IWCity (1589): Retailers buy the news?

An old phrase in Wall Street – “Buy the rumour, Sell the news”.

It means a trader starts to accumulate a company shares in anticipating the rumour will lead to a rising stock price and take profit after the release of the news. In the stock exchange, whenever a demand arises there will be a supply. After the release of the news, the slow trader will grab the stock at the higher price.

IWCity stock price

After the climatic sells back in March 2018, IWCity was supported at RM0.51 in June 2018. The stock consolidated above the support and it showed sign of strength in July 2018. On 20 August 2018, the stock gained 10% in a single day to RM0.85 with high volume. However, the gain was wiped out on the next day and it closed below the day high at RM0.79. This event showed there was a supply above this price and the climatic sell continued.

The stock bounced at RM0.58 with low volume and the bearish pattern continued. The lack of trading volume triggered the stock drop further until RM0.37. Here, the stock found support and it traded above this support for 7 days consecutively. On 28 December 2018, the stock gained 10% in a single day with higher volume compared to the previous 7 days. After the retest, the stock extended the rally until RM0.55 before it tested the RM0.42 support. The lack of follow through verified the spring and it rallied to RM0.79 with high volume. After the rally, the stock tested the RM0.67 support before the next rally to RM1.02 on 10 April 2019 with the highest volume after July 2018. This high volume at the top indicated distribution from strong hands to weak hands.

Interesting Part: Retailer buys on the news.

The news about the revival of Bandar Malaysia was released on 19 April 2019. The stock gapped up with another high volume similar to 10 April 2019. The stock has been rallied since Dec 2018 and the high volume on 10 and 19 April 2019 showed a classic distribution; this might be a head-and-shoulder pattern. I reckon the price will continue to test the RM1.10 resistance next week and drop to RM0.79 gradually. The retailers should not continue to buy this stock.   

Author: Gerald Koh