SPSetia-WB may have a bullish breakout

SPSetia-WB broke above its downtrend line at RM0.44 in early August. The breakout was followed by a correction back to the downtrend line. In the past few days, it rose slowly & timidly. Yesterday, it rallied strong in the afternoon session (see Chart 1). Is this the start of a rally for this warrant & the mother share?


Chart 1: SPSetia-WB's daily chart as at Aug 18, 2010 (Source: Quickcharts)

The last time SPSetia-WB broke above the 40-week SMA line in w/e April 17, 2009, it coincided with a similar breakout in the mother share. SPSetia then rose from RM3.00 to RM4.60 over a period of 8-9 weeks. See Chart 2 & 3.


Chart 2: SPSetia-WB's weekly chart as at Aug 18, 2010 (Source: Quickcharts)



Chart 3: SPSetia's weekly chart as at Aug 18, 2010 (Source: Quickcharts)

Based on the bullish breakout, SPSetia-WB could be a trading BUY. A better alternative trading BUY could be the mother share, SPSetia.

Note: Based on yesterday's prices, SPSetia-WB is now trading at a premium of about 15%. Its main terms are exercise price of RM4.48; exercise ratio of 1-for-1; and, expiry date in Jan 2013.