For a market-maker or stock operator, managing the second-wave of a bullish cycle has always been the toughest part of the business. Firstly, you got to flush out most of the stale-bulls. In the case of VIOVCOM, there is a mixture of the tired bulls. Some are sitting on massive profits and have no confidence that prices would advance and have taken the opportunity to sell in waves each time the stock attempted any mild rally.
Some are truly exhausted-bulls who have lost their marbles due to the prolonged sideways trading conditions and are keen to get out with minimum losses.
This has been a proven fact. Each time prices rallied over the last 9-months, sellers came out in many waves to realize their profits or reduce their positions by cutting loss. The situation facing this stock-operator presently is just like monkeys playing up on a coconut tree. If you can shake the tree hard and long enough they would fall and would not be there to bother you get up that tree!
It was obvious that the prolonged 9-weeks price congestion at 0.27 to 0.30 sen has enabled much long-liquidation profit-taking selling as 1.89 billion shares changed hands over this period. The vital question now is how much free-float or not friendly shares still out there? A large number would mean that the narrow-band price congestion would be extended untill a larger portion of these shares are un winded.
There are two sides to a coin. It is all about market psychology. Some viewed the stock’s inability to advance as price resistance. Others viewed it as a price support level and hold and accumulate further. I think it is a support level.
Strictly from a quantitative analysis point of view, the congestion period is viewed as a consolidation and accumulation phase. The smart-money is on the long-side and had built up a strong volume base in anticipation of the next-move or second-wave, which is up.
What does the congestion period means?
Price break-out after an extended price congestion signals a cycle-change or change in the trend. VIVOCOM price congestion has lasted 9-weeks. The period of the time-frame break-out is crucial. Price break-out after a short price consolidation time-frame is not significant.
Break-out after a prolonged price consolidation time-frame as in the case of VIVOCOM is very significant. Break-out of all 9-week tops is more significant than a break-out of all tops for the last three weeks. Watch for the upward price break-out for VIVOCOM.
Volume would surge and that would confirm the start of the 2nd wave of the bullish cycle. Deng Shou Peng once said: White cat or black cat? The colour of the cat is irrelevant as long as it catches mice!
What should Vivocom traders be looking for?
Success in stock market is not so much a matter of knowledge and analysis as it is a function of consciousness, of being able to let go and flow with the continually-changing way it is. Let us look at the reality.
Any serious trader or investor of VIVOCOM should not be influenced by what happened in the last rally. That was a completely different technical game and it is now over.
Vivocom is in a new trading phase. Traders should re-focus their focus. They should look at what transpired over the last nine weeks and look seriously at the volume and the implications of the tight-price actions.
They have to consider who actually absorbed, like a sponge, the 1.89 billion shares that were ditched out and start to understand what it means by “smart-money” or “people with deep pockets”. Investors must understand that for every share sold there is a buyer. With a proper understanding, they will then know that the setting for the next bullish-wave is been established!
VIVOCOM Price Trend- What’s Next?
People make markets and they are irrational much of the time. Markets are not random – because they are based on human behaviour, and human behaviour especially mass-behaviour or Madness of Crowds, is not random. It never has been. It probably never will be!
How long would the price congestion last? That is a few- million- dollar question! I honestly do not know. Only the market-makers know. What I really know is that the start of the next big upward move in VIVOCOM would catch many by surprise! When traders least expected it to happen, it happens! This I guarantee!
My Monkey Crystal Ball Calls:
1st upside objective: 0.335
2nd price-target : 0.40
3rd price-target: 0.475
CONCLUSION: If the Sun rises from the West, I would certainly dare to call a sell on VIVOCOM. But, the Sun does not!
Happy and Prosperous CNY. G.M.Teoh
G.M.Teoh is an independent market analyst who has successfully defied the conventional wisdom of trading.
His analytical research work on stock market were published by Star Publications weekly under the column name “The Stock Market Signals” from 1986 to 2009. He is currently the chief coach of the Master Trader Tutorial (MTT) conducted in Singapore, Malaysia and Indonesia.