Midas – take 5

Hello all,

To start off, I am requesting readers of this site to scroll down to a post that has a poll in it. It is a poll about chinese stocks. Please do me a favour by letting me know your interest in seeing technical analysis on chinese stocks. Thank you.

A week back, I happened to take a quick look at 5EN.SI’s price, and was shocked to see it trading below 80 cents. My last post showed a bullish pattern on Midas’s chart with an upward target of $1.08. Price has reversed, taken out support levels/stop levels based on the chart pattern, and dropped to 70 cents territory. It is during times like this that I can only pray I did not entice anyone to take a trade, relying solely on information here, like this. Midas has plummeted 20% from its breakout level from the wedge/triangle pattern.

I have a link here that will direct you to a page describing the falling wedge pattern: http://thepatternsite.com/fallwedge.html .

The reason why you do not see many posts here on wedges is because I am not too convinced about the performance of such a technical pattern. But I do search and highlight them when I see them on charts. Some have done well, but most – in my eyes – do not have good performances. Right now, I see Midas in a busted falling wedge. What looked like a point where Midas would look bullish for the months ahead, has turned down, and now I will be placing Midas in the category of “stocks with a general bearish view”. Fellow counters in that “queue” include the property players, and a few shipping stocks.

Now  for a chart to depict my views on Midas. Take note of these:

1. Turning down of 200-day MA – much like the property counters

2. 50-day MA remains below the heavier 200-day MA; what is worse is a failed test to break above the heavy MA

3. Price below support – turned – resistance level of 80 cents

It is possible that Midas may experience some buying pressure after getting hacked down, but my analysis tells me Midas should not be performing spectacular this year. Short run-ups should face resistance at the slightly long – term moving averages like the 200-, 100-, 60-day MAs.

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

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7 Comments

  1. Anonymous
    Posted March 6, 2011 at 10:22 PM | Permalink | Reply

    Hi owner, happen to stumble in here, while trying to find some explanation or rather solace for the dip since CNY.
    Sad to say, got sucked in the dip.

    Dont feel bad. Most would have entered based on TA.
    And might even exited in time or at the top; hopefully.

    The fall was credited to some graft charges on China’s railroad minister. Which hit it really hard as i think it was one of the largest local railroad provider and have some overseas contracts. (and with addition of Egypt’s unrest, “high time for correction sentiment”…)

    Thumbs up!

  2. Posted March 6, 2011 at 10:28 PM | Permalink | Reply

    Hi owner, happen to stumble in here while trying to find some explanation or rather solace for the dip since CNY.
    Sad to say, got sucked in the dip.

    Dont feel bad. Most would have entered based on TA.
    And might even exited in time or at the top; hopefully.

    The fall was credited to some graft charges on China’s railroad minister. Which hit it really hard as i think it was one of the largest local railroad provider and have some overseas contracts. (and with addition of Egypt’s unrest, “high time for correction sentiment”…)

    Cheers

    • Administrator
      Posted March 6, 2011 at 10:36 PM | Permalink | Reply

      Hello,

      Thanks for your input. That would be the fundamental reason. Hope to see you around here!

  3. Noobgal
    Posted March 8, 2011 at 9:12 PM | Permalink | Reply

    Hi, I was the one who alerted u of the wedge. Upon further studies, there is a bigger symmetrical triangle (try zooming out to a weekly view). Longer timeline formation trumps short term patterns.

    • Administrator
      Posted March 8, 2011 at 10:10 PM | Permalink | Reply

      Hello there,

      Thank you for your input on Midas. Hmm, i’m not too sure if i’m going to consider it as a valid triangle. TA is like beauty, which differs among different people. If you think so, then that’s alright. No right or wrong answer. I do agree with your statement that larger formations can impact the performance of smaller patterns on charts.

      Looking forward to further comments from you,
      Radhys

      • Noobgal
        Posted March 8, 2011 at 10:46 PM | Permalink

        agree that different people will have differing views.

        Loosely, a triangle formation begins with 2 points at the price high and 2 points at the price low. Midas def showed a connecting price high in mid april ’10 and mid-late sep ’10. Low points at late may, late august and mid-late december. aka 2 highs, 3 lows. not exactly confirmation but at least there is a general downtrend resistance to note here.

        The falling wedge appeared mid-late sep to mid-late dec. which by itself is still a valid formation, just that the target price would be resisted by a general down trend starting from the high in mid april. There is also a fibs level 38.2% at ~$1.03, taking price high in june 07 to price low in oct 08. to be safe, profit taking shud be set a lil lower than the resistance price.

        🙂

  4. Administrator
    Posted March 8, 2011 at 11:08 PM | Permalink | Reply

    Hmm, I’ll look at Midas’s chart again and see if i can share the same opinion as you. Nice to hear your past strategy on trading Midas.

    It would be good if you could comment using a name, that way i do not have to address you as “noobgal”, which is not a very nice word to call someone!

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