Healthway Medical: Strength

Healthway Medical's price action exhibited relative strength as it closed higher on a white candle day at 17.5c. This level is actually the XR adjusted level of the previous eventual target of 19.5c. All the more impressive. The new eventual target for the counter is 21.5c if 17.5c is taken out. Notice that the volumes on down days are actually lower than the volumes on up days for this week. That is a positive. The MACD has a buy signal today too.

The only negative I can spot is in the weekly chart which shows the MFI in overbought territory for the third week running. Conventional wisdom is that a counter cannot stay overbought forever but it can last quite long in extremely bullish cases.

I repurchased a chunk of Healthway Medical's shares at 16.5c and I would be quite happy to see it fly higher. If it sinks lower, I would carry on repurchasing as my current investment is only 40% of what it was originally before the counter ran up.

Saizen REIT: Accumulation mode

Like the broader market, Saizen REIT retreated today. Opening at 17c, it reached a low of 16c before closing at 16.5c. This is also on the back of higher volume. MFI and OBV are in decline, suggesting a lack of buying momentum.

Taking a look at the weekly chart, we see that the 20wMA is flat, coinciding with the 38.2% Fibo line at 15c. Expect 15c to be a strong suppot. With today's heavy volume selldown and the negative divergence between price and volume seen on the weekly chart, further decline in price to possibly test 15c cannot be ruled out.

I put in a queue last night to buy at the 16c support level. That was filled. I will put in a buy queue tonight at the next support level.

Golden Agriculture: White hammer!

Golden Agriculture gapped down and sank rapidly, hitting a low of 52c on heavy volume. Impressively, it closed at 54.5c, forming a white hammer in the process! A white hammer appearing after a series of down days is usually promising. We might have a reversal next week. We will need confirmation in the next session.

MFI, a momentum oscillator, is declining and almost at the 50% mark. OBV is still in decline which suggests distribution is still very much alive. Despite a lack of buying momentum and accumulation, price action managed to form a white hammer. This suggests some strong underlying support for the counter: the selldown was well absorbed.

As is my style to buy at supports when prices are moving down in an uptrend, I put in a buy queue at 54c, which I identified as a gap support, last night. Of course, it was filled. My other queue at 51.5c was not filled. Missed by 0.5c. Sometimes, hedging by queueing at one bid above support could be rewarding.

STI: Rejoins the channel

The air is buzzing with excitement or it might be panic. It depends on whether we are asset light or asset heavy at this point in time.

On 13 Jan, I blogged:
"The previous uptrend channel resistance for the STI should now provide support at 2,860 through early next week. If the index breaks this support, it would rejoin the channel. Having said this, with the 20dMA, 50dMA and 100dMA all rising and each within 70 points of each other, more or less. The outlook for STI's uptrend is still good. The correction will be a good opportunity to accumulate shares of good companies as prices move closer to supports."

With the STI now just a tad above 2,800 this morning, the index has rejoined the channel. The uptrend is still intact. If the index breaks the uptrend channel support, then, I would worry. For a look at the chart, please refer to: Confirming the signs.

On 15 Jan, I blogged:
"To me, the recent ups and downs of the STI is a sign that a correction is probably going to happen. A 3000 points initial target which so many analysts have talked about is so near and yet so far. The market is grudging and unwilling to give bulls the satisfaction (yet). Analysts have also talked about a 3300 points eventual target for the STI by end 2010. That's a mere 10% from where we are now." Please see: STI: Up or down?

The correction which we have been anticipating has descended upon us. This is an opportunity to accumulate at supports and I am doing just that. Good luck to us all.

Healthway Medical: Share placement

The Board of Directors of Healthway Medical Corporation Limited (the “Company”) wishes to announce that the Company is in advanced discussions with a major international financial institution (“FI”) for an equity and debt funding package (the “Funding”) of up to US$25 million. The terms and conditions of the Funding have been substantially agreed between the Company and the FI. The Funding is, inter alia, subject to the FI’s board approval. The FI’s board is expected to meet and
decide on the Funding by end February 2010.....

