(courtesy of tradesignum.com)
Yesterday, GPACKET continued its downtrend from Feb 26 peak of $5.85 to close $4.02 May 18.
May 18 day seems significant, not purely from the size of the price fall (18 sen) but volume traded. Volume is highest in last 3 month, 2nd highest over last 12 months at 3.8M shares traded (Highest = 4.4M on Dec 20, 06), and is the 2nd "high" volume to follow May 11 first relatively high volume (6 trading days ago).
It is worthwhile to zoom in into GPACKET trading history yesterday. Unfortunately, since I don't know how to capture the picture of the intra-day chart, I need to give you a verbal description.
GPACKET Intra-day Price and Volume commentary
- GPACKET closed $4.20 the prior day.
- At 9.17 AM, opened at $4.18 with a slight gap down.
- At 9.55 AM, price started to decline further, albeit at low volume initially.
- At 11.17 AM, the stock has fallen to $3.80, and volume started to pick up at around 11.17 AM. This indicates possible intra-day fear selling.
- At 11.23 AM, the stock touched a low at $3.68 (12.4% and 34% fall from prior day close and Feb 26 peak).
- During 11.17AM-11.23 AM, it must have felt very scary to own GPACKET if one just look at market prices.
- At 11.24 AM, the bulls stepped in and drove the price back up.
- At 12.30 PM, the stock closed $3.88.
- Upon reopening at 2.30 PM, strong buying interest on higher volume stepped in at $3.90.
- The afternoon session sees the bull having the upper hand, and the price closed at $4.02.
- However, for the whole day, one would say that the bears still have the upper hand, driving the price from $4.20 (prior day close), down to $4.02 (yesterday's close). Therefore, it is possible the intermediate downtrend might not be over yet, and one would need to watch GPACKET price on Monday morning/next week for confirmation of further downtrend, or otherwise.
Effect of GPACKET on OSKVI on Share Price and Volume
(courtesy of tradesignum.com)
Since OSKVI owns a large amount of GPACKET, what was the impact to OSKVI, after the large drop to GPACKET, at least to $3.68 at $11.23 AM yesterday?
1. From a volume perspective, not much. In fact, the total OSKVI volume traded is very low from the last 12 months perspective, well below average daily volume, almost minimal. (but watch next Monday to next week for possible time-lag/time-delay effects on OSKVI).
2. From a price perspective, a slight fall. Price fell from $2.40 close May 17, touching a low of $2.34 on small trade (2% fall), before rebounding and closing at $2.38 (<>
Effect of GPACKET on OSKVI NAV
1. This is important to understand, since GPACKET forms the majority of its NAV (or 56%, using May 18 closing prices), and OSKVI NAV is directly dependent upon market prices of the securities it holds (like a closed-end fund).
2. Using updated May 18 closing prices, OSKVI NAV = $3.65. Still a decent gap above $2.38 OSKVI closing price.
3. Using intra-day low price for GPACKET of $3.68, OSKVI NAV = $3.48. Still a decent gap above $2.38 OSKVI closing price.
4. For the NAV to match yesterday's closing price of $2.38, GPACKET would need to drop to $1.55 (using May 18 closing prices for the rest of the securities).
The Importance of Technical Analysis
A couple of days ago, Ben Gan from Wisdom Wise blog made a timely comment on one of my earlier OSKVI post on a TA perspective. It led me to think whether I have sufficiently warned my readers about the importance of TA in deciding an appropriate time to enter and exit a trade.
Let me reiterate that I firmly believe that when one supplements fundamental analysis with an accurate application of TA, then, one can get superior results than merely employing one method alone. It may seem obvious and redundant to say this, but if you can read TA accurately, don't ignore TA.
Let me reiterate that I firmly believe that when one supplements fundamental analysis with an accurate application of TA, then, one can get superior results than merely employing one method alone. It may seem obvious and redundant to say this, but if you can read TA accurately, don't ignore TA.
Yet, you may wonder why I don't provide TA advice on OSKVI even though I believe in that. One reason is because I don't regard myself as an expert or advanced practitioner yet, but merely a beginner-intermediate student of TA (my TA results, whilst positive in a bull market, is nothing to shout about). At best, I would just make a fool of myself several times on this stock due to mistimed calls. Worse, I could cause harm to others as a result of my ignorance. Also, I would be lying if I said I used 100% TA when I bought my own stake at OSKVI.
Notwithstanding that, let's take a look at OSKVI's chart - please use your judgement, and form your own conclusions:
Notwithstanding that, let's take a look at OSKVI's chart - please use your judgement, and form your own conclusions:
Observations:
1. June 30 - August 24, 2006: Nice strong uptrend. I believe if one monitors the stock in the morning of July 3, 2006, there should be a strong buy signal. Note that just 2 days prior (June 29, 2006), the buy signal wasn't there yet. This highlight the need to update charts at least once a day.
