next movement – there are two major scenarios:

(-) It falls back to low around 10

(+) After retracement on low volume, it makes the next bullish move . . . let us look at some details:

Keya’s first run was from 9.6 to 16.8. Considering Fibo retracements:

- 38% retracement would bring it down to 14 (where it tried to reverse today)

- 50% retracement would bring it down to 13.2 (it could also get support of the up-trend line shown in the chart – giving more technical strength to the pattern).

Then, a bullish move on increasing volume could take it around last high (around 17). Optimistically, another crazy move could take it into the mid-20's if it crosses 17 (as its PE is still low).

Hope you enjoyed the bullish run with this amateur!

Let us see what happens on the next run . . . 

Just be wary ... as the Index is in Correction (retracement) mode . . .
Best wishes as always . . . 

Technical Analysis of Islami Bank: Part 3 on 30 Jan 2017

Technical Analysis of Islami Bank: Part 3 on 30 Jan 2017 (after trading hours)

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

Hope you enjoyed the two waves of Islami Bank. I think we could have at least one more . . .

http://imti77az.blogspot.com/2017/01/technical-analysis-of-islami-bank-part_20.html

https://imti77az.blogspot.com/2017/01/technical-analysis-of-islami-bank-on-2.html

As Islami Bank is on a bullish move, you might be able to pick it on the next retracement as shown in the chart.

Plan your trade and trade your plan . . . Best wishes . . . 

Technical Analysis of ACI: Part 2 on 29 Jan 2017

Technical Analysis of ACI: Part 2 on 29 Jan 2017 (after trading hours)

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

The initial analysis of ACI was shared on 3 Jan 2017: http://imti77az.blogspot.com/2017/01/technical-analysis-of-aci-on-3-jan-2017.html 

Although I had expected ACI to retrace to around 400, it came down to 403 before taking off. Hope you could ride the wave . . .

It published good Q2 results. Last time I could not share the chart.

As ACI is on a bullish move, you might be able to pick it on the next retracement as shown in the chart.

On a separate note,

        Hope you had a great ride

                         (in the crazy bull)

But now, we might have to pay the price . . .

Let's hope not!!!

Technicals move earlier than Funda . . .

I like to say that Technicals have a faster clock speed than Funda . . .

Fundamental is very important. It should be the first step in company analysis. And if one has abundance of patience, then it is sufficient.

Now if one likes to move a bit faster and/or earlier, Technical Analysis could help. It is not a science – rather it is sort of an approximation. However, if one can use it with Funda, then success rates could improve in the business of unpredictability.

I will go through a couple of my previous analysis and mention another two that I did not cover here to explain my views.

Q2 of quite a few companies are being published. However, the market adjusts earlier – these companies started to rise earlier before the news was published.

It is one of the bases of Technical Analysis theory: Market action (price) discounts everything: Technicians believe that the current price fully reflects all available information.

Thus, the rise in the charts can be explained by the hypothesis that investors earlier determined and/or speculated that earnings will be increasing and thus, the rise in price. Just be wary of Sell on News.

ACI: http://imti77az.blogspot.com/2017/01/technical-analysis-of-aci-on-3-jan-2017.html

ACME Limited: http://imti77az.blogspot.com/2017/01/technical-analysis-of-acme-laboratories.html

Other two companies (from among many) that had significant rise in price are Peninsula Hotel and ACI Formulations both of which had huge growth in EPS. Another example is Central Pharma - although I could not buy their huge EPS growth (coming from ~78% increase in quarterly sales!) - it was a good trade Technically although the Funda seems to be too good to be . . . . 

Thus, instead of relying on rumor, one should focus on Fundamental Analysis and then if one wishes, Technical Analysis.

It’s your money, your choice . . .

And I have to appreciate the statements coming from the Government of Bangladesh on avoiding rumor based speculation:

http://bdnews24.com/business/2017/01/08/do-not-get-swayed-by-stock-market-rumours-pm

http://www.samakal.net/2017/01/08/10468

http://www.theindependentbd.com/arcprint/details/75813/2017-01-09

Technical Analysis of Sha Sha Denims on 27 Jan 2017

Technical Analysis of Sha Sha Denims on 27 Jan 2017

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

I am not that good at Fundamental Analysis. But with my limited understanding of Fundamentals, I think Sha Sha Denims is one of the best fundamental companies in Bangladesh.

The market also knew that it was undervalued at 34 - but for weeks nothing happened. Then suddenly, it made a Big Bull run that broke all barriers and exceeded all expectations. One such trade a year is sufficient.

