Oceanus

A counter which has been hotly discussed is Oceanus. Personally, I am not vested in this counter but the word "Oceanus" came up a few times when I went through the list of words put into the "search" function in my blog. So, this is a TA of Oceanus for anyone who might be interested.

On 30 Dec 2009, after forming a black spinning top with extremely long legs, usually a strong sign of a possible reversal, Oceanus' price has been sliding down in the last few sessions. The reversal sign was confirmed on 31 Dec 2009 by a sell signal on the MACD. Breaking the 61.8% Fibo line at 41c yesterday and closing below the line today suggest that more downside may follow. Next support level is provided by the 50% Fibo line at 39c which coincides with the rising 20dMA. Rising 50dMA and 100dMA limit further downside at 36c. The short term uptrend is drawn using the color army green and from this, we see that the uptrend is still intact.

However, with the MACD poised to do a bearish crossover, more downside is probable. The risk premium is not as high as it was in the last two trading days of 2009 but waiting for a pullback to stronger support levels might be prudent before accumulating.

Healthway Medical needs a break?

A friend sms me this morning and asked me for a new eventual target price for Healthway Medical as it was last done at 19.5c. I was driving at that point in time and I was amazed at how quickly the counter moved to hit the target price I identified. In slightly more than half an hour from the opening bell, Healthway advanced 2c from 17.5c to 19.5c. However, the eventual target price of 19.5c is based on chart pattern and proved too strong to be taken out so quickly and price closed at 18.5c today.

Most of the time, chart patterns are accurate windows into probable future price movements, resistance and support levels. Our FA says that Healthway is worth a lot more than 19.5c but TA, as a measure of the mass psychology of market participants, tells us where the probable stops are in the meantime.

Healthway Medical has a white candle with a wick on top that is as long as the candle's body. In spite of increased volume today, price closed only 1c higher. OBV still shows accumulation. There is no sell signal on the MACD but this is usually lagging. MFI is levelling off which shows a slow down in buying momentum and remember, it is still in the overbought region. Is a correction due?

Taking a peek at the weekly chart, the MFI has moved sharply into the overbought region. The last time it did this was in April 2009. Technically, there is more downside risk now. I would accumulate after the counter has done either a correction in price or a correction using time. Incidentally, I have divested more of my position in Healthway Medical today.

Golden Agriculture still burning bright?

I have always disliked candles with long wicks on top. They suggest to me that the candles are burning up and that not much burning time is left. There is no gap up for Golden Agriculture today and price action formed a white candle with a wick on top which is almost as long as the body of the candle. There is increased trading volume today but that managed to push the price up to close only 1c higher. That the buying momentum is slowing down can be inferred from the levelling MFI, which is still firmly entrenched in the overbought region.

The price of crude palm oil (CPO) fell today to RM 2,630, down RM 72 or 2.66%. This likely dampened sentiments. A correction is expected after a strong run up but I feel that any correction should be short term in nature and presents opportunity for accumulation.

Eventual target price for Golden Agriculture remains at 62c but with weakened sentiments, flattening momentum and the many minor resistance levels along the way, it would be wise to reduce exposure as a hedge. Gap support is at 54c and this coincides with the 123.6% Fibo line.

SPH - A chance to accumulate?

On 2 Jan 2010, I mentioned in a post that I'm in no hurry to accumulate more SPH shares at current prices. On SPH's weekly chart, the declining 200wMA provides resistance at $3.80 and I would like to divest partially if its price moves to touch the 200wMA. Unfortunately, this did not happen. For a recap on what I said then, please see Rethinking SPH.

Today, SPH's price action on the daily chart formed a wickless black candle which crashed through both 20dMA and 50dMA before stopping at the rising 100dMA at $3.60 which happens to coincide with a 61.8% Fibo line. If the price breaks through the 100dMA, the 50% Fibo line provides support at $3.52. This happens to be a many times tested candlestick support and resistance level. A stronger support would be at $3.45. Rising 200dMA should limit further downside at $3.30.

MACD is poised to do a bearish crossover. MFI has formed a lower high indicating a lack of buying momentum. OBV has been declining steadily which shows distribution.

I like SPH for reasons stated in the earlier post. The current technical weakness might just present opportunities to accumulate SPH shares and I would do so at a price closer to $3.52. In the event that this support breaks, I would buy more at $3.45. For anyone who has yet to own any SPH shares and would like to do so, a hedge at $3.60 is not unthinkable as nothing is for sure. Remember that this would be a hedge. Don't break your piggy bank.

