Based on technical analysis of BAT stock price demise yesterday, rm8.63 has appeared as stronk support. I’m surprised that there was virtually no bounce from rm9.26 touted by me as a stronk support previously.
BAT made a new all time low today at 9.22 and rebounded. It "looks" like a "bear trap", but I am not convinced. As of today, bulls tries to regain control and the real test is Monday. I think next week is a good chance for those who are trapped on the long side to sell on strength.
@MOBA, the key thing about technical analysis is to first figure out what is the TREND, before thinking about other details like resistance, support, etc. In BAT's case, the TREND is very obvious and the downward trend is supported by terrible and ugly fundamentals. Sure, price will go down, move up, etc. but the clear downtrend is unmistakeable if you look at charts longer than say 4 years. Since 2020, it has been trading on a sideways range, typical of long term consolidation, but today's price action to make a new all time low of 9.22 is not convincing. Nevertheless bulls have been defending strongly and so, it won't be so easy to break below 9.22 yet as the momentum next week is an attempt by bulls to push prices back up again to support.
If BAT makes a new low lower than 9.22 in the coming weeks, then, bulls will have lost and we will see even lower prices.
IMHO, next week or two may be the final chance for those who are long to exit their longs.
The longer longs hold on to their position, the greater the odds of them losing. Hold for 2 years and don't be surprised to see RM7.
FWIW, without BAT, today, my portfolio made all time high again. It has made all time highs 3 times this week. One does not need BAT to win this game. There are so many other sound fundamental stocks with good technicals. Or buy good quality REITS at lower prices if one doesn't know technical analysis. REITS returns should match or beat EPF over 5-10 year time-frames.
@Bradon, 9.22 is clearly the low today. Next week, 60/40 bias towards higher prices. The question mark is how long can bull sustain (a few days? 1 week? 2 weeks? 4 weeks to end Oct on next QR?) and how high can it get to (RM9.9?). I expect a lot of sellers near RM10. So, next week, next 2 weeks, next 4 weeks is critical. If prices starts to rise in the 4 weeks leading to QR release, majority chance the QR will disappoint. Punters are betting QR is good, hoping for a good Vuse results, but odds are not good here to bet on the long side.
I suspect, this next 1, 2, 4 weeks may provide opportunities for longs to exit on short term strength. I suspect 70/30 odds that RM10 resistance will hold, because many longs who averaged down below RM10 will try to exit near there to try to make a small profit. Those who are not greedy have 50/50 chance of making a tiny profit. Those who are greedy and tries to sell above RM10 like RM11 is banking on low odds of winning.
For this week, for those who are long, I strongly advise to put a Stop Loss at below 9.2. Today is a bullish engulfing pattern signaling a potential trend reversal. So, by right, price should rise next week, if today's bullish engulfing follows through. So, next week, we don't expect 9.2 if follow technical analysis. However, If next week touches 9.2, this stock is completely dead. Hence, by right, next week, should be low odds of seeing 9.2 and when there's a low odd event happening, you should have a stop loss there because it should be low odds to see the stop loss gets executed. Trade dynamically, because market is not static by dynamic. The stop loss after next week will be different and gets updated later.
Today is Bullish Engulfing candlestick, where today's close (9.5) is higher than yesterday's high (9.45). Bulls should feel a sigh of relief. However, if (low odds) Monday shows a Bearish Engulfing candlestick (e.g. if Monday's close is below 9.22), I think you will be glad to have your Stop Loss at 9.2 gets hit. If Monday do a Bearish Engulfing, we could be looking at a serious downtrend continuation.
Nevertheless, I think less than 20% chance Monday will show a Bearish Engulfing. Next week majority odds will rise / flat.