There was a rumor of some power plant project of one if its subsidiaries that might have fueled this bull run. But I think there is more to it.

The expansion from IPO fund is yet to be fully reflected in Shasha's Earnings. Once it starts reporting higher profits and EPS, I think it will keep on moving higher.

These are some highlights from its 2015 Annual report - strangely, 2016 Annual Report is mainly numbers-based with hardly any statements from top management!

Some Highlights from 2015 Annual Report:

• We have earned an amount of Tk. 122.46 million as interest income from un-utilized IPO fund which is deposited at different banks as FDR.
• Consolidated EPS of SDL and its subsidiaries stood at Tk. 5.07 for the year 2015 compared to Tk. 1.59 (restated) for 2014.
• SDL is still in its expansion phase. Construction of fourstoried utility and store building is ongoing. It is expected that two out three four-storied buildings will be completed by June 2016.
• We have already imported dyeing machine and warping machines. On the other hand some LCs were opened to import machineries as mentioned in the prospectus. At the last AGM it was declared that expansion of factory would be completed by September 2016 but due to changes of the design of factory building the delay has occurred.
• Profit after Tax of Energis Power Corporation Ltd. is Tk. 87.93 million.
• Profit after Tax of Shasha Garments Ltd. was Tk. 13.53 million in 2015 Compared to Tk. 34.45 million in 2014.
• We expect that the expansion will be completed by September 2017 and will lead to further increases in revenue and profit.
• SDL is going to establish a new plant in the DEPZ extension area with the latest and cutting -edge technology which will lead to a 30% increase in revenue annually. It is estimated that the cost of the new plant would be about Tk. 175 crore.

It seems a rosy picture till date.
Hefty profit, good EPS and Cash Flow . . .

	2014	2015	2016
Profit	175	572	580
EPS	1.79	5.07	5.14
Dividend	20%C + 15%B	25%C	12.5%C (I)
NOCFPS	4	5

What I mostly like about it is its Cash Dividends - a textile company that has been able to give at least 20% Cash in last two years - including Interim Dividends - has enough solvency to ride through hard times.

Now moving on to the Technicals. Even I could not foresee such a High Price for Shasha. When the herd mentality takes over, the bull becomes uncontrollable.

However, stocks sort of moves like waves, so Shasha might be generous enough to come to a lower price where entry could be safe for the next run. As I failed to estimate the High, I will not risk estimating the low it might turn back from.

The retracement scenario is given below in the chart. To me 55 looks an attractive entry level . . . But it is your call . . . 

I let the market decide and then follow . . .

Technical Analysis of ITC on 25 Jan 2017

Technical Analysis of ITC on 25 Jan 2017

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

I usually do not trade IPOs. Especially one with PE ~ 100!!!

I do not have data about its Fundamentals.

Only the Technicals. It had created support at 45 – a price I like for entry. However, recently it has turned up from 46 and then from 47. This got me interested.

If it can cross Resistance at 55, then 65 is likely in the first run . . .

I thought (optimistically due to the crazy Bull Run) that it would cross 55 at one go!

However, it failed at the first attempt and retraced to 50 Fibo Level (51.4) with a nice candle. It could still drop to 50.4 – but if we get a Green Candle tomorrow, it could be the start of another run to test Supply at 55 – before going forward (there is significant up potential).

If it is a red candle, stay away - keep cash to buy items later at a lower price.

Tight stop loss would be 48.9

Technically 45 is a safer entry price . . .

Technical Analysis of BRAC Bank on 25 Jan 2017

Technical Analysis of BRAC Bank on 25 Jan 2017

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

BRAC Bank is a good company with growth potentials.

Fundamental Analysis: It is a growth company that has been increasing Cash Dividends. Business seems to be good. 42% shares are held by “Foreign” clients. Only ~6% free float. It seems market is pricing bKash’s expected profit into BRAC Bank’s price.

	2013	2014	2015
Profit	1,419	2,102	2,184
EPS	2.20	2.96	3.08
Dividend	10%B + 10%C	20%C	25%C
NOCFPS	11	15	14

PE ~ 14

Now to the Technicals: BRAC moves in a classic technical formation with up moves followed by a period of consolidation (retracement) before the next up move. It is above a 5 year high with no overhead Resistance – sky is the limit (similar to BNICL chart http://imti77az.blogspot.com/2017/01/technical-analysis-of-bnicl-on-17-jan.html).

Recently it broke 68 Resistance (which should be Support from now on) and faces Next Resistance at 72. Now if it re-tests 68 from above and then moves up . . . we might see a Bullish move.

