Indicators does look oversold... so a technical rebound could be due soon... But is that all to meet the eyes?
To me, the rise of Genting's stock price was a fairy tale played by market makers to lure more and more "investors" in. Whether it is true remains to be seen... this is just my hypothesis which stopped me from buying in the first place...
The beginnings of the fairytale:
The fairytale begun long ago when Genting secured the licence to operate a casino in Singapore. Genting's stock price bottomed at 40 cents on 28th Oct 2008 with a hammer candlestick.
Stories and 'facts' of "casinos confirm will earn money" flew everywhere. "Invest in Genting! Sure earn big time in the future!"
But was that picture that rosy? A quick look at the last few corporate actions by Genting (data compiled by grandmaster89):
Revenue: $751.7 million
Net LOSS: $382.8 million
Revenue: $643.8 million
Net LOSS: $124.8 million
Revenue: $366.2 million
Net LOSS: $175.9 million
Rights issue to gain capital from current shareholders.
2005 - Offer 5 for 3 @ $0.13
2007 - Offer 3 for 5 @ $0.60
2009 - Offer 1 for 5 @ $0.80
10 Feb 2010
Full conversion of $450,000,000 of bond to ordinary shares.
31 Dec 2009
Full conversion of $425,000,000 of bond to ordinary shares.
The true hard fact was, Genting was loss making. They had issued rights and bonds to gain capital from unsuspecting shareholders and investors to stay alive. All these are based on the premise that their casino in Singapore will earn big bucks when it's open. Afterall, how can a gambling den not earn?
And so, the tale went on. The evil market makers took it as a chance to push up the price of genting. And so, 1, 2, 3 PUSH! Genting shot up to 80 cents, before coming down to rest at the region of 70+ cents.
"BUY! GENTING GOT POTENTIAL TO BE A MULTIBAGGER!", so they say.
"GENTING IS FOR LONG TERM INVESTORS!", so they say.
"But... Genting has risen so much, and it has not opened its casino yet, let's wait for the price to drop before loading in!", so they conclude.
The tale gets more exciting. However, in the period of uncertainty at that point in time, little would dare to load more stocks. Of course, those who loaded Genting bravely at that point will still be in profit now. Basically, those who anyhow choose and load any stocks at that point in time would be in profit now for 95% of the stocks... hence I don't really consider Genting as a correct load at this point compared to others.
But... the evil market makers would like you to believe otherwise. And again, 1, 2, 3, PUSH! Genting shot up past the $1 region! And... Genting issued rights at this point in time! What a perfect timing!
"WOW!!! GENTING IS BULLISH!!!", so they say.
"RIGHTS ISSUE IS GOOD! LOOK AT CAPITALAND!", so they say.
"GET THE RIGHTS! GENTING WILL BE $5 IN A FEW YEARS TIME!", so they say.
The market makers smile to themselves. The engine to irrational exuberance has been ignited. And so, they prepare themselves for another ramp as Genting's price consolidates further and the date to the opening of the casino comes closer.
And Genting announced the opening of the casino.............. finally! What a long wait! BOOMZ! Genting price gets pushed up by the market makers. $1.30!
"52 weeks high broken! Bullish!", so they say. "BUY!!! GENTING IS OPENING!!!"
"BUY FOR THE OPENING! GENTING IS OPENING!", so they say.
But those trained in FA will look at the floating shares and balance sheets, and shake their heads in silence. Those trained in TA will have seen the glaring negative divergence in MFI, RSI, MACD histogram, and MACD crossover to bearish.
"It's time to start rolling the next phase of our plan", whisper the evil market makers to each other. "Time to take our multi-bagger profit".
And so, Genting was sold down to $1 in a matter of 9 days, and hovered at this region for a period of time.
"ANY DIP IS AN OPPORTUNITY TO BUY!", so they say.
"GENTING IS OPENING ON CHINESE NEW YEAR! BUY FOR LUCK!", so they say.
And so, the fairy tale is complete. Genting has opened. The share price has been pushed up right to it's opening. Many has been made bullish about Genting.
It's time for the kill.