Swee Hong- Technical Analysis:A Turnaround Play with multi-bagging potential
Why do we think this is a Multi bagger in the making? For those who have followed me on Investingnote:binghan would have recalled I called a buy on Chasen when it was at 0.03 and 0.04 and called for a target price of at least 10 cents. Chasen ran from 0.03 to a high near 0.14 subsequently. How did I manage to catch such a bull stock?
Do follow my investingnote: binghan
https://www.investingnote.com/#/?source=2&user=binghan&tab=all
Chasen calls on Investingnote
Chasen call in group chat on 16th Feb 2017
Will post my Chasen trades in another post soon!
Swee Hong
Simple! Here are the reasons why I think Swee Hong could be another Chasen in the making!
Technical Analysis
We will be looking at Swee Hong in three time frames:Daily, Weekly and Monthly, which corresponds to its short term, mid term and long term trend.
Daily Chart-Short Term trend
- Swee hong broke out recently on strong vol above $0.022 followed by a quick retracement .
- Note retracement is steep but volume has been shrinking on retracement, the first breakout could be a bull trap for contra traders who would then be forced to sell their shares to the Big Boys accumulating this stock.
- Tight Bull flag formed. ( A tight flag and steep trend is usually unsustainable)
- Pattern resembles a cup and handle.
- Usually the first breakout is called 试盘 in Chinese which means the BBs are testing the supply above and this will be followed by a vicious flush 洗盘 to flush out those retailers who chased in the breakout.
- This is because for a BB to start pushing, it needs to corner the stock absorb as much float as possible.
- We are currently witnessing a 洗盘.
Weekly Chart-Mid term trend
Having looked at the daily chart let us zoom out to look closer at the Swee Hong's weekly chart using a few charts to illustrate a few concept.
Chart 1: Thin Resistance above $0.024
-Stock dropped and gapped down on low vol and thin vol. In fact stock used to have low vol traded before the drop.
- This effectively means that above $0.024, there are very little or no stale bull trapped waiting unload.
- This means resistance is thin above $0.024 and it can fly up high.
- This was the same for Chasen Holdings.
Chart 2: Volume flow analysis (Daily Chart)
- Take note. Did you notice three almost equal height of volume?
- Coincidence? I would guess that these are the actions of Big Boys absorbing the stock.
- Previous high volume up bars were followed by low volume days ( likely to flush out weak retailers)
- Recent buy-up seems to be accompanied with more interest as we see more volume.
- The 4th high volume bar would likely be the breakout of current base. W.D Gann believed that the 4th breakout would usually always breakthrough in the prevailing direction.
Monthly Chart- Long term trend
Chart 1: Monthly Chart Volume Analysis
- Note volume has been high for each bullish monthly candle close.
- Stock has not seen such high monthly volume since IPO.
- Such high volume at low prices, do you think it is distribution or accumulation? (Would BB benefit from distributing at such low prices?)
- We would choose to think these are signs of Big Boys' traces of accumulation.
Our Analysis
Timeframe: 4 months- 10 months
Target Price: $0.10
Stop Loss: $0.008
We would think that the next catalyst would be another turnaround quarter followed by previous 3 consecutive turnaround quarters.
Next run could come at the end of Aug 2017.
I will posting more updates on my investingnote https://www.investingnote.com/#/?source=2&user=binghan&tab=all
For those who have enquiries can email us at satkitrader@gmail.com
Disclaimer:
The contents of this website are provided to you for information only and should not be used as a basis for making any specific investment, business or commercial decision. The above analysis is NOT A BUY OR SELL CALL, it is purely our analysis. Please do your own due diligence.