.... The Company will convene an Extraordinary General Meeting (“EGM”) to seek the approval of the shareholders of the Company (the “Shareholders”) on the above transactions. This EGM is expected to be held in the first quarter of 2010.

As the Funding and the Placement are still subject to the FI’s board approval and/or Shareholders’ approval at the EGM, the Company wishes to state that there is no assurance that approval of the FI’s board and/or the Shareholders will be obtained and the Funding and the placement will be undertaken.

Healthway Medical is attracting the attention of international financial institutions now which is good. They are doing a share placement which is bad as it does not allow minority shareholders to participate.

Healthway Medical: Time-table

Shares traded ex-rights : 19 January 2010 from 9.00 a.m.

Books Closure Date : 21 January 2010 at 5.00 p.m.

Despatch of Offer Information Statements, the AREs or the : 26 January 2010
PALs (as the case may be) to Entitled Shareholders

Commencement of trading of “nil-paid” Rights : 26 January 2010 from 9.00 a.m.

Last date and time for splitting Rights : 29 January 2010 at 5.00 p.m.

Last date and time for trading of “nil-paid” Rights : 3 February 2010 at 5.00 p.m.

Last date and time for acceptance of and payment for Rights : 9 February 2010 at 5.00 p.m. (9.30
Shares and excess application p.m. for Electronic Applications)

Last date and time for renunciation of and payment for Rights : 9 February 2010 at 5.00 p.m.
Shares

Expected date for issuance of Rights Shares : 22 February 2010

Expected date for the listing and commencement of trading of : 23 February 2010
the Rights Shares

Healthway Medical and Saizen REIT

Healthway Medical: A low volume pull-back today with price closing at 16c. MACD seems certain to form a bearish crossover. MFI has formed a lower high today as it formed a higher low yesterday. There is no momentum either way, it would seem. If this continues, it actually favours the bears as price is more likely to drift lower than to float higher in such instances. Support at 15c is still valid.

Saizen REIT: MFI is moving higher but the index is still not overbought. OBV is moving higher too which indicates continuing accumulation although slight. Supports provided by the rising 20dMA at 16.5c and the rising 50dMA at 15.5c. I continue to like the REIT's fundamentals and I see limited downside while upside potential remains attractive.Saizen REIT: Accumulate at supports.

Golden Agriculture: High volume sell down

Golden Agriculture broke support provided by the 50% Fibo line at 56.5c to close at 55.5c after touching an intra-day low of 55c. This is on the back of pretty high volume and it seems that the negatives from lower crude oil and crude palm oil prices yesterday were too much to bear. Price is now supported by the rising 20dMA. With this type of high volume movements, there is usually some momentum and expectation is for the price to move lower tomorrow to test supports at 54.5c (38.2% Fibo line) and 54c (gap support). If those break, the next supports are at 51.5c (gap support) and a band between 50c to 51c (many times tested resistance turned supports).

Longer term fundamentals are still good. After selling off 90% of my position by the time it hit 62c last week, today I bought a chunk of Golden Agriculture's shares at the 20dMA support. This was a buy queue I put in last night. I will continue accumulating on further weakness.

Golden Agriculture: A tale of two crudes

I was watching Bloomberg on TV while vacationing and some technical analyst said that US$80 for crude oil is in the bag and would happen before the week ends. There is also news out of Venezuela that Chavez might have to do something drastic to handle a crisis in the country and that might send crude oil up to US$100! That would make Darryl Guppy happy.

Crude oil moved to the lowest in 2010 on Tuesday, 19 Jan, while crude palm oil trades at the lowest level in 8 weeks today at RM2,444, down RM46 or 1.85%. Short term weakness providing a chance to accumulate? Maybe.

Technically, the 50% Fibo line at 56.5c seems to be providing near term support. If this counter is also doing a correction using time, it would be waiting for the 20dMA to catch up and the 20dMA would be at the 50% Fibo line sometime in the next couple of sessions. The 20dMA also coincides with an uptrend line and this reinforces the near term support.

