Sinomem is forming a Falling Wedge and has a risk of breaking down after falling to break the 50D MA resistance (area shaded in green). Critical support at $0.472 which is the wedge support and also 61.8% Fibonacci Retracement Level.
Fundamental Analysis (Base on FY2009 closing at Dec 2009)
Comment: Current stock price is super overvalue (PE = 59!!). Poor fundamental because the YOY earning is not consistent & lousy ROA and ROE. Although the company provided a net earning of 50.7% but net cash is negative! If the company is making money, why the cash inflow is negative? I am not wasting my time to dig into the financial report to understand the detail and potential creative accounting.
Technical Analysis
Ying Li is currently trading within a Falling Wedge. Base on current chart pattern, the stock price may rebound from current wedge support if the breakout does not happen. The trading volume is fading for the part 9 months.
Ying Li does not meet my stock selection criteria fundamentally and I will not trade or invest in this stock.
China HongXing has been on free fall recently after announcing worst than expected quarterly. Although the company is still cash rich, the financial ratio has been pretty poor compared to their peers. ROA & ROE are only a pathetic 3% in FY2009 compared to previous years of more than 10%. Recent chart suggests that China HongXing may be ending a down trend by showing doji candlesticks for past two trading days. Furthermore, it looks like a falling wedge has been formed and the chart is close to breakout soon. No clear patterns for the time being until the breakout or a reversal candlesticks pattern is observed.