Saizen REIT: Another white candle day

Saizen REIT has another white candle day. The MFI shows buying momentum and is nowhere near overbought but with much lower volume, one would be right to wonder if the upmove would falter. Technically, the longer term downtrend in the MFI has not been broken. This means that the buying momentum over a longer term has yet to pick up substantially. Near term resistance remains at 17c, the previous high. Initial support is now moved up by 0.5c to 15.5c. This provides a fair entry price for anyone waiting to buy in.

Golden Agriculture impresses

For much of the day, it seemed as if Golden Agriculture would not be able to breach the 57c resistance level even though it gapped up, starting the day at 54.5c. Late day buying pushed the counter past 57c on high volume. Closing at 57.5c today with such strong white candlesticks and two gap ups in the two previous sessions is a bullish sign. MFI shows strong buying momentum but it has moved higher into overbought territory. OBV shows continuing accumulation. The eventual target is still at 62c and there are many minor resistance levels along the way. However, as is my usual style, I've hedged by selling 20% of my remaining position at 57c.

The price of crude palm oil (CPO) is probably supported by the bullish attitude the market has towards crude oil as oil futures have climbed for nine straight sessions, rallying about 12% so far. CPO is up RM20 to close at RM2,702 today. I continue to believe that a test of the previous high of RM2,790 will happen in the near future. Golden Agriculture will be a major beneficiary of higher CPO price.

Healthway Medical: Climbing upwards

Healthway Medical astounds market watchers today by climbing higher, closing at 17.5c, forming a white candle with a wickless top in the process. This candle is reminiscent of the candle formed two sessions ago. Volume is very high as investors seemingly could not get enough of the stock. MFI shows strong buying momentum and moved higher up into overbought territory. OBV shows sharp and continuing accumulation. In extremely bullish scenarios, a stock could stay overbought for a long time. Closing above 17c resistance today is a bullish signal. We need to wait for confirmation the next session to see if the price will move higher to test the next resistance level which I've identified as 19.5c previously. However, I prefer to err on the side of caution and I've divested another 15% of my position at 16.5c and 17c today.

Crude Oil: US$100 by mid 2010

More affirmation for Darryl Guppy's expectation of US$100 for crude oil through his TA - “As far as current demand trend shows, we will not be wrong to expect the price to rise as high $100 by mid 2010. We are not only seeing a better crude demand but also a better demand for the refined products,” said a Dubai-based trader. Dubai based traders reiterated that they expect the bull run to continue this year.

The comment comes in tandem with the views of Barclays Capital which said that crude demand will rise to a high of $100 a barrel this year, but will average at about $85 a barrel.Oil prices expected to hit $100 in 2010 say Dubai traders

What do we do? Well, this is good news for crude palm oil (CPO). Consider this: Crude oil: Update

Healthway Medical - Rising too quickly?

Healthway Medical opened nicely enough as it gapped up at 16.5. The buy up at 17c which we identified as an intermediate target was fierce but 17c proved ultimately too strong to be taken out today even as trading volume increased. Closing at 16c is a sign of near term weakness. Any decline in price will find support at 14.5c, the top of the previous cup formation which was resistance and now turned support. Any further decline in price will find support at 13c where three rising MAs are converging. This might just have been a case of rising too quickly as we see the MFI crossing into the overbought territory.

Fundamentally, Healthway Medical provides much better value compared to its peers. This picture has not changed. Any short term weakness in price will provide an opportunity for investors who have been waiting on the sides to jump on the bandwagon. Eventual target remains unchanged at 19.5c.

Golden Agriculture - Confirmation

Opening with a gap up today confirmed the bullish signal seen on the weekly chart yesterday which was the price closing above resistance provided by the descending 100wMA at 51c. That cleared the way for the counter to move higher. It just needed some buying momentum which was amply provided today as volume quadrupled! This is a strong confirmation even though it is now met with resistance at 54c. This is a short term resistance provided by the 123.6% Fibo line and has a high chance of being overcome in the next session as we have a wickless white candle today. Initial target is at 57c as provided by the 150% Fibo line. Eventual target remains at 62c as posited on 29 Dec 09. 29 Dec 09: Golden Agriculture

Fundamentally, the higher prices of soyoil and crude oil are limiting the downside of crude palm oil (CPO). With the Chinese New Year upcoming next month, demand is not expected to decline anytime soon. For more reasons why CPO is expected to do better in time, please refer to an earlier article in this blog: Crude Palm Oil: Update

Saizen REIT - Breakout

Saizen REIT had a nice breakout today as it started the day at 15.5c, above the resistance trendline which I've drawn in orange color, and proceeded to form a white candle. Volume expanded respectably with the upward movement in price. MFI has turned up sharply but being only slightly higher than the halfway mark, this counter is nowhere near overbought. MACD shows a strong buy signal. A quick look at the weekly chart shows the descending 100wMA at 21.5c. There is more upside to this counter yet although it should encounter initial resistance at 17c, the previous high.

