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Charts in brief: 10 May 10.

Monday, May 10, 2010

The STI rebounded nicely today. Personally, I am making use of the rebound to reduce exposure. If the rebound continues tomorrow, I would lighten my portfolio further.

Courage Marine: The BDI is in excess of 3,600 today! Good news for Courage Marine as it closed 1c higher at 20c but on very low volume. If Courage Marine is able to close at 21c or higher in the coming sessions, it would negate the bearishness seen in the last couple of weeks. We have a buy signal on the MACD but its reliability is suspect due to the very low trading volume. Wait and see.

Golden Agriculture: CPO at RM2,538 today means it is still in a downtrend which started in early March. Golden Agriculture staged a nice rebound with price piercing resistance provided by the 100dMA at 55.5c to touch a high of 56c before closing at 55c. Volume is also respectable.  We have a morning star set up, a 3 stick reversal pattern. The buy signal on the MACD is more credible in this instance. My overnight sell queue at 55.5c was done.  Let's see if 55.5c could be overcome and the resistance at 58c tested next.  58c, that's where I would queue to sell again.

SPH: MFI bounced off 50% support, forming a higher low. $3.90 resistance successfully taken out as price closed at $3.95. Volume is respectable and the price might go higher tomorrow to test the next resistance level at $4.03 gap resistance which coincides with the 20dMA. SPH remains the largest investment in a blue chip for me and I made use of the rebound today to offload some, locking in some gains. I might offload more tomorrow if its price goes higher.

CapitaMalls Asia: 4r1g buy signal on the MACD. MFI is turning up from the oversold region and the OBV is turning up too. We also have a valid morning star pattern although a weak one with volume very low on this up day.  There are various resistance levels next if the price continues to move up.  I would reduce exposure at these levels: $2.09 gap resistance, $2.12 support turned resistance and $2.15 declining 20dMA resistance.

Healthway Medical: MFI emerged from the oversold region. OBV continues to decline, suggesting that distribution is underway even though the counter has gone CD. I continue to queue at 15.5c to sell at resistance.

Saizen REIT: Quarterly results on 12 May 10, two days from now. Price closed at 16.5c today with technicals turning very positive. First off and a major development: the negative divergence between price and volume has been negated!  MACD is turning up towards the signal line as we see a buy signal. MFI's higher high is a given while the OBV suggests aggressive accumulation. The only negative is the descending 20dMA which seems poised to form a dead cross with the 50dMA.

Before the price could go higher, the descending 100wMA which is at 17c has to be overcome. This is a very long term MA and is likely to be a strong resistance. Let's see.

Good luck to all fellow Saizen REIT unitholders!

US Futures are looking very green now.  Looks good. :)

Related post:
Charts in brief: 7 May 10.


Anonymous said...

the trend has turned and you'r selling? what's your rationale?

AK71 said...

Hi ezinvest,

Prices have turned up and judging from the way the US markets are performing now, markets in Asia should continue to do well tomorrow.

However, is this the continuation of the bull run from the bottom of March 2009 or is it just a rebound? Frankly, I don't know. I don't think anyone knows for sure.

My rationale? I explained it in an earlier post:

In an uptrend, buy at supports and sell at resistance. This is to make more money. In a downtrend, we should also sell at resistance. However, this is to preserve capital.

With this very simple understanding, I have done exactly that today. I sold at resistance levels and reduce exposure. I am lucky that in both Golden Agriculture and SPH, I managed not only to preserve capital but to secure some capital gains as well since these shares were bought sometime last year.

Tomorrow, I might be given the chance to sell more at higher resistance levels. I might also be given the chance to cut loss on CapitaMalls Asia. With my simple understanding of TA, I will take the chance. :)

It is hard to have maximum gains, I would be happy if I could just increase gains. It is hard to have minimum losses, I would be happy if I am able to just reduce losses. That is my path and I hope I walk it well. :)

Anonymous said...

Hi AK,
Indulge me if you don't mind.Say if you have a million dollars, how would you go about investing it.
To start the ball rolling, I would place about 500k in perhaps 6-8 reits or high yeild stocks with low beta, another 400k in growth stocks and the final 100k for my thirst to trade.
Of course I'm making an assumption that I would have at least 1 year living expenses put aside, 3 years would be ideal!.
Whats your opinion AK?
Thanks for indulging me.

AK71 said...

Hi KL,

I guess you have read my posts on building up one's wealth as well as how we have to protect ourselves from the effects of inflation. I am doing so many things at the same time. ;)

Ok, let us say I have a home fully paid for and I have set aside 12 months' worth of living expenses, what would I do with a spare $1m.

1. I would set aside $200k as an opportunity fund for an investment property to be purchased at an appropriate time. Of course, this is just downpayment or part of it.

2. I would set aside $50k to accumulate some precious metals on weakness as a hedge against inflation.

3. I would put $500k in high yielding REITs (using the criteria I keep talking about in this blog). Yielding 10% per annum would give me $50k a year in passive income.

4. The balance $250k, I would keep to look out for investment opportunities in undervalued stocks. :)

My simple ideas. ;)

Hubert wee said...

Different people have different styles of investing. The key is to find the style which best suits you, according to your risk appetite and other factors, and go along with it. So I don't think asking others what they would do is very relevant, as u will likely end up doing things differently, although sometimes u can get interesting responses.

AK71 said...

Hi Hubert,

I think KL was just curious as to how I would allocate the money assuming I had a spare $1m cash hoard. ;)

Many might not know what best suits them and asking around, collecting ideas from various people could well help in the decision making process. So, on the contrary, I think asking people what they might do is relevant. :)

Dou said...

Not to side with AK71 but i feel sell is actually not a bad idea

AK71 said...

Hi Dou,

Thanks for being on my side. ;-p

Haha... Kidding. Well, the technicals are telling us something. So, we just do what's prudent, right? :)

Anonymous said...

Hi AK,

Well said, spot on old chap and also thanks for your informative reply.

Buffett and the likes believes in a concentrated portfolio, does that practice also hold the same argument with reits or would one be better off with a diversified portfolio of reits.


PS The reason I enquired earlier was because I am planning for early retirement and just wanted some ideas and guidance, thats all. Hope you don't mind.

AK71 said...

Hi KL,

An early retirement, that makes two of us. ;)

In one of my posts, I mentioned that Buffet is a "know something" investor. I certainly am not. Haha... Buffet is in a league of his own.

Having said this, if I have done a thorough FA of a business and like it very much, I would probably buy a lot more than I usually would something I am not sure of. The latter would be more a trade than an investment.

I bought many more shares of Hyflux Water Trust, Epure, Healthway Medical, Golden Agriculture, Saizen REIT, SPH and LMIR last year than I would usually, just to name a few. I have offloaded many of these investments by now as:

1. They reached or exceeded the fair values I ascribed to them.

2. Technically looking weak and might go through correction and consolidation.

I retain my full investments in businesses which are still very much undervalued and technically stronger. Examples are Saizen REIT and AIMS AMP Capital Industrial REIT. In fact, I bought more units in both these REITs this year.

Having various sources of passive income, for sure, reduces risk. :)

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