Wednesday, 15 August 2012

Genting SP - trust the chart not the news : Q2 results misses bigtime but hits a swing level as predicted & bounced ..

On last Friday 5pm, Genting SP did not fail to disappoint again when it released its Q2 results   - a 32% drop in net profit to a paltry S$165.5m which grossly misses consensus . 

Then knowing the results were somewhat bad and below consensus  , I determined on friday nite a reaction level ( 1.23) for the expected gap down on Monday open expecting a small rebound from there. and did a screen capture which i intended to post over the weekend & act upon on Monday.( see below chart ) ..

 this coincided with my longer time frame bullishness with genting   at 1.23 which was the main motivation for my post on genting 2 weeks ago..expecting a breakout of some kind ( to 1.38 , then react down  then possibly 1.43 before we see a bigger reaction down )   though i did not see the second half  of  the  double bottom coming then  .

Anyway  , then curious over how the market viewed the Genting Q2 results over the weekend , I immediately browsed through a few online stock forums and was horrified to find a very negative reaction to the Q2 results - with some forumers expecting an open below $1.00 .. with some proffering all kinds of 'fundamental' reasons why Genting is toast  :  
(i) removal of VP of high stakes gambling due to kick-back charges 'implying' loss of  future  VIP business
(ii) competition from upcoming regional casinos in the pipeline
(iii) earnings hardly justify half its stock price
(iv) slowdown in china & SG govt crackdown on overgambling by locals
(v) ongoing investigations by US govt into money laundering & bribery activities at LVS casinos
 etc etc 

affected by all these negative 'views', i chickened out and decided not to post my prediction of a reaction at 1.23 ( as  per below chart )  over the weekend but rather to  sit back and watch.   

However on Monday , Genting open gap down exactly at the reaction level ( missing by 0.5c)    ..and bounced from there. 

even when it bounced a little on monday to close at 1.245 ( see chart below )  , I was afraid to enter given the horrific projections of genting's future business  in the forums still fresh in my mind ,what more with lots of fresh downgrades from analysts on monday.. ( with morgan stanley & jp morgan downgrading tgt price to 1.05-1.10 and proclaiming genting has yet to find a bottom )  so I was afraid  it might break through the floor of 1.23..  . 

On tues, genting stabilized which made me realise my folly in getting suckered by the newsflow & fresh analyst downgrades  ..that gave me some confidence in my original  prediction and  some courage to enter ( albeit entering late  ) when it was trading at about 1.25/1.26 ..with some 200 wrts at 6.1c  &  then pyramid up with another 200 wrts  at 6.3c near an intermediate reaction point of 1.285    

Today genting  after reacting down from 1.28 in the morning , at about  14:02 hrs surged  past my old $1.285 barrier  to hit my old  genting high  (  where I last sold 2/3 on a failed breakout 2 post ago  ) at 1.335,  at which point  i got rid of all my wrts at day high  at avg price of  7.3c 

 now i will wait  patiently for the next swing point to enter..  but I would be mindful not  to be suckered into a long , protracted accumulation process.

Genting's action for the past few days reminded me  to trust the chart  much more than the newsflow  or any  'fundamental' arguments  i read news & 'fundamentals' are usually calibrated , orchestrated & released by the operator to sucker the public to buy or sell at precisely the wrong time. 

sorry readers - this genting discussion is  just an after-the-event record  for my own education , too late to be of any value as a prediction for your trading .. 

But there will be  plenty of  opportunities to  put my swing methodology  to post & test predictions in future posts -- so stay tuned .. but still  ..caveat emptor ...disclaimer applies.



Anonymous said...

Hi Bill,
I agree as what u have wrote that we can't trust the news most of the time, reading and understanding the charts is more important.
I enjoyed reading your blog and thanks for sharing your thoughts and predictions.

Novice Trader

Bill E said...

Hi Novice Trader ,

thanks for your comments.

yes, skillful chart reading coupled with a healthy skecptism towards newsflow will go a long way to gain mastery of the markets.

Bestwishes to your trading.


janw123 said...

I’m impressed, I must say. Seldom do I come across a blog that’s both equally educative and amusing, and without a doubt, you have hit the nail on the head. The problem is something too few folks are speaking intelligently about. I'm very happy that I came across this during my hunt for something concerning this.ibcbet

Dhenz Nogara said...

I need to to thank you for this wonderful read!! I absolutely loved every little bit of it. I have got you book-marked to look at new stuff you post…sbobet