Avoid Stock with Weak Background – Gamuda Bhd (5398.KL)

Earlier September, we do share why you must avoid stock with weak background by using DRB-Hicom as case study. Please click on the case study below if you miss the post


What is weakness?

In Volume Spread Analysis, weakness referring to the hidden potential selling such as Up-Thrust, No Demand and Sell-Off. Up-Thrust and No Demand usually happened during distribution stage and follow by Sell-Off which is the confirmation signal of distribution and the beginning of mark-down stage.

Based on Gamuda daily chart above, we have spotted some of the earlier weaknesses at the background:

1. No Demand (Jan 18) and Up-Thrust (April) signal at resistance level

2. Confirmation of distribution and the beginning of mark-down stage with the Sell-Off signal on 14 May 2018 with huge volume

3. Further distribution spotted again during re-distribution level at resistance level. Price unable to break above RM3.97 with few weaknesses (UT)