Three years ago, I wanted to buy this stock for New Year rally, but I missed this trade, due to attending a meeting. Now, the opportunity has
re-presented itself.
Fundamental: Supplier of aluminium alloy panels for trains, poised to benefit from China's RMB 4 trilliion stimulus package.
Technical:
Reverse head-and-shoulders, since Sep, meaning it has fulfilled minimum 3-mth period. Breakout of 0.505 also achieved. Resistance is at 0.80, at March 2008 low.
Trend: LT (200d) down, ST (10d, 20d) has moved up.
Oscillators: RSI, stochastics moving down from overbought region, suggesting prices should correct to 0.505 immediate support region. ROC also +ve.
Directional: On weekly and daily chart, ADX moving below 20, suggesting downtrend is stalling.
Volume: 5-day Vool. EMA rising, suggeting breakout is on increased volume.
My strategy: Buy.
Price to buy: Buy 10 lots @ 0.545 (now), buy 10 lots when price fall and bounce off from support later.
Stop-loss: 0.455
TP1: 0.65
TP2: 0.75
I feel although analysts has been espousing for 1Q2009 to be the time to do bottom-fishing, and although Midas still show a LT downtrend, a breakout on its reverse head-and-shoulders, coupled with its China story, suggests a reversal is on the cards. The time to buy is when nobody else is looking.
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