It is actually a share sought out by Fundamental Analysts – break out traders might risk it (stop loss at 66).

68 might seem pricey? A year from now, we would know after checking back ...

Bulls starting last in line might be caught by the bears!!!

Where the Sidewalk Ends by Shel Silverstein

Where the Sidewalk Ends by Shel Silverstein

There is a place where the sidewalk ends
And before the street begins,
And there the grass grows soft and white,
And there the sun burns crimson bright,
And there the moon-bird rests from his flight
To cool in the peppermint wind.

Let us leave this place where the smoke blows black
And the dark street winds and bends.
Past the pits where the asphalt flowers grow
We shall walk with a walk that is measured and slow,
And watch where the chalk-white arrows go
To the place where the sidewalk ends.

Yes we'll walk with a walk that is measured and slow,
And we'll go where the chalk-white arrows go,
For the children, they mark, and the children, they know
The place where the sidewalk ends.

Buy the Rumor, Sell the News

Buy the Rumor, Sell the News

This is a popular saying. And I have been on the wrong end of it in my early days when the market nearly wiped me off . . . 

From there I tried to develop a strategy that minimizes loss - if one can survive, profit will slowly accumulate like drops of water  . . . 

As it is earnings/dividend declaration time, market will take some time to "price" it in - which might result in some volatility.

I prefer to avoid it and thus, the posts might be less frequent. 

I will try to write if I find something good . . . Look out for the weekends . . . 

Technical Analysis of Maksons: Part Two on 23 Jan 2017

Technical Analysis of Maksons: Part Two on 23 Jan 2017

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

Before going into this analysis, I would like to evaluate the previous analysis of Maksons made on 4 Dec ’16: http://imti77az.blogspot.com/2016/12/technical-analysis-of-maksons-spinning.html

Opportunity to buy was around 7.3 – it came to 7.3 on 6 and 7 Dec and then went on an up move. I would say perfect – and lucky also ;-)

Target price was forecasted around 10 before next year's declaration. But due to the crazy bull we had, it reached 10.4 on 18 Jan ’17.

Generous market gave an early profit and now offers a second bite at the cherry.

Likely Fibo retracement to 8.5-9 seems likely after which an up move could be expected.

Based on Q2 declaration, market will speculate whether it will go down to 7 or halt at 10.5 or consolidate before moving to 13-14 supply zones.

I would set Stop Loss at 8.

If you are not bothered with Funda, you might consider the next wave of Maksons move . . .

I think Peter Lynch would have agreed that it is worth trying 100 shares of Maksons around 8.5 (total investment of 850) instead of buying a shirt priced at that rate. With patience, later on you might be able to buy a shirt and a tie (something I hate wearing - ugh)!!!

Technical Analysis of OAL: Part Two - On 22 Jan 2017

Technical Analysis of OAL: Part Two - On 22 Jan 2017

OAL broke the Major Resistance at 28 but it seems to have lost strength doing so (as discussed in http://imti77az.blogspot.com/2017/01/technical-analysis-of-oal-on-9-jan-2017.html).

Importantly, this could give an “opportunity” to enter at a lower price (thus, reducing risk) than current levels. I am assuming the first run ended on 16 Jan 2017 at 30.7

28 is now a support and also first Fibo retracement – but will it hold? Let's see.

Looking at possible Fibo retracement scenarios; if OAL falls further on declining volume to around 23-24 zone and then reverses on a “good” candle – an entry could be planned. Stop loss would be 21.4.

*(Note: TA is not a Science; it works 60-70% of the time so don’t be hooked on to the exact numbers – please allow some flexibility).

*I usually work with Un-adjusted charts - so I drew from low of 18.8 (there was stock dividend in between which might also affect the numbers).

Best wishes . . .

Technical Analysis of Beximco on 21 Jan 2017

Technical Analysis of Beximco on 21 Jan 2017

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

I don’t trade Beximco – let’s say it’s a trust issue.

I don’t know about the Fundamentals – really, I am not interested in Beximco’s fundamentals.

The market is awash with rumors – as the saying goes, “Buy the Rumor, Sell the News”. And I undertook this analysis for a namesake who is addicted to Risk.

Please forgive me if the calculations come out wrong . . .

Weekly Chart: It seems to be a double bottom (~21, which is Ideal entry price) and break-out of a Triangle – with re-test complete around 24. Pattern estimate is around 52.5

Daily Chart: It had an initial up move around 18 points. I would estimate another 18 points rise from next Fibo. Assuming 38% Fibo at 32, the target is roughly 50. Coincidentally, bounce from First Fibo level (34.5, which is a rare occurrence itself) gives an estimate of 52.5 also.

