I was writing my post on Capitaland and happen to stumble upon Charlie Lau's post on Wilmar and STI. The article can be found here: http://www.sharesinv.com/articles/2010/12/26/technical-commentary-sti-wilmar/
Of course, i read the article and was once again studying the operations for Wilmar. Let's put STI aside now and focus on Wilmar. I have heard many news and media talking about Wilmar's recent price plunged and with the continuous feed of bad news from the press, this frighten the public and kept them out of this stock for the moment. To be frank, i have not observed this stock for quite sometime until i read this article, therefore i don't know what was the news that was released nor what was causing the price dropped. Anyway, i don't read news, so it really doesn't affect me. What got me interested was the price action in Wilmar before the plunged on 21/12/2010.
After studying the recent operation, i managed to spot some unusual trading range which offered some clues as to whether big operators are continuing to distribute this stock or starting to accumulate it. Per my analysis on that trading range circled on the screenshot, it is obvious that they are distributing. I will not go into what actually happened in 9/11/2010 back then although i know what was causing this huge fall. In my earlier post, i mentioned that trading range do offer very important clues on big operators activity and one should learn decipher and analyse it, as huge amount of money could be made from it. As in the case of Wilmar, supply was overcoming demand and the operators are luring the public to think that the price was attractive at $5.99 since it recorded a high of $6.93 on 9/11/2010. The difference of almost $1 of course lured the public in when the operators are doing some profit taking and at the same time distribute more stocks to the public. That's where the public got slaughtered and a major selldown occurred on 21/12/2010 which brought the price to a low of $5.6. Psychology the public is dishearten now and I am sure they are eager to get out of this stock. The next day, 22/12/2010, i saw buying from operators and this might temporarily support the price for a rally.
I replied to Charlie: "There are still no signs of real buying or accumulation for Wilmar yet. You are right that the rally might be window dressing or a technical rebound due to the huge selldown on 21/12/2010. Infact, I saw some buying coming in the next day to start playing for a technical rebound. However, more evidence is needed to support the price as for whether a real rally is coming or just a rebound because of the oversold on 21/12/2010. Also, Wilmar had broken many supports, which require some time to trend higher again." So what is the strategy moving forward now? If i am trading this stock, i would have bought it between $5.58-$5.63 and my stop loss would be at $5.51-$5.53. Of course, if more evidence of buying appeared in this stock, this would raise a high alert for me to monitor very closely. I have to thank Charlie for posting his article which allowed me to put this stock on my watchlist.
Ronald K
Update: Wilmar today's action (27/12/2010) is bullish and is poised for rally anytime soon.