@Simon, majority odds 2024 Budget will be neutral for BAT. Only very small minority odds that government will do a complete U turn on GEG. If you are betting on a U turn on GEG, that’s like buying TOTO. 😂
@William, good to watch the price movements past 4 days but also watch price movement past 4 years and longer too so that you employ the right trading strategy. Many BAT retailers have been holding for longer than 4 months hoping for price to rise back and getting trapped. The longer they hold, the higher the odds of losing
when Vape tax is just 10%, Local Vape price will wipe-out illegal Import ( overseas transportation for foreign already Cost 10% of its selling price---How to compete with local Brand---Sorry BAT should be International Brand ) As Vape replaces premium Cigs, BAT revenue will expand rapidly bcos BAT has over 1000 local Outlet
It is strange that dividendguy has been too active at this BAT column even though he has sold all or most of the BAt.....Keep telling ppl to sell BAT as the nice guy to ask ppl dont be stubborn.......May i know what other counters in your portfolio n are U more in fundamental analysis or technical analysis? Any one know more detail what going on in the Vape market? For BAT to get better quarterly profit for next 2 quarters, the investors n top management just need the government to work harder to reduce iilicit cigarettes in the market..........BAT is undervalued if below 9.80, with so many ppl coming to this i3investor to give negative comments, either they know more or some force want to pull down the share price of BAT........ Not many research houses giving new TP for BAT in past 2 months....
@Kevin, I cut loss at 9.65, losing 2 sen - my average cost is 9.67. Normally, when I lose monies in a stock, I like to keep track of the stock for another year to see if my fundamental thesis is correct. I like to read fundamental comments here to see where the blindspots are. This is part of becoming a better investor. I don't mind being proven wrong by market. When I sell, I have a thesis and here, I feel it is a strong one.
I see from your past comments that you are advocating DCA for this stock. Why do you think this stock is under-valued and worth to average down? Are you aware that Vape market in Malaysia is now generating RM3.5 billion revenue? And cigarette market revenue is only RM4.9 billlion? And BAT share of Vape is hardly anything? Don't you think BAT is too late?
"KUALA LUMPUR, August 21 – The retail value for Malaysia’s vape market grew by 53 per cent from RM2.27 billion in 2019 to RM3.48 billion in 2023, according to an industry report.
The Malaysian Vape Industry Study 2023 by the Malaysian Vape Chamber of Commerce (MVCC) also revealed that the number of adult vape or e-cigarette users in Malaysia increased by 27 per cent from 1.1 million in 2019 to 1.4 million in 2022."
"The Malaysia cigarettes market size was MYR4.89 billion ($1,182.4 million) in 2021 and is expected to decrease at a CAGR of more than 1% during 2021-2026. The tobacco business in Malaysia does not appear to have promising futures as total volumes are predicted to drop from 2021 to 2026. The industry is expected to post value growth which can be attributed to price increases majorly driven by increases in taxes on tobacco products."
Google "what is BAT share of cigarrette market in Malaysia" - you will realize BAT owns 52.4% of Malaysia cigarrette market and this market is declining.
You will also see BAT management keen to convert its cigarette smokers into Vape, not realizing that whilst the same customers are sticky on cigarettes, once they convert to Vape, they will have hundreds of other choices in Vape.
The Vape market is very, very different than cigarettes market.
So, these are my thesis. In cigarettes, BAT commands 52.4% of a declining market. In vape, BAT's a nobody, based on my research. I'm willing to monitor for a year to see if my thesis is right or not. Looking for people to provide counter examples to improve my learnings.
https://www.globaldata.com/store/report/malaysia-cigarettes-market-analysis/ - a good report. BAT is the market leader in cigarettes. Dunhill is the more recognized brand by BAT. The best thing is for BAT to protect its cigarette segment as it is a cash cow. The question is - is BAT Board and Management willing to hunker down, or will they follow ASTRO to be aggressive and die faster?
My experience with senior management and Board members is that they typically don't like to do nothing when market share is declining. They always want to do something. Especially when they are paid handsome fees - see the Annual Reports.
Because of this human nature, more likely than not, they will make mistakes and run the company to the ground. Because of this realization, I sold and exited.
It is human nature - Board and senior management nature - that when revenues decline, they will eventually sack the CEO. And replace the CEO with someone more aggressive. Then the CEO takes big bets, spend a lot, and basically run the company to the ground. Like new ASTRO CEO. Took on big debts to be aggressive and then, realize that it can no longer afford to pay high dividends because Finance costs that comes from big loans is unable to generate enough cash and so, they had to cut dividends drastically.
