EGCH ( what happened ???? ) What's Happening with Kima Stock (EGCH) on the Egyptian Exchange
Kima stock is one of the constituents of the EGX70 index on the Egyptian Exchange.
Phase One (August to September 2024):
The EGX70 index rose from 6200 points in August 2024 to 7028 in September 2024, a 13.35% increase. Similarly, Kima stock rose from 7.46 to 8.41 during the same period, also by 13.35%. So far, everything seems aligned, with no discrepancies between the main index and the stock.
However,
MACD had a different opinion.
Despite the main index and Kima stock forming an upward trend (higher lows and higher highs) during this period, the MACD indicator for Kima stock formed a downward trend (lower highs and lower lows), despite the rising prices.
Phase Two (September 17 to October 14):
The main index rose by about 6% to 7350 points, forming a higher high than the September 4 peak at 7250, thus confirming the upward trend, and establishing a strong support zone between 7350 and 7250.
Note: The main index formed a higher high than the previous peak.
On the contrary, Kima stock declined by 5.50% to 8.06 on October 13 and fell by more than 11% from its price of 9 Egyptian pounds on September 4.
Here, we find a head and shoulders pattern targeting the price range of 7.2 to 7.
Of course, the first positive sign is the daily close above the right shoulder at 8.73.
Phase Three (October 14 to November 24):
The main EGX70 index continues to rise and reach new highs, reaching 8350 from 7350, representing a 14% increase, breaking new historical highs. Even now, the index is trading around the 8400 level.
As for Kima stock, it rose by about 7% to 8.78 on October 29 from the last low formed on October 14 at 8.06, which is just a test of the right shoulder of the head and shoulders pattern that we mentioned earlier, and which failed to close above.
Today, November 24, although the main index is still trading at its highest levels, Kima stock has lost all its gains during the previous period and has broken the neckline of the head and shoulders pattern, targeting the 7.20 to 7 range, and is expected to continue falling.
Conclusion:
What happened here is exactly what the great writer Larry Williams mentioned in his famous book "Secret of Selecting Stocks" in the second chapter (Methods of Identifying Accumulation and Distribution or Disposal of Stocks).
In short, if a stock does not perform like the index to which it belongs, it is in an accumulation phase (a falling index and a rising or stable stock) or a distribution (disposal) phase (a rising index and a falling stock or a small rise followed by a loss).
Kima (EGCH) is clearly in a professional disposal process from September 2024 until now. I believe this is due to the recent subscription for the stock, which improved the average stock price for major shareholders, thus pushing them to dispose of some of these shares and profit from the subscribed shares.
Note that Kima stock rose by approximately 200% from January 2023 to January 2024, losing about 40% of those gains from the beginning of 2024 until now.