As stated in my earlier articles about Saizen REIT in this blog, fundamentally, it is undervalued and should be worth a lot more. Factors in favour of Saizen REIT include (but might not be restricted to) stable income streams due to relatively inelastic demand for Japanese rental apartments, a lowering debt level, persistent insider buying, a strong Yen which means NAV should be adjusted upwards and could give rise to potentially higher yield as well. Over the next few months, Saizen REIT should see greater appreciation in price as more investors realise its true value. Congratulations to fellow unitholders!
Buy Japanese real estate
Passive income with high yields: Saizen REIT

Golden Agriculture: slow and steady?

Golden agriculture closed above the declining 100wMA today on low volume. This being the weekly chart, we have to see if it stays above the 100wMA at the end of the week.

Even though there is a negative divergence between price and volume, I see limited downside with all the MAs rising and within close proximity of each other on the daily chart. However, without a surge in buying momentum or some positive catalyst, this counter might end up moving sideways for a while.

The FA for crude palm oil (CPO) and for Golden Agriculture remains positive. Patience will be rewarded.

Healthway Medical - A spectacular breakout

Healthway Medical had a spectacular breakout today on very high volume. Closing firmly at 16c, this is beyond the top of the previous cup formation at 14.5c. The relentless buying momentum towards end of the day looks set to continue in the next trading session. The intermediate target of 17c looks attainable. Eventual target remains at 19.5c. This is derived from measuring the trough to the top of the cup formation and projected forward. This is further confirmed by the Fibo lines.

From a FA perspective, a price of 19.5c would mean a PE of about 17x which I believe is more than fair compared to Q&M Dental Group's PE of 37x at 60c!
Q&M Dental Group

I have divested 20% of my position at 14.5c and 15c as a hedge. The rest, I am leaving to ride the wave up. To all fellow shareholders, congratulations!



Here, I would like to share my recent response (with some editing) to a fellow shareholder's question on what might be Healthway Medical's future price movement:

From a FA point of view, Healthway Medical is cheap relative to its peers in Singapore. Compared to Q&M Dental Group, it's very cheap.

However, I also do a bit of TA which says that price action is all about sentiments. So, charts are supposed to be windows to the mass psychology of investors.

People keep saying that Healthway Medical will move to the mainboard one day and, guess what, I agree. However, that is over the longer term. Believing in that longer term prospect of the company will not stop me from taking some profit today based on TA.

Using TA, I hedge by selling some of my position at each resistance level. Usually, it's 10% or 20% of my position per level. It depends on how big a position I have. So, 14.5c is the top of the previous cup formation while 15c was the last high. I sold 10% at each of these two prices. The next resistance is 17c based on Fibo lines and candlesticks. I might sell 10% again. 19.5c, sell again.

As for what is the price going to be after the rights issue. Your guess is as good as mine. I will cross that bridge when I come to it.

Wilmar International

A friend mentioned that he would want to buy some shares of Wilmar International because he is confident that a listing of its China-related operations in Hong Kong will take place and it is just a matter of time.

Wilmar's valuation looks rich to me compared to other palm oil companies like Golden Agriculture. Of course, Wilmar is not a pure palm oil play but most people associate it with crude palm oil. The stock market is not the best place to find rational behaviour, we know.

Let's do a TA. Similar to Noble's chart, the 20wMA pulled away rapidly from the 100wMA. The 20wMA flattened two weeks ago. Compared to Golden Agriculture, which is testing resistance, Wilmar is hugging the flattening 20wMA for dear life as volumes dwindled. If I were to do some crystal ball gazing, this chart shows what Noble's chart might look like in future. For anyone who is thinking of entering, I see $5.54 or so as a fair entry point. It is about a 15% correction from the closing price of $6.43 and it is also a natural candlestick resistance and support level. This is another counter not for the faint hearted.

Noble Group

A friend told me recently that Noble Group was 9c a share in 1999. It closed the 2009 at $3.25. That's a 36x returns over 10 years!!! I've not done any research on any financial engineering the company might have done in the last 10 years. So, this observation might be too simplistic.

