Waterfall...

Never can understand the choice of word to describe such a chart.

I started learning the markets long ago, DURING A BEARISH MARKET. Oh, yeah, the market conditions are important to note whenever we trade. It's like fishing. A calm sea and rough sea are two different fishing condition. The end result is never the same, using the same exact skill set. In trading, during early bullish market conditions, breakout trading will work like a charm but when the market turns extremely bearish, using the same trading skill set, will most likely yield a different end result.

For plunging stocks like this or even AirAsia, throughout my personal paper trading result, NOT BEING A HERO and avoiding the stocks during the initial plunge had always been the better option. For most of the time, the plunge WILL CONTINUE and trading it will yield disastrous results. Oh yeah, some will be smart panties and insist that this is a bullish market, and whatever plunge should represent a buying opportunity.

Let's not be biased and let me choose a stock from 2013, a period where the KCLI was in an extremely bullish period.

Now let's find a plunging stock, yeah, LOL, your waterfall stock.

Stock name is withheld so that we do not form any BIAS from the get go.

Stock was at 2.79... and it plunges... big gap down....



another gap down the next day.



in the next chart below, the stock stabilizes .... held at 2.43 the next couple of days...

ok.... at this point of time... perhaps one wait the declining volume as an indicator that maybe the selling has subside....

.... so at the end of the day... with the stock holding the 2.43 line... and volume declining.... one dives in....

wham ....bam......

the stock gaps down once again..... closes at 2.25 !!!! remember the stock was just at 2.79 few days ago... see chart below



How? Hold or take the losses?

Ahh.... this is where it got even more trickier.... the stock actually stabilized and by Oct, young green shoots were showing and perhaps there was chance, an opportunity to take the risk and make a gamble on the stock.



and guess what happens? in that month it did rally to as high as 2.73...... but then....... it fell once again....



it would hit a low of 2.03!!!!

oh... yeah.... I am sure many would have guessed.... I am talking about my favorite other stock.... AirAsia.







Oldtown..... so.... you think the sell down is justifiable?

so think about it, that AirAsia chart example.

It was during a rather bullish market environment. The index was flying, stocks were flying. And there came the JATUH AIR stock (LOL! I think I shall love this phrase. It's sexier!)

And the end result is clearly for all to see.

And oh, those who dare challenge the average theory, I would definitely show why it's NOT a good idea to average down at all.

And since we are talking about theories... whenever someone throw a theory at us... best we find out real examples.... examine the end results before we decide if we should follow.....

and what's the buy recommend based on?

And in reality .... what is it really saying??

me? results don't matter for now. ( isn't this is what I was saying at the start of this topic?) what matters is the sale of the leasing company and with it the special dividend.

So what do you think the risk is if one bets on it at this moment of time?

The 2 OBVIOUS risk....

1. Will Tony get this sale DONE?

This sale idea was mooted a long time already. Wasn't it last Aug when AA announce this idea publicly.
It's now nearly June. If this leasing company is so attractive, why is it taking so long?
No buyers? Or buyers not willing to pay so high? Or buyers not liking the T&C of the sale?

The longer it drags............

2. Special dividend.

Everyone is simply greedy.
All is focus on how much and the potential yield.
Like I said before, the sale and leaseback of assets is designed to help companies with tight cash flow.
Selling of such leasing company? LOL! AirAsia is really desperate for the cash, yes? (and if you agree on this, then perhaps you would also agree that it will the bidder's market. yes? )

Now with AirAsia needing the money badly ... which is very, very obvious... when then would it want to throw it away by giving so much money as a special dividend?

Meaning to say.... we need to address the possibility that AirAsia might not give out special dividend as suggested by the market.

Where is your...

Got sale, but really small dividend ?

Got sale NO dividend?

totally bias....

ASSUMING you have do not own any stocks of OLDTOWN before but was interested cos it's a 'INVESTMENT' stock plunging big time.

And obviously, the mindset is to think that whenever there's a huge fall, there must be some sort of bargain. Sometimes the answer is yes BUT many times the answer is no. A rather IFFY strategy cos you can get it more wrong than right.

First thing first...



Now that's the BIG fall... but the thing to note is the chart below...



As we can see the stock was driven high the past couple of months, which coincided with OLDTOWN's super duper result recorded in Feb 2017.

Now if we are interested in it now, now that the latest result is said to be 'disappointing', we need to check out Feb results.... key is don't be a sucker and simply dive in chasing numbers....

Again, for me, everything is about comparing numbers....



As can see

1. OTHER GAINS.....

that boosted profits by some 5.336 million. Well the amount is significant given the total size of Oldtown's profits. Which means we need to read that note B.



And comparing it with the same quarter last year and also comparing it with the total ytd figure, it's best one not to expect these to occur regularly.

