Olam topped?

Evening all,

Equity markets are looking real bad this week. Some of the selling pressure probably attributed to the Fed’s slightly negative view on the economy. Also, Europe’s debt problems continue popping up in the news, sending fear across markets worldwide. I have been looking through quite a number of local counters, and so far I have yet to see anything that looks like it is bottoming out. Today, I have a few charts of Olam – O32.SI – for you all.

On the weekly scale, Olam is finding support from an important support region of about $2.20-$2.30. This area acted as good support for Olam all the way back in 2007. For those who do not like looking so far back in history, Olam did use this level last year, and it tested $2.00 just a month ago. After dropping to lows of 2.06 last month, Olam rallied a little to where it is now; and we can say that the ever-important 200-week moving average is holding onto price. Sadly – for those with long positions – I have a bearish pattern on Olam’s chart: a large downward parallel channel. There are 2 important events on the chart that I would like to highlight: One, I have a red line that acts as resistance, and this line coincides with a fibonacci level (23.6%); two, the bottom of the parallel channel, the green support region, and the 50% fibonacci retracement level are all along the same level!

What I can conclude from my findings on top is that Olam should continue lower in the mid-term owing to a bearish pattern. For the next few weeks, Olam will be testing critical support. Once Olam breaks down from this support, it will join a drop party of other stocks with slightly similar charts (if this year ends up a bear one, then I guess all stocks come in this “category”). Despite staying above a massive support region – and if Olam continues above it then I will respect it – I will be leaning on the bearish side because of a simple bearish chart pattern and general market conditions. Whichever way I see Olam’s stock chart, all signs tell me I should not be long on this counter.  

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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