The Stock Market Rally As Predicted - Midas, Mewah, Swiber

If you had been following my blog for the last 4 weeks, it is of no coincidence that the current market rally was about to unfold. 

On a technical analysis basis, weekly MACD of most stocks was slowing down in the negative direction, started to turn upwards and cross its signal line. The first positive call on the most iconic Capitaland came on 28 May that netted a return of 8.8% (check out that blog article here). That marked the start of the property bull when most of the property counters caught up with the Juggernaut's (Capland) rally in the next 2-3 weeks (check out blog article on the property bull run here). Finally, when big cap stocks like Kep Corp, F&N, Semb Corp, Semb Marine start to move, as they have done in the last 3-5 trading days, it is perhaps time to really declare this a bull run. 

However euphoric you may be reading this now, let's keep our excitement in bay because of the lessons learnt in the start of the year - when things become too overly optimistic. Is that the case now though? I do not think so as it is really quite a start of the rally. Yet, it is worth to pay attention to the divergence in prices of the large cap stocks as they are usually the ones that begin to signal the end of the run. Since Capitaland started this rally early, it is also probably the best indicator that we can use to gauge on the end of this run. For now, remember that entering now is probably 2-3 weeks late (from the really good traders) but do still enjoy the run. Reach your targets and enjoy for the year - healthy trading. 

Mewah is probably the only palm oil counter that has yet to go on an immense bull run that we have been engulfing the prices of Bumitama Agri, Golden Agri and Indo Agri. At the end of 2011, it had a price of ~$1, falling immensely to $0.37. Will it be able to see the 20-30% recovery in its prices as we have seen in that of its fellow palm oil counters (Indo Agri has risen a whopping 30% from its local low in May)? Right now prices of Mewah has already risen 15% from its local low in June.

Outlook - Buy; laggard play. Technical indicators are aligning to put this stock on a upward trajectory. Volumes are recovering, most notably today where a spike in buying pressure clearly appearing. Having performed less admirably compared to its fellow palm oil counters such as Bumitama Agri, Golden Agri  and Indo Agri, there is no reason not to expect this once-hot-counter to embark on a similar trajectory when traders start to feel the others have long overran their fundamentals.

• MACD - Is trending upwards for last 4 weeks for daily chart. Daily MACD just crossed 0 and headed strongly higher. Weekly MACD just crossed its signal line.
• RSI (25d) - Just crossed the 50% level.
• Bollinger Bands - Prices are riding along the upper bollinger band now with the bands clearly widening to accomodate for even more price volatility and possible uptrend.
• 20d MA - the 20d MA has just started to turn up, another positive sign that the average momentum has indeed left pessimism trailing. 
• 200d MA - Prices are still a good 8% away from the 200d MA as compared to most palm oil stocks that have prices already crossed the 200d MA. Undervalued much.
• Major white candlestick - and 2 smaller white ones for the last 3 trading days signify a much stronger rebound.
• Volume - A surge in volume occured today (3 July) accompanying the major white candlestick.

Midas announced a RM860 million metro contract today (3 July) that was very well received by the market together with market optimism that pushed its shares a whopping 5% higher. There has been increased optimism too that it will be able to secure more rail contracts closer to 2013 onwards given the recovering China rail industry after the recent rail incident.

Outlook - Buy; cheap play. Stocks dealing with basic materials have been a good recovery in the last 2 weeks with Sakari Resources already increasing a whopping 25%. In the US, aluminium and metal counters have similarly enjoyed a good run. 

• MACD - Is trending upwards for last 4 weeks for daily chart. Mild increase until today when MACD seems to be increasing more firmly and urgently.
• RSI (25d) - Just reached the 50% level.
• Bollinger Bands - Prices have burst the upper bollinger band now with the bands soon-to widen to accomodate for even more price volatility and possible uptrend. Nonetheless do note that there could be an anticipated take profit on 4 June (tomorrow) given the huge break from the upper bollinger line. 
• 20d MA - the 20d MA has just started to turn up, another positive sign that the average momentum has indeed left pessimism trailing. 
• 200d MA - Prices are still a good 12.9% away from the 200d MA. Potential for upside is high.
• Major white candlestick - accompanied another yesterday (2 June).
• Volume - A huge surge in volume occured today (3 July) accompanying the major white candlestick. Investor appetite for this stock is clearly increasing and has increased much over the last 1-2 weeks steadily.

Swiber was arguably the most battered down stock after the first-half-of-the-year rally. It recovered mildly after securing a host of contracts that extended its order book towards $1.5billion over the next 5 years. An impressive record for this company but the market has yet to firmly price its potential and brand in the oil & gas sector. Today its price finally broke $0.60 which was a local high in end June after euphoria on its slew of contracts. With more investor buying pressure, it seems that its fundamentals will soon be correctly validated.

Outlook - Buy. Still a 17% away from its year-start rally high (Ezion holdings is almost at its year-start rally price high for comparison) presents a good upside potential for this stock. In this sustained bull run, it is always a great idea to be vested in oil & gas counters. This is cheap, in a great sector, has strong fundamentals. All in for a good buy.

• MACD - had a blip over the last 2 weeks but is well supported on the 0 in the positive territory and is trended upwards. Weekly MACD has just crossed its signal line for more bullish break.
• RSI (25d) - Just reached cleared the 50% level.
• Bollinger Bands - Prices are touching the upper bollinger band now with the bands seemingly narrowing due to lagging calculations where the volatility of the last 14 days was pretty low. Not a great buy sign but given today's break in prices above $0.60 (around 5% increase from the 14d average), there is no reason not to believe additional volatility is back. 
• 20d MA - the 20d MA has been trended upwards with no signs of decrease. Strong upside.
• 200d MA - Prices have just crossed the 200d MA putting it in the likes of similar oil & gas counters of a bull rally time. Let's not forget that the other counters have prices already much above the 200d MA. 
• Diagonal major support - Prices are well supported on the diagonal as show in the chart. Risk reward is very healthy at current prices.
• Major white candlestick - accompanied 2 other in the last 3 trading days. Very positive uptrend.
• Volume - Steadily increasing volume has accompanied the last 3 trading days signifying much renewed buying pressure for this counter.