To The Moon

Hi everyone. I’ll also be initiating coverage on a semiconductor company in Singapore:

AEM Holdings Ltd. (SGX: AWX)

AEM’s chart looks really weak. And I mean it. Here’s why:

AEM formed a head and shoulders topping pattern (see if you can spot it - I won’t be pointing it out as it has already completed this pattern) previously. Subsequently, it broke down from a 7-year support trendline (green) in February, and has not been able to break above its 3-year resistance trendline (red). Until the latter is broken, it will continue to trade in a series of lower highs and lower lows.

We appear to be nearing a short-term bottom, as we set to retest prior resistance at 1.89 from above. This should result in an S/R flip that can lead to a “bear market”-style retracement to 2.83 (prior support-turned resistance) that would cumulate in a backtest of the 7-year support trendline from below, as well as a rejection off the 3-year resistance trendline that precedes the next move lower.

Here’s my expected path for this move:

I would only turn bullish on AEM’s chart IF:

1. It can break above the red resistance trendline

2. It can break above 2.83 and form a higher high

Otherwise, I am of the belief that over a longer period of time, AEM is headed lower, possibly to as low as 0.875. However, given that we are expecting to see short-term reprieve in AEM’s stock price, I am initiating coverage with a technical HOLD rating, until the “bear market” rally is over.

However, if we lose 1.89 and invalidate the bullish divergence setup that is potentially forming on the weekly chart, it has a long way to go to the downside, and I wouldn’t be catching a falling knife.

Sentiment: HOLD (New)

Summary (with Price Targets - NFA):

• Broke down from 7-year support trendline and is stuck underneath a 3-year resistance trendline. Measured move to the downside should be to 0.875 (and possibly lower) in the long-term. In the short-term, it should soon see a rally to 2.83. I will only turn bullish on AEM if it can break out of its resistance trendline and reclaim 2.83. Otherwise, it is just a shortable lower high.

Alright, that’s all for this newsletter. Till next time!

$AEM SGD(AWX.SI)$ $Straits Times Index(STI.SI)$ $Walt Disney(DIS)$ $PayPal(PYPL)$ $Sea Ltd(SE)$

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