Wednesday, June 4, 2008

Air Asia Case Study

Oil price has gone up from about 100 USD in the beginning of the year to 124 USD. That is an increase of around 24% just for 2008. High price oil will affect the earnings of companies that rely on oil for operation, example airline and transport companies.

Let’s look at the chart for Air Asia.

The stock closed at RM 0.99 yesterday. The price is currently below the 50 day, 100 day and 200 day moving average. A bearish sign.

The RSI has been below 30 since the beginning of May 08. However oversold doesn’t mean it will not go down further as illustrated by the chart.

The short term stochastic signal is showing some positive sign. But it seems to be moving down again. The bulls just do not have enough strength to push the price higher.

If you are looking to buy this counter, it is best to wait for the MACD indicator to do a crossover.

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