DIALOG

Moral of  today :
Less signal confirmation>>higher risk>>higher gain.
More signal confirmation >> lower risk >> lower gain
(I use Dialog to elaborate my point....)

On 23Sept11, I told my friend that Dialog is ripe to catch the knife as she has broken 3 support in 3 days !!!. So I told him lets catch at RM1.84 at the 4th support , it should be quite safe. Indeed she rebound from the next trading day onwards and there is a good rebound with a 25%. Well, catching knife like this comes with a higher risk. If I want to have a higher probability winning, then on 27Sept11, I can catch it when the %D (blue line) the Smoothed %D (red line) Fast Stochastic crossover and above 20%. Will more confirmation means I will have lower return at around 11%. Note also on 27Sept, KLCI has just rebound with a Bullish Piercing pattern candle stick. Bear in mind, Dialog is resisted by 2.3 resistance line for a few days already showing shooting stars and spinning tops, it will be prudent to take half profit if not all profit.

Fundamentals of Dialog :
Though Dialog has a high PE ratio, I have calculated its intrinsic value is around RM2.80 (Future 10 years earnings using 5 year past growth %). Definitely she has reached RM2.80 in June11. With current chart going downtrend due to overall market is bearish, the chart is telling she will go down further. But I do believe if one is to keep for long term as an investor (5~10 years ?), I believed RM2.80 is within reach again. If one don't own any of her, it would be wise if to collect it around 60% below the intrinsic , at RM1.12 (PE around 14) or RM1.40 (PE around 18).