Looking at the numbers, I find valuation for Noble rather mind boggling. To buy at the current valuation, one must be extremely optimistic about the future earnings of the company. Well, Jim Rogers thinks that prices of commodities will continue to rise in the years ahead. If we believe him, then, it might be better to buy directly into commodities or companies producing these commodities rather than commodities trading companies. I remember Musicwhiz did some FA on Noble and Olam. So, I shan't go into details here. The link to his blog is in my blogroll. As is my style, if the FA fails, I do not bother to go on to the next step which is to do a TA.

However, what worries me is that even some usually very cautious investors I know are euphoric about Noble. From a TA standpoint, if the trend is not broken, continue riding it. Having said this, Noble's rapid climb in price does not look sustainable. So, I'm doing a TA out of curiosity. The negative divergence between price and volume on the weekly chart is quite plain to see. After breaking multiple wMAs in May, it tested the 100wMA support in July and off it went hugging the upper limits of the Bollinger bands since. The shorter term 20wMA has pulled away from the longer term 100wMA and 200wMA. The spread is now quite susbtantial. Using two sets of Fibo lines, it looks as if the current price of $3.25 is at resistane. A pullback is on the cards but with such positive sentiments bouying the counter, the 20wMA, at $2.70 this week, might just be able to support the price. That would be a 15% pullback. To my friends who are vested, stay vigilant. If the 20wMA breaks, there is quite a fair bit to fall.

Bungee jumping, anyone?

Under normal circumstances, if we were given a choice to stay safely on land or to jump off a bridge, I think we would choose to stay on land. If we were guaranteed safety if we were to jump off a bridge and collect an experience of a lifetime, would we do it? Many still wouldn't or else bungee jumping would become a very common pastime.

Last night, I had dinner with a few friends and as usual, we talked about investments as well. We all have friends who are very risk averse and would rather leave their money in the banks and collect 0.125% interest p.a. Some are "smarter" and leave their money in one year fixed deposits and collect 0.7% interest p.a. Now, we are talking about people with excess cash, beyond what they need in the event of unemployment over a period of 6 months. They are safely on land or so they think.

The threat of wealth erosion by inflation is very real and leaving our hard earned money in bank accounts to collect <1% p.a. isn't the wisest thing to do. The Monetary Authority of Singapore lifted its 2010 inflation forecast to between 2.5 and 3.5% on 19 Nov 2009. Land we were standing on which seemed firm just now might quickly become quicksand. Jim Rogers says that the worst thing to be in now is cash. It's perhaps an exaggeration but I think we get the idea.

There are many financial instruments which would "guarantee" higher returns but few would provide the liquidity which the stock market has. All financial instruments carry an element of risk to varying degrees. Make no mistake, the stock market has plenty of risks but it also has ample rewards for those who are equipped properly to traverse the difficult terrain. Having the right skills and, dare I say, right companions would make the journey a smoother one. Ultimately, do our due diligence and make our own decisions. We have no one to blame for our failures but ourselves.

There are many reasons why people would not venture into the stock market. Fear of losing money is probably the main reason. Not everyone has the mental strength to overcome this fear to move their money out of their "risk free" savings accounts into the stock market. We have friends who say they "cannot lose a single cent" and that they "would lose sleep at night if they have money in the stock market". It would be better to leave them be. Till this day, I have not had the good fortune of knowing anyone who had only made money in the stock market and did not lose a single cent. People who ask for 100% safety for their money (in nominal value) would have to settle for <1% annual yield.
Things Singaporean: SRS, CPF-OA and CPF-SA.

Rethinking SPH

This is one of my favourite blue chips. Strong balance sheets, generous dividends and it will be a major beneficiary of the improving economy as well as the opening of the two integrated resorts (IRs) this year. However, I'm in no hurry to load up at the current price.

Its price is being supported by the 20wMA at $3.60 and the declining 200wMA provides resistance at $3.80. I would divest partially if its price moves to touch the 200wMA. I would do this as a hedge as I'm not so sure that its price would not revisit $3.40, the 61.8% fibo retracement which coincides with the declining 100wMA. $3.40 also looks like an important candlestick resistance/support level.

Revisiting Keppel Corporation

Keppel Corp is one counter which I bought at under $4 in early 2009 but offloaded too early. I like this counter. The world cannot do without crude oil. Other counters in the same theme which I offloaded too early as well were Ezra and Swiber. With crude oil strengthening in price, it might be time for me to revisit Keppel Corp.

