MYEG: Double Top Distribution

Since the massive -65.34% gap down in 4 days’ time on 17th May 2018, the stock found support at RM0.88. With the lack of volume, the stock continued to show weakness and dropped to RM0.80. Here, the huge volume came in to support the stock above RM0.80 on 31st May 2018. It showed the large operators were buying and the automatic rally of 14.58% gain approached after 7 trading days.

The lack of volume unable to drive the stock further up and the support of RM0.80 was retested on 12th July 2018. Although it travelled below 10 days moving average, the demands forced the stock to gain 55.05% in 8 trading days. Interestingly, the stock consolidated at RM1.20 with low volume. It showed buyers and sellers were equal. This could present the next big rally because the gap down in May 2018 might be the panic sells from retailers. After the consolidation, the stock rallied 45.75% but it was incapable to persist. The selling restarted with the bear market in 4Q2018.

In January 2019, the stock rallied and consolidated at RM1.00. Here, the stock rallied 15.93% on 6th March 2019 with a high volume. The price action demonstrated a strong buying hands and the stock went up to RM1.68. This was a good short term play of over 60% gain in 1.5 months. After tested RM1.35 support, the stock showed another rally in June and July 2019. However, the rally did not penetrate RM1.70 resistance and the selling formed a double top. The pinnacle double top is a strong message that the stock might have topped. Smart traders would have sold all their positions to protect their capital.

The trading range above RM1.35 in September 2019 was a definite no buy zone. It was dangerous and did not show a potential of uptrend move. Simple explanation, lack of volume and lack of uptrend momentum. The support penetration of RM1.35 on 17th October 2019 confirmed the weak characteristic and the ongoing selling might force the stock to travel further down. Obviously, I won’t buy this stock thinking it is selling cheap. A cheap stock can be cheaper, an expensive stock can be more expensive. (Click here for the full picture)

Author: Gerald Koh