Tuesday, June 10, 2008
Technical Analysis : Parkson Holding Berhad
Saw the chart while Turtle was going through brokerage reports over the weekend. Turtle is going to do something very dangerous today because he may look very foolish, trying to make technical analysis commentary on Parkson, which is not his cup of tea. Most of the chartist will want to avoid this stock because it is clearly on the downtrend. Those are buying is attempting to catch a falling knife which is a big no no in the world of trading.
Investing or trading requires imaginations of what future look like. From technical analysis stand point, there are two scenarios, one is continue to fall to RM 4 selling at PE of 7 times with estimated EPS of $ 0.50/share. Scenario 2 is continue to bounce around $ 5 - $ 7 (PE of 10 to 14 times). Should one wait until a clear trend is emerging?
If scenario 1 were to happen, Turtle bought Parkson at $ 5.80 leaving himself a potential loss of 32%. Since Turtle is leaning towards fundamental camp, he believe if Parkson is able to grow at the worse case of 15%, the stock will be able to bounce back to $ 7.00(around 12 times PE) in one year time, a potential 20% gain. The biggest fear that Turtle has is misjudge company earnings and not so much of the technical analysis judgment error.
What Turtle saw was a good probability of Parkson to break all time high of $ 10 in 3 - 5 years time. Well, time will tell.
P.S. This will be the first and last technical commentary to avoid further embarrassment. Have a nice day!