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Golden Agriculture: CPO price spiked 2.44%.

Thursday, July 15, 2010

CPO price spiked 2.44% today to close RM58 higher at RM2,439.  The impressive appreciation aside, what is more significant is that the downtrend resistance established since the double top formation I have talked about before has been broken!  Is this the beginning of a sustained recovery or is the decline simply shifting to a lower gear?  Only time will tell.

Golden Agriculture's share price has yet to react to this bit of news or would it react at all?




From 26 April, we can draw two fan lines.  Price broke out of the first fan line resistance (in orange) and later on broke out of the second fan line resistance (in red). Since then, price seems to have moved into a range with resistance at 55c, provided by the flat 100dMA, and support at 52c, provided by the gently rising 200dMA.

Although the OBV is flattish, the MFI, which accounts for both volume and price, has broken out of its downtrend. So too has the RSI.  The halt in the decline of the MFI suggests that we are seeing a return in demand but this is probably balanced by the presence of sellers which is why the OBV is flattish. The dojis formed in the last two sessions suggest indecision and this reinforces the idea that we are seeing a delicate balance between the buyers and sellers here.

The MACD is gently rising in positive territory which indicates that the momentum is positive. So, although the current situation is still iffy, there is a slight upward bias observed. In the short term, the 100dMA resistance might be hard to break.  Look at the stochastics and we will see that it is entering overbought territory.  Upside could, therefore, be limited at 55c.

Fundamentally, if CPO price continues to recover while the share price of Golden Agriculture trades sideways, we might have an interesting proposition to go long here.  Buy in at 52c? Maybe. I am keeping an eye on this one.

Related post:
Golden Agriculture: Rebounding.

6 comments:

jason said...

Hello friend, i have always been around reading your posts with great interests - vested in Saizen and Golden Agri leh! Nothing on Courage Marine or shell shocked at the massive deterioration of the Baltic Index? 60% losses for 27 consecutive days is quite damn scary! Seems one can charter a 2005 capesize for $4k a day now!!! I kid you not. Even rates for handies/panamaxes are more expensive than the cape........ ship owners are quaking in their boots now. Its a very difficult time for the dry bulk markets now.....Stay tuned..

AK71 said...

Hi Jason,

The BDI's uptrend is well and truly scuppered. It is definitely the lowest in at least a year. Will it challenge 1,463 reached in April 2009? Doom and gloom?

Unfortunately, we are but boats out at sea and at the mercy of Mother Nature. Excuse my sudden poetic moment.

Anyway, I still have my investment in Courage Marine. I have not abandoned ship yet. Can only wait and see now.

I would love to do FA and TA the whole day. Blog about my analyses five times a day. That would mean being a full time investor and trader, of course. However, that's out of the question. Must stay pragmatic.

Lately, I have been very busy at work. I have also decided that I should go back to the gym. I have accepted a new teaching assignment too. So, there are many more demands on my time now than before. I will try to continue blogging regularly and extensively but I know that I won't be able to. I can only try.

As and when you have any news on dry bulk shipping, share with us please. :-)

sqr said...

I noticed that Courage Marine did not drop as much as the BDI. Why?

Also, BPI seems to be bottoming now. Courage Marine's fleet has only one capesize, and the rest are either panamax or handymax.

AK71 said...

Hi sqr,

I believe that Courage Marine is showing resilience because of its debt free balance sheet. During difficult times, it is the companies with strong balance sheets which have a better chance of survival. :-)

jason said...

Yes, the panamax rates have seemingly found a bottom after all those losses - probably due to coal and perhaps grains coming out of US/South America - China's still gotta eat!?!
O/all dry bulk markets into Q3 will continue to be sombre - cooling China demand and summer holidays in Europe will see factories closing for maintenance etc. This will be the 2nd wave to further weed out ship owners who had bought ships during the peaks of 2007/08 and barely survived the end 2008 cum 2009 crash.
China is actually using up its imported iron ore stock piles plus using domestically mined as well, hopefully to press down the Rio/BHP/ Vale Q3 iron ore pricing - up another 23% from Q2.Its really to see who will blink first! So dry bulk mkts suffer from this showdown at OK Corrale.

AK71 said...

Hi Jason,

Thanks very much for your valuable insights. Definitely useful in anyone's decision making process on whether to go long now or later. :)

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