You might rightly ask why is it correct to buy on July 3 at a higher price than on June 29 (just 2 days ago)?
To a trader who focussed purely on share price and volume, July 3 provided confirmation of an uptrend. June 29 didn't.
However, to a value investor, a situation like June 29 is not a bad day to buy since the stock is on a bargain.
It is important to keep both concepts clearly in mind. There is no right and wrong answer, just different styles.
2. Aug 24 - Nov 16, 2006: Share enters consolidation phase.
3. Nov 16 - Today: Share appears to enter a mid-term downtrend.
Here, it's worthwhile to point out the benefits of being a trader. A trader would have noticed the downtrend signal around Dec 4-5, or maybe even earlier. On the other hand, a value investor that ignores TA could still be holding on to the stock as it should still appears under-valued, although clearly less under-valued than on June 29. In this instance, a trader would do better. Again, it is important to appreciate the benefit of different styles.
4. Mar 16 - Today: There may be a possible side-ways trend, but at the back of a longer-term downtrend bias noted in 3. above, it is still not clear. Certainly no clear uptrend visible yet.
5. On May 16 07, the stock showed a small green candle, with a small green volume (i.e. slightly volume increase). To be honest, on May 17, I mistook that for a potential bullish TA signal in investssmart chatbox - a TA beginner mistake. In retrospect, it was clear that I was wrong in interpreting the charts in at least 2 respects. First, the price increase is small, i.e. it pays to be suspicious. Second, the volume increase on May 16 is small, and it pays to be suspicious, especially with point 3. Third, on the next day (May 17), there was already clear sign that the upside observed on May 16 might not have much energy left, as confirmed in May 18. In other words, the strong uptrend sign is clearly not there yet. It is important to continue monitor for that sign, be patient, and wait for the signal to show itself (or more accurately, for all signals to align themselves to give compelling reason to buy), if one wants to time one's entry well.
CONCLUSION
You might rightly ask why is it correct to buy on July 3 at a higher price than on June 29 (just 2 days ago)?
To a trader who focussed purely on share price and volume, July 3 provided confirmation of an uptrend. June 29 didn't.
However, to a value investor, a situation like June 29 is not a bad day to buy since the stock is on a bargain.
It is important to keep both concepts clearly in mind. There is no right and wrong answer, just different styles.
2. Aug 24 - Nov 16, 2006: Share enters consolidation phase.
3. Nov 16 - Today: Share appears to enter a mid-term downtrend.
Here, it's worthwhile to point out the benefits of being a trader. A trader would have noticed the downtrend signal around Dec 4-5, or maybe even earlier. On the other hand, a value investor that ignores TA could still be holding on to the stock as it should still appears under-valued, although clearly less under-valued than on June 29. In this instance, a trader would do better. Again, it is important to appreciate the benefit of different styles.
4. Mar 16 - Today: There may be a possible side-ways trend, but at the back of a longer-term downtrend bias noted in 3. above, it is still not clear. Certainly no clear uptrend visible yet.
5. On May 16 07, the stock showed a small green candle, with a small green volume (i.e. slightly volume increase). To be honest, on May 17, I mistook that for a potential bullish TA signal in investssmart chatbox - a TA beginner mistake. In retrospect, it was clear that I was wrong in interpreting the charts in at least 2 respects. First, the price increase is small, i.e. it pays to be suspicious. Second, the volume increase on May 16 is small, and it pays to be suspicious, especially with point 3. Third, on the next day (May 17), there was already clear sign that the upside observed on May 16 might not have much energy left, as confirmed in May 18. In other words, the strong uptrend sign is clearly not there yet. It is important to continue monitor for that sign, be patient, and wait for the signal to show itself (or more accurately, for all signals to align themselves to give compelling reason to buy), if one wants to time one's entry well.
CONCLUSION
1. If you have the skills, use TA to supplement your entry into OSKVI.
2. From a business perspective, OSKVI shows a compelling value, despite the potentially large fall of GPACKET. Certainly, as a value investor, I would consider acquiring OSKVI in its entirity at current prices.
3. Other things equal (and bear in mind real life is rarely equal), GPACKET would need to fall from $4.02 to $1.55, before OSKVI trades at 100% NAV.
4. There needs to be strong catalysts that will unlock its potential value, before one decides to invest. A reader has just commented on a potential catalyst. I have provided some potential catalysts in earlier posting, but since the post is long, I will comment on that in a later post. Hopefully, I'll get the time to do this, but there should be no hurry, as the catalysts may take some time before it happens.
Disclaimer: As usual, use your own judgement, and invest (buy, hold, sell) at your own risk.