4 counters

Another down day for the STI as it closed just a few points above the 2,700 support.

Golden Agriculture closed at 50c which I've identified earlier as a critical support.  The black candle day took place with lower volume compared to the last session.  Price action formed a black inverted hammer which, together with the white inverted hammer, are considered possible reversal signals.  This has to take place after a series of down days which is the case here.  We will need confirmation tomorrow.  If the decline continues, the rising 100dMA provides near term support at 48c.

Healthway Medical closed at 17c, forming a dragonfly doji which is usually interpreted as a bullish candlestick.  However, this took place on the back of much reduced volume and a declining MFI which hit 50% today.  The buying momentum is broken but the declining MFI also gives more room for price to move upwards in the event of a reversal.

Q&M Dental is seeing its price retreat, closing at 49.5c, down from the lofty 60c not so long ago on the first trading day of 2010.  It should retreat.  I am not even looking at the charts.  Fundamentally, at 49.5c, it is still very expensive.

Saizen REIT closed at 15.5c, the support level provided by the 50dMA.  Both yesterday and todays' black candles were accompanied by relatively low volume. Rising 100dMA at 15c should limit downside.  15c is also a many times tested candlestick support and resistance level.  I have put in my buy queues.

STI and 3 counters

Asian markets made huge retreats today. HSI and STI are down by 2.38% and 2.54% respectively. The Shanghai Composite is down 2.42% while Taiwan is down by a whopping 3.48%! European markets are all in the red right at this moment.

Where are the supports for the STI? I identified two levels of support for the STI in a previous post. With today's close at 2,740, we are sitting right on the first level of support. Please see:. STI: How low can it go?

With the retreat in the STI happening with such magnitude and strength today, as could be seen in the high trading volume, the next support which is a band between 2,680 to 2,700 could be tested next.

Healthway Medical started the day at 18c only to touch a low of 16.5c before closing at 17c. MFI is declining which suggests that buying momentum is weakening. Price action is directionless at the moment at best.

Golden Agriculture closed at 50.5c as it crashed through the supports at 51.5c and 51c. My overnight buy queues at those levels were filled. The next support level is at 50c, a many times tested candlestick resistance turned support. This support level is critical. . We might see a whipsaw if this support level holds. The rising 100dMA is at 48c.

Saizen REIT's price action formed a solid black candle as it closed at 16c, below the rising 20dMA. My overnight buy queue at 16c was filled. The rising 50dMA will provide near term support at 15.5c next. The pullback is on relatively low volume with. the MFI declining to 50%. The fundamentals have not changed and I will accumulate at the next support level.

Healthway Medical, Golden Agriculture and Saizen REIT.

This is going to be a quick look at Healthway Medical, Golden Agriculture and Saizen REIT.  A quick look is all I might be able to do in the next couple of days as I am on vacation and the internet connection at the hotel is rather pricey. I am writing this after midnight after a nice night out.  I hope I am still writing coherently.

Healthway Medical closed at 17.5c on Monday, the same as the previous session last week.  It is showing resilience as expected.  However, the price moved to touch a high of 18.5c before closing lower.  This formed a candle with a long wick on top.  If you have been following my blog, you might remember that I dislike such candles.  Price is unable to close higher on a day with much higher volume.  Not too positive, you might agree.  OBV and MFI are flat, suggesting a lack of conviction either way.  The MFI is hovering under the overbought region and that suggests that any upside in the immediate term might not be very durable.  Fundamentally, I am not convinced that Healthway Medical should trade at anything higher than 18.5c which is what it is worth, post rights, if it trades at the same valuation as Raffles Medical Group, both in terms of PE ratio as well as P/B value.

Golden Agriculture's bullish reversal candle in the last session was not confirmed on Monday.  It has also formed a candle with a long wick on top which I dislike.  Price closed lower today at 53.5c.  However, unlike Healthway Medical, volume was much reduced yesterday with MFI declining to the 50% level.  At this level, there is more room for price to move higher if a reversal comes along.  Of course, MFI could continue to move lower and if the price decline stalls or moderates as this happens, it is actually a positive. OBV continues to decline but more gently, suggesting that distribution might be moderating. I would accumulate Golden Agriculture at the next support levels I identified in earlier posts.

Saizen REIT's price closed unchanged and it seems that the rising 20dMA is providing some support at this point in time.  Volume shrank while MFI continued its decline.  OBV has flattened.  What is interesting is the declining MFI.  This suggests a lack of buying momentum but if this continues to lower without any corresponding decline in price, it is actually a positive.  I would keep an eye on this.  Saizen REIT is still a counter I will continue to accumulate at supports.  This REIT, I firmly believe, is going to be re-rated upwards in time and when that happens, the market will recognise its value in the usual way.

Have a good Tuesday, everyone.

Grow your wealth and beat inflation

In some interviews earlier in the year, Marc Faber said that the meteoric rise in global stock markets in 2009 was a once in a lifetime opportunity to make a lot of money and that 2010 should be a year of capital preservation (ie. not to lose money). Marc also said that, on average, it is still possible to get about 10% gain from the stockmarket this year.

People who know me would know that I have a lot of respect for Marc and I take his advice to heart. However, I believe that if we use fundamental analysis and choose to invest in companies with strong fundamentals that are still below their intrinsic value, coupled with technical analysis to determine fair entry and exit points, we could make more than 10% capital gain this year.
Stockmarket analysts.