52.5? Am I being Fooled by Randomness?

*On a separate note, Taleb’s Fooled by Randomness is a very good book but a bit difficult to read. After reading it, you could try When Genius Failed which is fun to read.

It’s ironical that the names of these two important books came to my mind when I was writing Beximco’s analysis, that on request of a friend!

Case of Yin and Yang!

I would set a stop loss 3 points below entry point.

It’s your risk. One thing I would like to say – jump out at the slightest sign of danger even before the estimated target . . .

No doubt it looks inviting though . . .

Greed vs mistrust - moral dilemma . . . 

Life is a trade-off . . . the choices we make . . . the roads we take (Robert Frost)

Edited on 22 Jan - Previously was a wrong chart of Fibo Extension - this is right one on Fibo Retracement

Technical Analysis of Islami Bank: Part Two on 20 Jan 2017

Technical Analysis of Islami Bank: Part Two on 20 Jan 2017

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 will also write about the benefits/advantages of Technical Analysis. Please forgive the pompous approach.

Before going into this analysis, I would like to evaluate the previous analysis of Islami Bank made on 2 Jan 2017: https://imti77az.blogspot.com/2017/01/technical-analysis-of-islami-bank-on-2.html

Forecast of Re-test was at 29.60 – Islami Bank touched 29.6 on 3^rd Jan and then went on up move. It was perfect. Moreover, the generous market again gave an opportunity to buy at 29.6 on 10 Jan.

Forecast of Move – I had (conservatively) mentioned that it would initially move to 35 and then? It actually went around 38 in this move. I would say a good projection.

Assuming one got in at 30 and exited at 35, its 16% profit in 10 trading days; if you got out at a higher level, well done.

Only problem was the candle on 8 Jan – it seems there was a “false” high of 33 that spoilt the candle – was it to put off Technical Analysts? Even the candle on 9 Jan was a bit strange. But I will let it go.

It was the perfect Break-out, pull-back, re-test theory in practice. It lets the Technician optimize the trade in the shortest possible time. It is one of my favorite sayings – Technicals have a faster clock speed than Funda’s (on a different note, those working with strategy/innovation could read the very good book: Clockspeed by CH Fine).

Another thing is that major news came on 6 Jan about management change. The market took about a week to price it in – the up move indicates that the market took it positively.

Interestingly, the charts were much bullish earlier – the charts were ahead of reality – and indicating positive movement. In business terms, it is called early-mover advantage. So if you can move ahead of the market, you can enter at a lower price and you can be ready to ride the wave, when it occurs.

Now for a more detailed discussion on the possibilities of the next moves from a Technical Perspective (I will try to keep it short though).

Although it’s an adjusted Weekly chart, we can see two big waves with almost perfect Fibo retracement – one from May 2015 and the other from May 2016. According to Dow Theory, there is another Big Wave coming . . . Actually it has been forming from Q4 ’16 onwards.

*Note: The Big waves are made up of small waves . . . blah blah blah . . . I will skip the Theory! For those interested, please read on Dow Theory and Elliot Wave Theory.

Another thing I have not shown here is a possible Inverse Head and Shoulders pattern in the 3 year Un-adjusted Weekly chart (it is like imagining shapes in the clouds!) For those interested in H&S, its Low is 15.20 and the approximate Neck-line is around 30 - that could guide you to estimate the initial target ;-) It sort of even followed the classic High Volume Break-out and low volume pull-back to the neck line before preparing to fly away on increasing volume . . . 

Now to the Recent Daily Chart: After its first move, Islami Bank would likely retrace near a Fibo level before making the second up move.

In the daily chart, we can see first Fibo retracement at 36, the second at 34.6 and another at 33.5 and so on. If it retraces on declining volume and then turns from the Fibo levels, we could be in some exciting times.

I would set Stop Loss at 1.5 points below entry price.

Two things I would like to highlight here:

1. When the Funda’s and Technicals meet, one gets synergy.

2. The other is profit maximization in a bull market: Buy low and sell high investors (holders in my view) also make hefty profit. But the fast Technician can sort of make at least 3 trades in a full bull run and thus, generate more profit. And the Risk-taking Technician also makes trades during the retracement in other items! They follow the Principle of keeping no cash idle. In a bull market, it is about maximizing . . . It also depends on the risk appetite of the individual.

*(Note: TA is not a Science; it works 60-70% of the time so don’t be hooked on to the exact numbers – please allow some flexibility).

But Islami Bank is sort of technically perfect till date.

     Will it disappoint?

          Let us find out . . .