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.

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)