Saturday, May 26, 2007

TA charts for CSC, Yongnma and Lian Beng

I did a TA on the three construction stocks that I owned, CSC, Yongnam and Lian Beng and found a lot of similarities in them. All of them have ascending triangle formations, a bullish sign. That's another sign that construction play is going to be hot the next bull run, possibly in mid June (that also means I expect the correction to last till then).

Firstly, what's ascending triangle? It's a bullish formation with a ascending support trendline and a horizontal resistance line. An important characteristic is that the volume must contract while the formation is building up. A good sign is an expansion of volume after it breaks out of the horizontal resistance line.

CSC is the first to break out of ascending triangle. The volume decreases steadily and on 22 May when it announced that it won a S$240 million contract for Marina IR, it gapped up on heavy volume. Now it's well supported at 0.370. I think it's a breakaway gap, which means I won't expect to see the gap on 22 May covered up any time soon. 0.370 should be a strong support, followed by 0.330.

Yongnam is also in the same formation, though it's a bit loose. Seems to be in channel trendline (consolidation) well inside the ascending triangle. Still valid I think, since it also exhibits decreasing volume. The two trendlines meet on 3rd week of June, that's the latest time to see a breakout on the upside. I suspect it'll be much earlier than that. If it does breakout, I must see an expansion in volume, something like CSC.

Lianbeng's ascending triangle formation is the most established and well formed. It starts all the way back from Feb/March period, extending over 3 months. I suspect if it breaks out on the upside, the force will be strong on this one :) Again, decreasing volume all the way back from Feb, with well spaced highs and lows defined by the two converging trendlines. Converging point is 1st week of July.

We'll see who wins more of the Marina IR and Sentosa IR. Supposed to come very soon :)