2. Purchase of trading merchandise, food , beverages and consumables

I was interested in that amount. Oldtown purchased so much less for that period.
* This is an expense item. Obviously, the lesser the expense, the more the profits! *

Now this is where I jump to the most recent report...

What is shown is rather REVEALING.



For the latest quarter, this expense item SHOT up. Remember the quarter in Feb, the purchase figure was only 3.3 million. This quarter it was 21.9 million.

There you go. Expense shot up, profits came down.

Now 2 things to consider.

Was it intentional that Oldown purchased so much lesser for their Feb Q results? Did they attempt to boost profits? If the company is guilty then..... why on earth do we want to trade/invest in this stock?

If it was not intentional then ok. Oh yeah, thngs like this could happen. Suppliers no stock, suppliers shipment problem etc etc...

Then of course, for the Feb Q report, despite the handsome quarterly profits, it was really reflected in its cash balances.... see below.



Cash was actually lower.... BUT what stuck out sorely was the massive, massive rise in TRADE RECEIVABLES....

from 63 million to 92 million in 3 months.... is bloody scary.

So there we have it..... this stock jumped from 1.90+ to 3.40+ in just 3 months. The earnings reported was impressive but when we go thru its quarterly report, was this HUGE JUMP IN OLDTOWN'S STOCK PRICE JUSTIFIABLE?


This needs to be answered before even considering an attempt to trade this stock.

Oh back to the receivables issue. In the most recent result quarterly, the company said...

The Group has provided for doubtful debts of the overdue trade receivable accounts
amounted to RM4.76 million

Huh !!!!

In Feb report, trade receivables jumped from 63 to 92 million. Now we read the company needs to provide for doubtful debts. So the profits is adjusted lower by 4.76 million.

WOW!

If we put 2 and 2 together, ie put the purchase issue and this trade receivables issue together.........

This post has been edited by Boon3: May 28 2017, 08:29 PM

Purchasing Issue: What is not good is the possibility that the management withheld purchases for that Feb Q and pushed all deliveries to the May quarter. That would easily made that Feb quarter results look extremely good.

Trade receivables. The problem is that for the Feb quarter, receivables went from 63 million to 92 million in 3 month. In May report, receivables suddenly went back down to 63 million along with a 4.76 bad debt provision.

Ah... this is why some people advice not to trade/invest stocks with IFFY issues. This way, one AVOID stock market cliches like stock goes up, INSIDERS happily dumping their shares along the way the stock flies up... and you, the innocent, is left holding the bag.

In scenarios like these, it's not conclusive at this point of time. Yes the volume appears to be drying up at this moment but for me, it's merely indicating that those who want to sell because they were 'caught' (what were they thinking really) by the recent piss poor earnings from AAX had already sold.

BUT the recent rally which started since end April, had attracted far too many bullish traders on basically what is really a week fundamental stock.... and my interpretation is that there a fair big share who hadn't sold... YET.

So unless there is a real solid catalyst to trade/punt this stock again, I am afraid any technical rebound might not be substantial and could well be very short lived.

my 3 sens la.





ps. this is a nasty dangerous habit to be continuously looking at such falling stock. All you need is ONE real nasty bugger and you could get yourself badly burned. take care hor. I really do mean well.

For a beginner, it's ok to be doing what you are doing BUT as you progress on, all these indicators aren't really very safe and could be risky if you over rely on it. Indicators are just indicators and it's based on past traded data. Which means it's lagging.

For example, if you mix a slow indicator and use it to trade a very short time frame, you might easily end up with plenty of nasty indicators and you suddenly feel all indicators are bull shit.

Trust me ... it will happen as you evolve as a trader.

My advice always.... be patient. the market will always be there. so be patient. learn your king fu well. Fight only when you are ready to fight.

I believe you need to find a real reason to trade a stock la.
This usually works out best.
Else you be trading what the chart wants you to trade.
And if not careful, the chart can easily make a fool out of all your money.


ps... you have improved a lot hor. I can see it one....

forgot to post it...



the chunk of recent volume.... possibility of stale bull.

better watch.... see if AAX drop to 39 sen or not. Watch the reaction there. Will buyers come out supporting the stock.

Sold Sign eh?

See I tried to tell u....

Anyway just remember... during times like this, fundamenals is important.

What's the saying with when the tide and the naked buggers swimming again?

Oh...another thing on volume.

In cases like this...
On one hand you can say the selling has dried out....
But you cannot discount the opposite that buying demand has evaporated....

Remember AAX is a 4 billion plus share.
Without the volume, this share is not going anywhere...

..... and this is the accident waiting to happen.... 100xPE

oops///

This post has been edited by Boon3: May 30 2017, 05:51 PM

here cover there cover... how to tell?

so many other factors right?
Where was your entry in the first place?

if look like this... I would simply say..... too late an exit.

You post an empty chart like that, who else want to entertain you?