Saturday, January 19, 2013

Breakout of the Laggards? - Wilmar, Midas, Tiger

Current Weekly Market Theme:
Market euphoria over partial resolution of the fiscal cliff is on the wane, with laggard and penny stocks in focus this week. 
Anything related to China's growth is still hot and up-and-coming. China's GDP was a tad above analyst estimates with the census department announcing an official 7.8%. While still higher than expectations, the dampener is the reluctant acceptance that China's growth will not be returning to the stunning levels we have seen in the last decade any time soon. 

1. Wilmar (China play; Palm Oil)
  • Strong resistance in this week with increasing volume at ~$3.67. 2nd time in 9 months that prices have attempted to cross this level, with the first being unsuccessful in June.
  • MACD - high positive divergence and trending into the positive
  • RSI (25w) - crossing 50% on a steady upward trend
  • Price to watch - $3.67 resistance line. Break out into the huge gap down region in Apr 2012 provides good buying reason that the worst could be finally over for this badly battered palm oil counter. With a successful break, expect TP $4.75 (~28% from breakout level) over the next 3-4 weeks.


2. Midas (China proxy; rail; aluminium)
  • Strong upward trend from 15 weeks ago that resulted in a breakout 3 weeks back. Straddling between the gap down region in Jul 2011, stock prices seem destined for the upper resistance region.
  • MACD - increasing positive divergence and trending in the positive
  • RSI (25w) - above 50% and seems headed for 70%
  • Price Target - $0.61 (~19% from current levels) over the next 5 weeks. Expect the counter to take a short break next week for more accumulation opportunities given how much the stock price has already risen. On the long term (5-6weeks) outlook, the uptrend looks strong and there's no reason for news to drive the stock down given the resumption of railway investment in China.


3. Tiger Airways (SEA growth; aviation)
  • Breakout strongly this week with increased volume and trading attention.
  • MACD - small positive divergence and trending into the positive.
  • RSI (25w) - crossed 50%.
  • Price Target - $0.81 (~5% from current levels) over the next 2-3 weeks. 
  • The good thing about Tiger seems to be its slow and steady rise back into prominence after a terrible 2011-12 period that threatened its profits. New CEO with new marketing company does bode well to set the records straight to continue to overhaul the Tiger brand and put it back into the limelight again.

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