Creative brings '3D' sound to headphones after US$100m R&D
HEADPHONES are unnatural, Sim Wong Hoo, founder of Creative Technology, believes. Read more at The Business Times.
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Tale of a creative contra stock: Creative Technologies
Disclaimer: I am just sharing a recent trade from the technical analysis
perspective and I do not advocate buy, sell, hold, reduce or add call. Basically, like you; I come to the market to
make money. I understand everyone hold different views on investment and my
style might differ from you. If your views are different, I would like
constructive comments and please do not flame me. I would like to share and learn from each other.
February 2018, Friday
After I posted a news story on Creative Tech “Creative brings '3D' sound to
headphones after US$100m R&D” https://www.investingnote.com/posts/639067
, I took a look at the chart.
It is not a chart I look often at all because it had not been “moving” for a long,
long while. And many people have forgotten about it. But when I looked at the
chart pattern, I saw something different this time. Creative Tech seems to have bottomed after 12
years of decline! 12 long years (since 2005).
The years between 2002 to 2005, the counter was moving sideways. That’s why I always myself to apply stop
loss. A counter can takes more than a
decade to hit bottom.
do I said it had bottomed out?
It had 2 spikes in 2017 and the 20 DMA is higher than the 200 DMA. The 200 DMA seem to be rising after August
2017. The 200 DMA had been on decline
since 2005. There is a change in pattern…
counter opened gap up. Gap up shown the
price had jumped and it could represent a significant change and to me it
present a trading opportunity. The price
last closed was 1.25 and it opened 1.46.
The price was running up quite rapidly and I locked in the order before
lunch and got the price at 1.96. I
actually thought the price would probably go up to 1.80 but after lunch the
price kept surging. In the late
afternoon, it went as high as 3.39.
While extremely long candles are common in the U.S markets where price
movement are more volatile, in Singapore it is rare. I was tempted to take profit but I did not. It still closed very nice at a nice number of
24- 25 February 2018, Saturday and Sunday
I did some thinking over that weekend and made some calculations. I reckoned that it is impossible to have 2
extremely long candles for consecutive sessions. One extremely long candle that
jump 100% is very rare, so what is the chance of another one. Not likely.
I mapped out the different scenarios on Monday, (a) doji (b) red candle
engulfing and (c) 50% green candle.
And if a) and b) occurred by afternoon, exit at 2.8, I still want to take
profit. If (c) occurred, target price 4 dollars.
26 February 2018, Monday
Creative opened much higher on Monday at 3.30, it continued to run up. At 9:10am, it went past 4 dollars, locked in the order and sold off at 4.34. The
highest price that day was 4.38.
Why I did contra instead of swing trade or even holding the counter longer?
There is no exact right or wrong. If you
see the 1st chart, you would know that Creative Tech market cap is
small now and basically it had been not moving.
There had been no coverage from analyst for a long time. Those who bought at higher prices have
already long left the market or had forgotten about it. There is an absence of support and resistance
level, so if I hold longer I am not sure which price would be the resistance or
the support level. I am not keen to take this risk as I want to
What about going forward?
At this juncture, I would coined Creative Tech is going through an “IPO” phase.
That means prior to February 23, the price is now deemed as undervalue.
New buyers have come in and like
IPO, new price points (including new support and resistance) will be
established the next 5 months. They will be the stabilizing agent. I am also aware that the fund managers, BB had also came
in, so with increased coverage and increased stake, the price should not go
back to 1 dollars plus the next weeks or months. It may hover around this price
and the possibility to go much higher is very likely too.