Tuesday, December 2, 2008

Sime Darby

Sime Darby almost halved its net income target on Nov. 28 to 1.9 billion ringgit for the year to June 2009. Palm oil, the biggest contributor to profit, has tumbled and the global recession has weakened demand for houses and vehicles.
Sime Darby's revised earnings goal is about 34 percent lower than the average analyst forecast.

The technical chart looks bad. Yesterday drop was on heavy volume.

The MACD indicator is way below its signal line. ADX is creeping up and with –DI above the +DI, this may turn out to be the beginning of a downtrend.

RSI is in oversold territory but stocks that are in a downtrend will stay in oversold region for extended duration before rebounding.

The stock broke through the RM 5.45 support yesterday. This level will be the resistance for any up move from this point.

With fundamentals weak and technical chart not showing any sign of rebound, it is best to avoid the stock until a clearer picture emerges.

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