HK Daily for 08-20-08 (2866,203)  

Posted by Book Eater

Hang Seng Market Overview:

Is this finally real? Looks like it…

I actually cannot believe my eyes as I’ve seen this market open and steadily moved higher. Perhaps it was partly due to cutting a lot of losses from the market as the bottom seemed to be near and yet it seemed so far. So when the boy who cried wolf wolf cried again today, I couldn’t get myself to trade. Though I think I should…I finally threw the towel and the government finally helps boost investor confidence by saying in the news that they are planning a “stimulus package” worth RMB400-500 Bil to help the ailing markets.

Hang Seng index opened at 20,388.79, not far from yesterday’s low and moved steadily higher from morning to afternoon after rumors aired in the news on government’s possible intervention in the markets. Market responded aggressively with upticks across all sectors. Most of the stocks that moved higher were the most beaten down ones that are potential beneficiaries of the China package such as Anhui Conch Cement (914) as well as CNBM (3323) which are cement industries that will be primary builders of the destruction caused by the Sichuan earthquake.

Recommendation: Things happen fast in the markets. Traders can look to probe on issues that are forming good setups. 2866 and 203 look to be good probes.

(sorry didn't upload the charts of the stocks anymore here coz ang bagal ng blogger ko magupload. Just look at na lang for the stocks.)

Stock Picks:

China Shipping Container Lines (2866)

Intraday action is showing a cheap cut at a close below 1.90. In Hong Kong Markets, most stocks will follow the uptick in the index, and this stock provides one of the best risk-reward ratios. Parabolic has not yet chased the price. More conservative traders will look to buy on an uptick that hits the parabola before entering. Target price seen is at 2.50/2.25

Recommendation: Probe

Support: 1.90

Resistance/ Target Price: 2.25/2.50

Preferred Entry: 1.94

Risk Reward Ratio: 7.75/ 14 ( 31 cents of gain versus 4 cents of loss/ 54 cents gain versus 4 cents of loss)

Denway Motors (203)

Denway Motors is steadily going higher and has finally gone past the parabolic signal with a box breakout intraday. Probing by buying near 2.75 with a cut at 2.65 is a good risk/reward trade because target is about 3 to 3.10 from the daily chart as confirmed by the heavy 32 day MA resistance. MACD started to cross today. Volume is still average.

Recommendation: Probe

Support: 2.65

Preferred Entry: 2.75

Resistance: 3/3.10

Risk Reward Ratio: 2.5/3.5


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