1. What activities are Gtronic involved in?
Gtronic is listed in KLSE main market under technology. The company started off 26 years ago by providing burn in services for a multinational company. Today, Gtronic mainly involved in the semiconductor manufacturing by providing the services including:
a. Manufacture a wide range of quartz and timing devices for the telecommunications and automotive industry, with applications going into cell phones, GPS, PC and Ipad.
b. Full Turnkey manufacturing for LED Products, Sorting, Assembly, Testing and ODM provider
c. Manufacturing capbilities in semiconductor, including Die Sawing, Auto Die Sorting, Auto Pure Tin, Tin Bismuth Plating, Auto Die Attach, Wire Bonding, Automatic Optical Inspection (AOI)
d. Provide chemical products and indirect materials to support semiconductor companies
2. What happened on 25/04/2016?
Fact: On 25/04/2016, Gtronics opened at 5.33 but closed at 3.42. It has fallen RM 1.91 or 35.8% in a single day. Its share price continued to drop until 03/05/2016 and closed at 3.24. Within 6 days, it has fallen astonishingly RM 2.09 or 39% from 25 April ‘s closing price of 5.33. We can calculate that almost 600 Million of market capitalisation was erased over the six days. Investors and traders were shocked by the panic sell.
3. Why did panic sell happen on 25/04/2016?
Fact: In its first quarter ended March 31, 2016, its earnings fell 78.5% compared to 1 year ago, due to the twin effects of declining smartphone sales and the volatile ringgit.
4. How to find out the right time to catch the fallen knife in the case of panic selling?
Our thought: You can observe that the MACD went down to negative zone after the massive selloff. From May 2016 to Sept 2016, the MACD was seen moving in uptrend although it was still travelling in the negative zone. The potential entering point came around 13 Sept 2016 when MACD and signal line crossed above the 0 line, which turned the market sentiment into bullish zone.
5. MACD and signal line move below 0 line in the early December 2016. Should I hold or sell at the period?
Our thought: Never use MACD or a single tool to trade a stock, always use multiple indicators or tool to determine buy, sell or hold. 30-day moving average started to flatten at the end of October 2017 and MACD started to turn downtrend. Hence, it is advised to sell at the moment and you have already had a profit of 21% if you enter on 13 Sept 2016 which was mentioned in point 4 above.
6. When is the next buying time?
Our thought: Jan 2017 was the correct time to re-enter Gtronic. Again MACD crossed above 0 line and 30-day moving average soon crossed above 60-day moving average. Since then, MACD and signal line never moved below 0 line. Although MACD and signal line had several crossover, we could use Moving average to determine whether we should sell or hold. As you can observe, the moving averages moving uptrend and the uptrend remained intact. Hence, we will hold.
7. When is the right time to sell?
Our thought: July 2017 will be time to sell. It is because you can observe MACD started to move downtrend. And also moving averages started to flatten out. Eventually, MACD crossed below 0 line in Sept 2017. You should have sold the stock by this time.
8. Why we never use fundamental research?
Our thought: You can do some research and found that the stock price move ahead of the company’s earning performance. Throughout financial year 2016, the company’s quarter earnings all were weaker that the same quarter in previous year.
9. Current trend:
Our thought: Not a right time to enter. Stock price is consolidating.
10. How to find potential stocks like Gtronic?
Tools: KLSE Stockpick screens stocks that shows the indicators: Oversold Stocks, Trend Reversal, Potential New Uptrend, Upward Crossover of MACD, MACD Upward Centerline Crossover