If the 20dMA support gives way, Golden Agriculture should find support at 54.5c, the 38.2% Fibo line and at 54c which is a gap support.

Healthway Medical: XR

Healthway Medical's share price seems to be holding up pretty well even after XR. However, today's price action formed a doji after the previous two white candle days. That is always "iffy".

The MFI has formed a higher low which suggests that buying momentum exists but it is very close to crossing into the overbought region. We still do not see a buy signal on the MACD and I get a feeling that the counter is consolidating, doing a correction using time. If this is right, the price is unlikely to decline very much further and is waiting for the 20dMA to catch up before moving higher.

Adjustments have been made to the chart after the counter went XR on 19 Jan. So, I've redrawn the Fibo lines and we have a support level at 15c (61.8%) which is where the 20dMA is headed towards by end of this week. Downside should be limited to 15c if the counter is indeed doing a correction using time. New eventual target is also adjusted for XR and is now at 21.5c (down from 24c) as indicated by the 161.8% Fibo line.

I have repurchased some shares at 16.5c as a hedge. I will now wait to see if the counter is indeed doing a correction using time or if it would correct in price to hit 15c.

Rationale for partial divestment

Amongst the three counters I am actively monitoring, I remain heavily vested in only one counter: Saizen REIT. I have divested 90% of my position in Golden Agriculture and 80% of my position in Healthway Medical in the recent run up in prices.

From 4 Jan, the first trading day of 2010, Golden Agriculture raced from 51c to a high of 65.5c for a gain of 14.5c or 28%. Healthway Medical blasted through the roof as it started the year at 14c and hit 19.5c for a gain of 5.5c or 39%! In both instances, partial divestments took place at every resistance level as the prices rose.

Now, have I changed my mind about these two counters? No, of course not. The fundamentals and prospects are still good over the longer term. I just feel that the market became a little too enthusiastic and sent prices up too high and too quickly. I liken it to a sprinter who is able to run very quickly over short distances but the speed is unsustainable over longer distances.

Knowing which companies' shares to buy and when to buy them is important but knowing when to sell the shares is equally important. For sure, if we simply hold on to the shares till they reach the zenith before selling is one way. However, to grow our wealth more quickly, selling at resistance levels and repurchasing at supports for the next leg up could be more rewarding. It is with that mentality that I partially divested my shares of Golden Agriculture and Healthway Medical.

What about Saizen REIT? It started the year at 15c and reached a high of 18c for a gain of 3c or 20%. Not too mean either. I identified Saizen REIT as a yield counter for regular passive income. Conservatively, I expect a yield in excess of 10% per annum from middle of 2010. With that in mind, I am not too keen on divesting my investment in Saizen REIT unless the price is extremely compelling. Three portfolios and three counters: future gains and passive income.

The stock market climbs a wall of worries and goes down a river of hope or so the saying goes. Basically, it means that prices do not go up or down in straight lines. If the prices go up without a break, it means that the wall of worries is non-existent. I would worry in such an instance! It usually means that the market is euphoric and we have buyers rushing in en masse.

When we have almost full participation in the market, there is very little fuel left to push it higher. That is when the market reverts to the mean. Anytime, when too many people shift to one side of the boat, a shift back to the other side is necessary to maintain equilibrium.

In an article I read this morning by ETF Guide, it says,"Investors Intelligence tracks the recommendation of different market advisors. As of the most recent poll, 53.4% of all advisors are bullish. 30.7% of advisors are longer term bullish...... " It went on to say that even the market high of October 2007 did not get such a positive response. This is a wake up call and contrarians are taking note. Marc Faber is probably one of the first to sound the warning and I talked about this in a post yesterday: STI: Up or down?

Right, this is where I sign off. I will be going away for a short holiday from tomorrow and will not be adding new posts for a few days. Thanks for the overwhelming support so far and I hope my posts have been useful and in some cases, maybe, inspiring. I wish everyone the best of luck and, remember, always hedge and come back often.