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Why is ASHAKA CEMENT Shares selling Off?


Am I the only analyst watching the shares of ASHAKACEM fall from grace?  The stock closed at N71.25 today (June 18, 2007) down N3.75 from its close of N75 on June 15, 2007. Today’s close represents a N17.75, or 19.9% decline from its 52 week intra day high of N89.00k attained on May 23, 2007.


However, today’s closing price of N71.25k represents a decline of N13.67 from the 52 week closing high of N84.89, attained on May 22, 2007. As today’s trading pattern illustrates, it appear the selling is likely to continue as the stock opened at N71.30, had an intra day high of N72.89, and an intra day low of N71.25, but closed at the low. Since the stock opened below the previous trading day’s closing price of N75, and closed at N71.25, the day’s low, it indicates that the sellers in the stock out number the buyers.


Analyst with strong technical skills would have noticed the trouble on May 23, 2007 and exited the stock. On May 23, 2007, ASHAKACEM opened at N83 had an intra day high of N89, and an intra day low of N80.81, but closed at N83.50, a price which was below the previous day’s close of N84.89. The May 23, 2007 trading pattern represents a “blow off top” and the beginning of the downtrend.


Based on today’s (June 18, 2007) trading pattern, I believe there is still some selling left in the stock.  At the current price (N71.25), the stock is below its 20 day CSMA and 50 day CSMA of N78.98k and N75.89k respectively. However, the stock has strong price supports at N68 and N66. I will watch and see if the stock bounces at those prices.


At the current price, the shares of ASHAKACEM have lost approximately N26 billion naira from its intra high of N89 attained on May 23, 2007. Again, as they say in trading bulls make money, bears make money, but pigs get slaughtered.  ÃƒÆ’ƒÆ’¢â‚¬â€œ Good luck.



Chukwumah Biosah, is the President of CEBABL Audit Group, based in Los Angeles, California.


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