Were there warning signs for Swiber?

Swiber’s stock was in a terminal decline as visible from it’s chart. It was falling every year from 2014, there was no support, no indication of turnaround.

 

Warnings signs in the chart

Energy services company Swiber filed for liquidation. Maybe there are some financial/fundamental reasons somewhere that says bullishness but there is not a single positive aspect to be found in it’s stock chart.

Swiber monthly chart 2007 - present

Swiber monthly chart 2007 – present

1. No new 52-week high except 2010 and 2013 and only briefly

There was absolutely no gain in stock price year to year. Healthy stocks should be painting new 52-week highs but not this one. Some years like 2009 might be bullish but only for short term traders or speculators. Take a step back and look at 2009 in the context of the deep correction in 2008 and that positiveness is merely a retracement only. Those short lived pops spell ‘bull trap/failed break‘.

2. Below and resisted by moving averages that were pointing down all the way.

Moving averages like these 12-month, 24-month, 36-month exponential moving averages all shout ‘down trend’, ‘resisted’.

3. New 52-week lows every year since 2014.

Now this is absolutely bearish, continuation, no u-turn whatsoever.

4. How many bullish months in the last 3 years? Just count the number of white candles?

Again another deadly sign.

 

No reason to buy

In my opinion charts are the best indication for small investors. It is unlikely that companies make full disclosure of their health on a timely basis. On the other hand, stocks are traded everyday and prices reflect the consensus of segments of the market that are better informed. Swiber’s stock chart shows the stock in terminal decline without a single sign of bullishness, indication to turn around. Maybe it could stabilise at some level, find support, go flat. Some stocks do this but in Swiber’s case, it’s stock was declining the whole of last year and this. Without an indication that it could turn around or stop somewhere, it is but a matter of time before hitting zero.

As a reminder for readers, never buy stocks like this. In my post ‘Technical lessons from biggest Singapore stock market fall in 2013‘ I wrote this about Blumont, Liongold and Asiasons

 

What to do when stock prices fall like this?

No one should try to catch bottom or to average down an existing position. That would be clearly catching a falling knife. Remember that cheap can get cheaper. Zero is cheapest.

And lastly, if there is any compelling reason to buy at all, then price must action must justify the decision by printing a bullish reversal pattern.

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Soh Tiong Hum is Director of TerraSeeds Market Technician Pte Ltd. TerraSeeds is a trading educator in Singapore since 2005.   Soh's Twitter account @sohtionghum was ranked #23 out of The Top 70 Twitter Accounts To Follow In 2015 by MahiFX.   Disclaimer notice: "I do not have a financial advisor's license. I am not qualified by any regulator to give financial advice. I do not know you the reader. Your investment means and motive may be different from me. My posts here are based on observations and meant for education. I am not responsible for for any consequence from your actions."
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