Background

I previously blogged about RAPID in June here and in July here.  A couple of prior articles can be referenced in the June article there.

Since the peak in June, I've been waiting patiently for the right setup.  One such setup looks like appearing, but I suspect it won't be text book and more likely to be fake.

Fundamentals background

RAPID had a weak EPS QR as follows.  Next QR also looks likely to be weaker than prior year.  Fundamentally, it doesn't look ready to rally but will someone on the inside knows something sooner first?

However, on P/NTA, it looks cheap.  However, what is under-valued can remain under-valued for quite some time.

The Chart Setup

Key observations:

1. The triangle since early this year is obvious - on paper it looks like it wants to break out soon.  However, my gut says this is more likely to be a fake triangle setup, and the triangle is more likely to be redrawn than not.  Note next QR date is in mid November.  My gut says if it rallies, it's more likely to be a fake one to set up for more downside.
   
2. Technicians may point to a few potential bullish setup - e.g. the hidden RSI bullish divergence where RSI shows higher lows, whereas Price shows lower lows since August.  Similarly, the Accumulation Distributio did not show a decline, even though price shows lower low.  Usual explanation is someone is accumulating (syndicate?).
3. However, divergences to a bullish set up are many too.  E.g. next QR report date is mid Nov - a bit too soon for the meeting point?   Charts showed 5 LHs.  Isn't this downtrending still?  What is the potential catalyst that could propel this stock up?   Q1 EPS is a high 12.96 sen - how likely is it that Nov QR will show a beat higher than 12.96 sen?  (not very likely).   This setup - if ready - could have seen stronger prices the past 4 days but we didn't see that.   If this stock is syndicated, then, 3 months look like too short a period to start pushing.  etc.   
4. In other words, the setup is just an average setup.  
5. There are some technicians that will still take this as a valid setup.  They believe that they can't tell the future, and let price show them if they are wrong.
6. So, if one would want to take this setup, there is a safer version for this.
   1. Wait for price to fall below the support line first.  (40% chance of happening).
   2. Then, wait for price to find new support below 67 sen.
   3. Then, wait for price to rise back up above 67 sen.
   4. Only buy when price breaks above 67 sen then.
   5. This is for a safer entry.  You sacrifice safety to enter at higher than 67 sen.
   6. The advantage is that if price crashes below 67 sen, you won't be catching a falling knife.
   7. That's the text book theory.  However, real life - especially after I publish here - is likely to be more confusing.
7. So, assuming you did enter around 67 sen, then,  for a complete trade setup, you need to define the Stop Loss, the Target Profits, the Position Size / risks per trade.
   1. My notes above assumes that when price falls below 67 sen, it didn't go too low.  It assumed 1 ATR or 2.5 sen lower i.e. swing low of 64.5 sen i.e. if that 64.5 sen was the swing low, one option is to set a stop loss 2 ATR below that i.e. around 55.5 sen.  This is just illustrative and won't exactly be like this.
   2. The point is to set a stop loss, perhaps 2 ATR below the new lower support.
   3. Target profits can be 4 stages shown.  The goal is to make sure the Reward (measured as Target Price - Entry Price) is greater than the Risk (measured as Entry Price - Stop Loss price).
   4. Position size can be small for this type of trade. 
      

Summary and Conclusion

I am still monitoring RAPID since the peak in June.

On paper, it appears to be printing a potential trade setup, and I shared my personal thoughts above.

However, I don't have a strong feeling about this setup.  At best it feels just average. At worst, it feels manipulated.  

The setup doesn't seem to be backed up by fundamentals yet.  There are other signs that suggests RAPID might not behave like text book.

I am more likely to use other setups than textbook.

This is just for future reference.  We don't lose monies if we don't take the trade.   My preference is still longer term dividend investing, where there's nothing really to do.

Disclaimer:  As usual, you are solely responsible for your own trading and investing decision.