Stock Review - TA on OSIM

The stock suffered a plunge on 26 Apr 07; But with the 3 white soldiers advancing on 5th, 6th and 9th July (on high volume of ~10M no less), this might be a signal of further uptrend for the stock.

There is strong supprt at $0.88/0.885 as shown on 9/2, 26/4 and 9/7, and I expect the stock to advance to $0.95 in the short run (short term resistance).

For the secondary signals - all 3 are uptrend indicators:
(a) MACD is above the Centreline and above the Signal line.
(b) RSI is above 70% mark and its end just turned up.
(c) Stochastic dipped below the 80% mark but its relative distribution (as indicated by the sloping blue line) is still upward trending.

Some recent announcements on SGX:
(a) 26 July - Q2 Results will be out after market close! Most analysts expect this quarter to be a much better one for Osim. (Opening day of the Simpsons Movie too! No relevance though...)
(b) 12 July - Osim announces setting up of retail markets in Middle East markets (i.e. Kuwait, Iran and Oman) by end-2007 (Rich countries but lots of political unrest)
(c) 28 May - Ron Sim bought 500 lots at btw $0.685 - $0.70. Sign of confidence?

Recommendation: Buy during the week of 16 - 20 July with Buy Price of $0.88 and a Target Price of $0.95. Consider selling or pare down your holdings by 26 July if you have no confidence in the upcoming results.

Basics in Equities Investing

There are basically 2 schools of thought when it comes to investing in Equities - Technical Analysis & Fundamental Analysis. What are they?

Technical Analysis (TA) is the study of historical price movements through the use of charts. The 3 main charts that most Technical Analysts use are the Line chart, Bar chart and Candlesticks. Personally, I prefer the use of Candlesticks for its more descriptive visuals. Technical analysts look for patterns in the charts and using the basic assumption that "History repeats itself" to forecast future price movements. They look for signals or indicators within graphs to tell them if a stock will continue its upward/downward trend or is heading towards a reversal. Proponents of TA will tell you that it is simple to use, signals can be quickly detected and the investor psychology is incorporated within the analysis. Some arguments against TA are that the indicators/signals are highly subjective to the user and that the value of indicative values will change over time (since they are dependent on a large number of variables)

Fundamental Analysis (FA), on the other hand, is the determination of a company's underlying value by analysing the company's financial statements, business model, its future prospects, management team and internal controls. Fundamental Analysts invest on the assumption that "an undervalued stock will always catch up to its underlying value in the future". Proponents of FA will tell you that since financial ratios such as Net-Asset-Value (NAV), Earnings-per-Share (EPS) and Return-on-Equity (ROE) are rigorously calculated, estimate of a company's underlying value will not differ too far from such tangible quantifications. Criticisms of FA are that even if the undervalued stock will rise to its underlying value, investors will never know when this will happen (via TA).

If you ask me, I suggest the use of both analysis - Use FA to identify which stocks to invest in, and use TA to determine when to do so (Timing).

Happy investing!