In terms of fundamentals, if one were to seek exposure to offshore counters, Keppel Corp is a better choice as it has a stronger balance sheet. The economy might be recovering but I'm not sure that taking on too much debt is a good idea as is the case with Ezra and Swiber. Keppel Corp also pays out generous dividends which is very attractive to me.

Looking at its weekly charts, the negative divergence between price and volume from May 09 to Dec 09 is quite clear. Buying momentum has been weak as MFI continues its decline, forming lower highs. However, OBV has a gradual slope upwards which indicates longer term accumulation. Price has been hugging support provided by the 20wMA so far. Without any buying momentum, this counter is doing a rather precarious correction using time. Resistance is being provided by the very gradually rising 200wMA at $8.85. The falling 100wMA is unlikely to provide much support in the event the 20wMA breaks. A stronger support would be one provided by the rising 50wMA.

I would wait for a correction before accumulating. I would buy some at the 50% fibo retracement(S$7.55) as a hedge and would buy more if it goes to the 38.2% fibo retracement (S$7.28). If one is already vested, selling some if the price hits the 200wMA would be a nice hedge. Having said this, I am sure that the longer term trend of Keppel Corp is up as the rising 50wMA is on course to form a golden cross with the declining 100wMA in the coming months.

Crude Palm Oil: Update

On New Year's Eve, crude palm oil (CPO) closed up RM68 or 2.62% at RM2,663, a 7 month high. A retest of the high achieved this year at RM2,790 in May is on the cards.

CPO price is more likely to rise than fall in 2010 because of:

1. Demand from the world's top two consumers of vegetable oils: China and India. This demand is expected to increase as economies improve.

2. Bad weather in the Americas leading to lower soybean yields. This leads to lower soyoil production and higher prices. CPO is a substitute which is also less expensive.

3. Crude oil's price movement which is expected to continue rising as a cold winter increases demand for heating fuel in the short term and economies improve through 2010. CPO is an important source of biofuel and would most likely ride the wave up.
Why Golden Agriculture?

A new year and a new decade. Strategy for 2010.

Firstly, Happy New Year! It's the beginning of a new year and a new decade. Many countries in the world still have huge debts to deal with but let's hope things will be better the next 10 years.

This is extracted from the latest issue of NEWSWEEK magazine:

The American goverment may owe China US$799 billion but when it comes to foreign debt per capita, the US is relatively prudent. Which nationality has the highest foreign debt per capita?

Greeks US$ 27,746
Belgians US$ 27,023
Austrians US$ 26,502
Irish US$ 24,247
Norwegians US$ 21,402
Italians US$ 21,089
Dutch US$ 20,412
French US$ 18,946
Germans US$ 15,574
Finns US$ 13,617
Americans US$ 11,094
Danes US$ 9,410
Spaniards US$ 8,715
Swedes US$ 7,058
Brits US$ 6,526

Now, this puts things in perspective. Many countries are still not out of the woods. This gives the idea that we will see the global economy going into a tailspin again in the next 2 or 3 years greater credence. We are experiencing a cyclical bull in a secular bear market and not the beginnings of a secular bull market.

My strategy for 2010?

1. Gold
I am keeping an eye on the price of gold. If it goes closer to the psychologically important support level of US$1,000 an ounce, I will buy more physical gold as a long term hedge against inflation. Gold also acts as an insurance for my other investments. I buy physical gold from UOB.

2. Crude oil
I believe that demand for crude oil will continue to strengthen through 2010. However, it will not go up in a straight line. It will climb a wall of worries and we will have plenty of worries in 2010, no doubt. I would trade counters which are leveraged to the price of crude palm oil (CPO) as a proxy to the price movement of crude oil. I like Golden Agriculture.

3. Japan
As a contrarian play, Japan might outperform after almost two decades being in the doldrums. I like the Japanese Yen. I like Japanese real estate. I like Saizen REIT.

4. Indonesia
A strong emerging market, Indonesia did not suffer negative growth in 2009. I like LMIR and First REIT for the low gearings and the high yields.

5. Healthcare
There is greater demand for quality healthcare with increasing affluence and an ageing population in Singapore. I choose Healthway Medical.

6. Tourism
2010 will be a year where tourist arrivals balloon in Singapore with the completion of the two integrated resorts (IRs). Looking for value and high yield, I like Suntec REIT and SPH.

There are many other counters which will do well in 2010 but I will concentrate on these I've highlighted. The choices here are based on FA. Remember to use TA to identify entry and exit prices. Good luck in 2010.