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Price Chart prevails

Koon Yew Yin 20 Jan 2021 

Since the Covid 19 pandemic began the demand for gloves far exceeds supply. As a result, all the glove makers can eaily increase their selling prices to make more and more profit which should be reflected on their share prices. Initially all their share prices went up. Unfortunately, for no good reason, their share prices have been dropping in the last few months. This phenomena is so rediculous. 

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Supermax’s 1st quarter ending September EPS was 39.58 sen. Its prevoius quarter ending June was only 15.19 sen. It made 100% more profit. Its 2nd quarter ending December should be another new record profit which should be announced soon. Among all the glove stocks, Supermax has the best profit growth rate. 

Currently Supermax is selling at the projected PE about 3.  

I am ashamed to admit my mistake in believing fundamental analysis must eventaully prevail. I believe the truth will set me free and good fundamental will eventualy prevail. As a result, I did not sell my holdings. About 80% of my holding is Supermax and 20% is Top Glove. 

I should have sold some of my holdings ealier. Now is too late to sell because each of them has already dropped about 40% from its recent peak. 

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The price charts for all the 4 leading glove stocks show that they all have been dropping in the last few months despite their excellent fundamental qualities. 

Investors must remember that price chart takes preference over fundamtal analysis. You must sell as soon as the price chart is showing a down trend. Never buy a down trending stock even if its fundamental quality is excellent.  

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