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. 

[Previous post: Singapore Property Cooling Measures - Buy on Dip?]

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.

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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.

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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.

The Tale of 2 Stocks

Yoma has been on the horizon of many traders and investors since last December, tracking the rise of Myanmar in the international arena. Coupled with the market bull run, Yoma has been enjoying a tremendous surge in its stock prices since December. Is the bull run ending? It does not seem so. 

Technically, there is a breakout today past the all time high in January. This is coupled with a strong buying volume. MACD has been treading up together with RSI. Very healthy rise yet again after taking a short breather over the last 2 months especially February. 

On the weekly, the stock has been increasing in volume clearly and MACD has staged a rebound and is treading upwards again. Although some caution to note is the RSI in overbought region. However, it is still of little concern to traders lately and it has been above 75 almost for the whole quarter of this year.

What run for this stock indeed. And to come.

Tiger, on the other hand has been hit by strong fuel prices that have been hampering its profits. Even after staging a comeback with strong flight on-time performance with renewed operations, this did not pacify most analysts and most have revised Tiger to Sell or Hold. Has it surged beyond its earnings and the market feels that the fundamentals are weak compared to current stock prices?

Technically, Tiger stock prices have risen dramatically in the last 3 months owing to a global equities rebound and some form of relief from its return to the skies in Australia. But it has reached a strong resistance line that clearly traces all the way back to Aug 2010. Never has the stock breached this levels convincingly and now, it seems equally unlikely to do so. Weekly volumes have been decreasing, a sign of waning interest in this stock. MACD histogram has diverged with the MACD signal line, pulling it downwards. RSI is not too indicative, staying around the 50 level.

In huge contrast to Yoma, Tiger seems set to have a reversal of fotunes and continue sinking into its malaise. Into the future, there does not seem to be respite. 

Midas and Tiger Exhibiting Strength with Major Supports

The market has been taking some profit-taking/correction/consolidation/volatility whatever you would like to call it. A few stocks have been catching my eye in this period of change - a refreshing one after an unexpected bullish of 2 months. They are Midas and Tiger. I quite particularly like the way they have tested the supports in this rally and am convinced that they are less risky plays in this supposedly continuing uptrend. At least, in any situation that the market turns, the stocks chosen will not break that easily.

Bullish short term. Midas has just broken out of a symmetric triangle or a pennant or whatever pro-pattern chartists call it. A white candlestick has appeared for the first time in 9 trading days. Volume has increased too. 

But, the price action is not without headwinds. First, it is still tracking below the 20d MA line so expect some resistance to come. Should the breakout and a cross of prices above the 20d MA, a more bullish uptrend is expected. For the conservatives, perhaps it would be better to wait for the cross over the 20d MA at around 0.40.

MACD histogram has been 2 days in green. MACD line is trending up and still in positive territory.

RSI has just crossed over the 50 mark and is highly healthy.

Watch. Tiger has been consolidating its prices for the last 1-2 weeks at around 0.80. Prices were also resisted strongly by the 200d MA line heavily for 4 trading sessions and possibly even til today. It is also heavily support by the 0.80 line so some sort of a triangle of trading boundaries is formed. A very narrow band of trading is occuring so expect a breakout soon.

Volumes have been low suggesting some sort of price consolidation and possible further uptrend in the breakout.

MACD histogram has been in red for the past 5 days. MACD line is trending down slightly but still in positive territory. Expect some sort of further retracement of the MACD.

RSI is slightly downtrending/flat but well above the 50 level.