Olam - Bearish doji star candlestick suggests likely near term correction

- Olam International could be poised for further correction in the near term with the formation of a high wave doji star candlestick on high volume at its 2-year downtrend resistance line, after rallying more than 45% in the last 2 weeks.

- With the RSI turning down again just under the overbought level, the Accumulation/Distribution indicator falling under its 3.5-month uptrend line and the ROC indicator signaling a sharp bearish reversal high up in the positive territory, these seem to suggest that the uptrend momentum is waning.

- We expect the stock to find initial support at $1.85 (2-month uptrend line), breaking which, we see the next support at $1.50 (resistance-turned- support level)

- Immediate resistance is pegged at $2.30 (2-year downtrend resistance line), ahead of $2.80 (gap zone in Jun ’08).

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Olam target almost reached

Olam=2.16 (Target almost reached...take profit)

Olam flag formation

Chart for Olam=$1.90 (Flag Formation...resistance at $2.18)

Olam shows you the power of 200 DMA

Olam=$2.02 (The power of 200 Day Moving Average)

Olam - More Near-term Downside

After rallying more than 53% within a 1-month period, Olam looks to be heading into a resistance zone capped by the upper Bollinger band, the top channel line of the 5.5-month channel and the support-turned resistance level of $1.70 established by the two major troughs in 2008.

The price action has also formed a Doji candlestick, signaling a potential reversal (still needs confirmation). The RSI indicator is now showing a negative divergence with the price action, further supporting our view that a near-term reversal is in the works.

As such, we see a possible pullback to the immediate support around $1.52 (recent peaks and 200-day MA), with the secondary support at around $1.23 (100-day MA and lower channel line).

Any upside from the current $1.70 level will likely meet resistance at the next support-turned resistance level of around $2.10.

Olam above 200 MA

Olam = $1.64 is another stock above 200 Day MA - $1.58

Olam - double top formation

The double tops formation remains intact... Sell

Shorting Opportunities in Olam and Noble

Olam’s main business deals with commodities. The CRB closing below lows (208) will likely take the entire equity market with it. This makes commodity related companies prime candidates for shorting.

Olam has tested 1.48 and declined to current levels. With the CRB trading below lows of 208, we anticipate Olam continuing to slide further. However, Olam is oversold on a stochastic basis as is the CRB and there might be a small move up.

We advise investors to begin shorting Olam, taking half of their intended position. If Olam rallies, it should find mild resistance at 1.35 where investors can get a better price. The recommended stop would be at 1.50. By shorting in this manner, investors would be in a win-win situation. If Olam rallies, they get a better price, if it declines, the initial position is in profit and investors can gradually scale into their winning position with the remaining half.


The reason for shorting Noble is similar to Olam. We anticipate a slide in Noble as well because it is a commodity related company.

Nobel has dropped off after testing highs at 1.25. We advise investors to again, take half their position in Noble first, so that regardless of the move they will be positioned for a decline. Noble should have some resistance at 1.13 and we advise investors to sell the second half of their position if Noble reaches 1.13 again.

In the event Noble does not hit 1.13, investors can add on when Noble closes below successive support levels. The recommended stop is at 1.27.

Olam International – SELL

Still holding above its 30-day SMA. Resistance is at S$1.36 and S$1.50.

MACD is about to confirm its dead cross while RSI has hooked downwards.

The stock could be heading lower to retest the breakout level at S$1.05-1.14next if the S$1.27 support gives way. Aggressive investors should only think ofbuying if this support level holds. Take profit for now.

Olam = $1.26 (double top formation)

After a double top formation, now trendline at $1.27 broken

Olam = $1.49

Resistance at $1.49 previous high