So far, based on what I've seen on BAT management, I haven't see they cut Directors fees by 20% yet. Like to see that before I go back in. For now, I have a feeling Director fees and CEO salaries will rise rather than cut 20%.
Warren Buffett is famous for saying this - "“When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.”"
In BAT's case, its business reputation (declining cigarette revenues) is likely to remain intact, no matter how good BAT management is. That's my thesis.
Someone once posted past 10 years of BAT EPS. My own tabulation showed me that past 8 years, its EPS has been declining. I don't think this is due to Management mistake, but cigarettes have a reputation for bad economics these recent years and I don't think this trend is going to do a U turn ... it's one of those macro trends that is likely to persist.
Looking at price action .. chart wise .. I think it's too early to try to catch the bottom. It is only starting its downtrend. My thesis is it needs to do what it did during Jul to Nov 2022 i.e. drop more, find a bottom, build a base, test the downtrend again and again ... and when it finally has built a base and couldn't go down anymore, then, that's the time to buy anticipating the next path is up. But that could take several months and meanwhile, I think we'll continue to see lower prices.
I'm willing to be wrong here and not lose, and being too early to catch a falling knife.
To be honest, in a long term down trend like BAT, I am only about 33% confident of winning the trade on the long side. So, I really need to see strong technical signal that the bottom is really in, it has been basing, it has been testing lower lows and fails.
Without this technical signal, I will prefer to miss the opportunity to win from the long side.
But you could be right ... maybe I should stop monitoring BAT and move on. Why trade from the long side in a downtrend ... maybe because I'm looking for the same opportunity that existed in Nov 2022 where BAT has a fast and nice run up - the trader side of me is "hooked" to try to find the right technical setup. Hence, I linger here to stay in touch with the market. I doubt anyone's comments here will move markets, as i3 is just one site.
What I find interesting is one of the commentators mentioned candlesticks. My experience with candlesticks is that it is random. E.g. last Friday, we have a bullish engulfing pattern, which is bullish. However, today's pattern negate that i.e. this is now a bullish reversal failure - indicating more lower prices to come. However, I think my view here is "random" i.e. 50/50 chance that this view will be wrong or right.
I've seen this randomness in candlesticks for many, many years (nearly 2 decades). I don't have an edge.
My edge comes in fundamental analysis (and combined with timing and technical patterns). Without fundamental analysis, my technical results is just 50/50. I'm willing to illustrate with BAT over time how random techical / candlestick trading really is.
"In The Intelligent Investor, Benjamin Graham famously writes that: “Investment is most intelligent when it is most businesslike.” Graham viewed any purchase of a stock or bond as an investment in a business, rather than the purchase of just a piece of paper."
The % of Malaysians who smokes (legal and illegal cigarettes) has declined. GEG (Generation End Game), global trends and vaping/alternatives are likely to cause this % to continue to fall in future years.
For many of you who are long BAT for a long time and sitting at a loss and wondering what to do, I've been in this situation many times before and the only advice I have is - be a good trader.
If you want to do a DCA, be a good trader. Know when market signals a price bottom. Then, buy anticipating selling at higher price, regardless of prior average holding. This way, you might lower your average cost from gains from trading.
However, this is easier said than done, even for very good traders who trades against the trend.
Much easier to cut loss and move on to new trades. Start with a clean slate.
Thanks everybody for great inputs. It's a forum to share their thoughts whether positive or negative... I jumped off at 13 and on sideline and not sure timing to maybe, maybe only get in. So many currents affecting this counter. Anyway good luck 😀🤞 evrryone
Sure a deep and wonderful research ,some long term holders may had bought at 30-40 high end price and is not advisable to sell at lost but instead continue to collect good dividend to counter the paper lost, they is no doubt tranditional cigarettes is on continuing down trends,at this transition into new generation of e- cigarettes vape.bat is playing catch-up and is in leading position in other countries
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