Market Play 2 - Plantations - Kulim, IJM Plant & Rimbunan Sawit

Our second market play is the Plantation theme. CPO prices have risen to a record high above RM 1,600 a tonne & the Plantations Index is at a 12 year high. CPO will continue rising as it is still at a discount to soya & rapeseed oils. The Biodiesel theme & future purchases by Biodiesel factories will underpin CPO prices, so plantation stocks will be making extraordinary profits for 2006 & 2007. Major stocks like IOI & KLK have risen strongly for a year & will continue to rise. I have selected 3 stocks to review Kulim, IJM Plantations & Rimbunan Sawit (a newly listed stock associated to the Rimbunan Hijau Group).

1) Plantations Index - I have written about this before. It has formed an IHS & is now on a low volume correction with support at 3443. It has also formed a Harami candlestick pattern so it may start rising again Monday. The upside target is 3639. RSI & MACD are positive & it is above the MAV. Next moves will be up unless it decides to test the 3443 support first but then its up, up, up all the way.


2) Kulim - Has been rising in an uptrend channel since 2002 & rose very strongly from 2.60 to 4.06 in last 3 months. It is now above the channel but on a low volume mild correction. Daily & Weekly MACD are positive, but daily RSI has turned down slightly. Weekly candlesticks have formed a potential shooting star but an open above 3.86 & close above 3.88 on Monday will negate the weekly s-star. It is also above the MAV & strong support is at 3.84. After the mild correction it should rise again but a break below 3.70 (the 21-day MAV) will be negative. A strong break above the recent high of 4.06 will take it to 4.24 & possible mid term target of 5.20.

3) IJM Plantations - Rose strongly to 1.62 & is on a low volume & mild correction now. Has formed a good uptrend channel but rose above the channel on strong buying. Strong support at 1.55, RSI & MACD are positive, prices are above the 10,21 & 30 day MAV. A very good buy. Upside is not known as historical high is 1.62 so we have to watch the candlesticks.

4) Rimbunan Sawit - Has risen strongly since its debut on Bursa in June. It has formed a nice uptrend channel & is now in the middle of the channel. Support is at 1.30 & resistance at 1.42. A break below the channel at 1.27 will be very negative but this is highly unlikely. I expect prices to continue rising & to breach 1.42 anytime soon. This is a very good mid term buy (3-6 mths). Target price is uncertain as it is a new stock so we will have to keep an eye on the candlesticks for pointers.