Technical Analysis of Abterra Limited (Abterra) - SGX

Many stocks below ten cents are traded in very high trading volume in the past few weeks as efforts are being put on these stocks that are currently lagging behind the blue chips. One of them is Abterra limited (Abterra).

Abterra is an investment holding company that primarily trades in iron ore, cotton, coal, chemical, steel and bathroom products. The company also engages in mining resource properties, as well as in the production, transmission, distribution, and sale of electricity. Abterra was formerly known as Hua Kok International Limited and changed its current name in 2005. In addition, it also has operations in China, Australia, India, and Indonesia

The price of Abterra was trading in a range between $0.015 and $0.025 from mid-November 2008 to mid April 2009 with very thin trading volume. Volume starts to increase in May and price shot up as high as $0.085 on the 11th of May 2009. A correction ensued and price is currently at $0.07.

The price trend changed from a down trend to an uptrend when price breaks away from the $0.015 and $0.025 trading range in April and traded around $0.030. The short to long term moving averages started to reverse during this period providing a good opportunity to buy. Currently at $0.070, price is still above the averages and therefore still in an uptrend with relatively high volume. It has been appearing in the SGX top volume chart for the past few days. However, price moved into a sideway correction since the high of $0.085.

The current price momentum is neither bullish nor bearish. The Relative Strength Index (RSI) and Momentum indicators are currently at the midpoint. However, the MACD indicator is already showing bearish momentum on the current trend since 3 weeks ago and there is no indication of it turning bullish yet. Therefore, the uptrend is weak and the next direction should be determined by whether the price breaks below the support level (bearish) or above the resistance level (bullish).

Price is currently at the 38.2% Fibonacci retracement level from the long term bear trend since early 2008 when price was at $0.15. It tested the 50% retracement level at $0.085 but failed to continue. Generally, the Singapore market based on the FT Straits Times Index is at the 38.2% retracement level. There is a low chance of price climbing higher unless the FTSTI climbs to the 50% retracement level at 2,680 points.

Watch for the breakout of the support and resistance level for this particular stock. Traders should run away if price breaks below the support level of $0.06 and continue to hold or buy if the price breaks above the resistance level of $0.07 and if does break above the resistance level, it may start to test $0.085 again and probably to $0.10. The next support level is at $0.05.


Daily Abterra chart as at 5 June 2009 using NextVIEW Advisor Professional


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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.