Fund Flow

Wednesday, 10 April 2019

China Cosco Shipping Holdings Limited (601919)

I feel that there is something worth to write on this educational text book application on technical analysis on A share China Cosco (601919), one of the trade i have taken profit taking for the past few days approaching my target price set.

I would like to touch on 3 points namely, Fundamental Analysis (FA), Technical Analysis (TA) and Fund Flow Analysis (FFA)

Number 1 Point: on Fundamental Analysis, the reason why i decided to take a position on A share China Cosco is because it is a global shipping company where its presence is increasingly felt in the global stage. Baltic Dry Index reach at all time low of 291 points in year 2016 February 12th, where overcapacity in commodities seen its price slump affecting global trade activities follow with credit tightening is at the highest in year 2006 June with 5.255% that cause the financial crisis in year 2007 to 2009.

In the past China Cosco Shipping Holdings being a state owned enterprise of China had seen major corruption scandal that seen its value wiping off in the stock market. The worst is over for China Cosco currently trading in undervalue price. All time high for China Cosco (601919) had seen its share price at 60 (CNY) 60.35 in year 2007 October 19 pre financial crisis 2007-2009. The lowest price reach is 2.73 (CNY) in year 2013 August 2nd.

However ray of hope is shining on China Cosco (601919) and its fortune may overturn soon with the prospect of Baltic Dry Index bottoming in year 2016 with 291 points, had seen index points rallied to 1773 points in year 2018 August 3rd recent high, that is a whopping of 509% before trade war tension between US and China escalate further had caused BDI to drop to its recent low of 601 points in year 2019 February 8th.

For more detail reading up on Baltic Dry Index (BDI) which i wrote earlier please refer to the link

Number 2 Point: on Technical Analysis, refer to my chart attached source from Chartnexus

China Cosco A Share (601919) 3 Year Daily Chart

On October 2018, China Cosco (601919) reach recent low of 3.33 by using that as a benchmark couple with resistance classical line drawn the immediate resistance is at 6.66 (100%) simple mathematical formula and an useful strategy by Technical Analysis expert Mr. Hu Li Yang's rise by one fold meet resistance pressure 涨一倍埋压. Note that all time low price is 2.73 by using rise by one fold meet resistanc pressure strategy price works out to be 5.46 (CNY) may see resistance turn support and support turn resistance vice versa. if price 5.46 maetrialise after China Cosco recent high of price 6.58 reach past few days x .85% (safety of discount margin) it works out to be 5.59 not far from 5.46 price. Ideally investors can accumulate around price range of 5.26 to 5.59 ranging from (15% to 20% safety of discount margin).

China Cosco A Share (601919) 3 Year Daily Chart 

 China Cosco A Share (601919) 3 Year Daily Chart With Technical Analysis
Based on this chart, it is observed that classical neckline in upper light blue color hit 3 times and resisted at price 6.56, since price from recent low 3.33 rallied to 6.58 past few days high had seen almost 100% in profit, base on the assumption that price upon reaching 6.56 high from 3.33 low will there be any more horsepower for more upward thrust to break above resistance or price could see a temporary correction to the yellow rectangle line box for consolidation and camping near resistance for more upward price movement. It is notice that the impulsive wave has established from the bottom of yellow rectangle line box to reach 6.56 classical neckline drawn is not sustainable. I would preferred to see a price correction to around 15% to 20% to form a potential inverted head and shoulder chart pattern to time entry again. the next resistance could be 8.52 in sight.

China Cosco A Share (601919) Historical Chart

Above is the monthly historical chart with Technical Analysis illustrated.

Number 3 Point: Fund Flow Analysis is observed to be bullish because of more foreign capital inflows into China with MSCI A share inclusion, CNY drawn into IMF Special Drawing Rights (SDR), 

Disclaimer: All news, information and charts shared is purely by my research and personal views only. This is not a trading recommendation or advice but on the basis of sharing information and educating the investment community. Different traders and investors adopt different trading strategies and risk management approach hence if in doubt please approach or seek clarifications with your Financial Adviser, Broker and Banker.