With current heightened geopolitical risks, investors appear to be staying alternately risk-on and risk-off, leading to a directionless trend. Nevertheless, greater volatility will lead to greater opportunities in short term swing trading space. Investors should place greater emphasis on proper risk management in order to play safe in this rather volatile market environment.
Using screening tool based on fundamental criteria, one of the screened companies is Malaysian-listed Luxchem Corporation Berhad, a supplier of industrial chemicals:
Technical Perspective & Risk Management
Current trend appears to be on an uptrend, with a possible pullback trading opportunity. Assuming an entry price at RM1.62 and a stop loss at RM1.50 (i.e risk of RM0.12 or 1R), it may be possible to position a swing trade based on a target price of RM1.80 (this will translate into a potential return of 1.5x of potential risk). RM1.80 appears to be the highest point in the last 6 months for Luxchem.
Prospects & Risks
Investors need to consider the uncertainties relating to volatility in Ringgit as well as crude oil. Nevertheless, Management remains positive with the Company’s prospects.
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