Does this mean that we have to take on risk? Of course, there are risks involved. There is no free lunch in this world. Risk has to be managed, not feared. Easier said than done? After all, it's only human to feel fear.
Risks and rewards: TA and FA

Then, let this be an inspiration: "The rich would act in spite of fear. The poor would let fear stop them." I read this in a book while browsing in a bookshop recently. I cannot remember the title now. If we are petrified by fear, we would never do anything in times of adversity.  At the height of the bear market when the VIX was making new highs, when everyone was fearful of buying more shares, that would have been the best time to gradually accumulate shares of good companies.
Bungee jumping, anyone?

Convinced?  So, what do we do?  There are many suggestions by financial analysts on what to do with your money depending on your risk appetite and how to get better returns than fixed deposits in the banks. Frankly, to get better returns than fixed deposits is quite easy. A one year fixed deposit now pays as much as 0.8% per annum, the last time I check. There are also suggestions to leave our money in money market funds which pay 1.3% per annum, thereabouts. Lower risk than equities and higher returns than fixed deposits, though not guaranteed.

For me, the more important thing is how to get better returns that will protect us from the wealth erosion effect of inflation! A rather benign inflation rate could be about 3% per annum. So, if we leave our money in the bank, more than the contingency cash required for six months of expenses in case our regular source of income is terminated, we are doing ourselves a grave injustice with an interest of only 0.125% per annum in the banks. If we leave our money in a fixed deposit or a money market fund, our wealth is still shrinking as the returns lag inflation.
Be a pragmatist and prosper in 2010.

I wrote about capital gains and high yields in various articles in this blog.  I have shared my thoughts on inflation and investments in gold and real estate too.  On a daily basis, barring the days I'm away from home, I've shared my analyses on price movements of certain counters.  These analyses would hopefully contribute to capital gains.  It seems that I'm neglecting high yields.  After all, the theme of my blog is: "Have a more secure financial future in an uncertain world by creating a stream of reliable passive income with high yields." 
High yield portfolio.
Real estate as hedge against inflation.
Gold as an insurance against inflation.

I guess why I'm not writing as much about high yields is because they don't really have to be actively managed as much.  I am receiving dividends from a portfolio of high yields at this time on a quarterly, half-yearly and yearly basis, depending on the stock.  This is something which people who are relatively risk averse, who want to grow their wealth, fearing the effects of inflation could consider.

My portfolio of high yields at this moment include:
SPH
ST Engineering
Cambridge Industrial Trust
CitySpring
First REIT
FSL Trust
K-REIT
LMIR
AIMS AMP Cap Ind REIT
MIIF
Suntec REIT
HWT
Frasers Commercial Trust
Saizen REIT

These high yields are not all created equal and some were bought at prices I would rather forget.  Many, however, I am happy to say, I have purchased at much lower prices in the last twelve months.  The constant passive income they have provided me with makes me happier.

The profits I made from trading in the stockmarket, I make it a point to apportion some of it towards accumulating high yields.  The high yields I have been accumulating in the last few months were SPH, AIMS AMP Cap Ind REIT and Saizen REIT.  I have written extensively about these high yields.  So, I shan't say more here.
Passive income with high yields - Saizen REIT.
AIMS AMP Cap Ind REIT.
 
We have a responsibility to ourselves and the people we care for to have a secure financial future.  This is something we have to consciously work towards.  It is the responsible thing to do.  The journey is likely to be filled with obstacles but treat each one as a learning experience and grow with each step.  A good dose of luck doesn't hurt as well.  Good luck to us all.

STI: How low can it go?

With the Dow down 216.9 (-2.09%) at 10,172.98 and the S&P down 24.72 (-2.21%) at 1,091,76, it is likely that the bloodbath will continue next week in the Asian markets. Crude oil is down to US$74.23, that is down US$1.85 or 2.43%. Crude palm oil (CPO) on 22 Jan closed at RM2,455, down RM33 or 1.33%.

The flood of negative price action is psychologically daunting for investors and longer term traders alike. Investors are likely to wait for prices to go even lower before committing more capital while longer term traders are likely to wait for clearer signs as to whether the trend is still up or reversing before taking fresh positions. The one group that might benefit are the short term traders who might short the market as the chances of further downside is definitely greater.

Having said this, generally, the longer term uptrend is intact and investors would do well to hold on to their positions and ride out this rough patch. Of course, not all stocks are created equal, certain counters such as Healthway Medical are expected to be more resilient while certain counters such as Yanlord might sink much more.

In the last session, the STI gapped down and traded lower for most of the day but did a dramatic u-turn and closed higher, forming a white candle which looks promising. Promising because a possible reversal pattern which chartists call a "morning star" might appear if the index opens and closes higher in the next session. Confirmation is still required.

However, with the return of heightened volatility as could be seen in the widening of the Bollinger bands, a lack of buying momentum as could be seen in the rapidly declining MFI and the continuing distribution as could be seen in the declining OBV, it would be no wonder if buyers hold back in the next session, which could send the STI lower.

Now, the question is how much lower will the STI go if it does continue sinking? To answer this question, I have decided to draw three sets of Fibo lines for the STI's chart. For the visually challenged, please don't click on the chart. My eyes watered after a few minutes of looking at it.

From the three sets of Fibo lines, we can see where some of the Fibo lines are so close to each other that they overlap or almost do so. From these lines, I see strong supports at 2730-2740 and 2680-2700. Another 5% downside, it seems, cannot be ruled out from the last session's close of 2,819. Time to bring out the warchests? Maybe. May Lady Luck smile on us.

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.