Golden Agriculture and Saizen REIT

Golden Agriculture (50.5c): Unable to close above the 50dMA today at 52c is not a good sign.  Trade volume although not expanding very much remains significant.  The fact that the MFI is bordering on the oversold region provides little comfort as it could stay oversold for a while if sentiments remain bearish.  Once again, the critical support level at 50c is in focus.  Investors with long positions in this counter like myself would want to see this support level holding up.  Fundamentally, the prospects for crude palm oil (CPO) in 2010 remain positive.  The price of crude oil will also appreciate in time as economic recovery this year gains traction on a global scale.  Golden Agriculture will remain a major beneficiary in such a situation.

Saizen REIT (16c): Another low volume day with the MFI bouncing at the 50% mark.  There is little to say here.  I am still in accumulation mode where this counter is concerned.

Healthway Medical: Downward drift.

Healthway Medical closed at 15c today on reduced volume.  MFI has also stopped declining.  All these suggest that it is more closely aligned with a classic case of low volume pull back and that it is not experiencing a massive sell off.  This does not mean that its price will stop declining, however. 

It is common TA wisdom that without any expansion in volume, any upward move in price is unsustainable.  Another common bit of TA wisdom is that in the absence of any meaningful expansion in buying activity, the chances of a continual downward drift in price is higher even if there is no massive selling.

The price is at the 15c support level now.  It is likely to test the 14c support in time although a flattened MFI, at this point in time, suggests that it might not happen in a hurry.  Of course, if there is any positive catalyst in the near future to bring buying activity back in force, things might all surprise on the upside.  This possibility seems remote for now.

Personally, I partially divested at 16c this morning the shares I bought as a hedge at 16.5c two weeks or so ago, booking a small loss in the process.  After this divestment, the Healthway Medical shares I am left with are mostly those bought between 10c to 13c last year.  These, I am quite comfortable holding for the longer term as they are actually fully paid for with the gains from divesting 80% of my original investment in the company.

Excuse me, are you an investor?

We have heard many times the advice that we should diversify our investments to minimise risk. 

For those of us who have read books about Warren Buffett, we would also remember something along the line that diversification is for the "know nothing" investor and for the "know something" investor Warren Buffett, when he identifies something good, he goes in big! 

He doesn't diversify, he concentrates!  







Of course, this is probably viable for us if we were in the same league as Warren Buffett and, of course, if we were in the same league as him, I wouldn't be blogging here and you won't be reading my blog.  

Maybe, there should be at least two more categories of investors: the "know a bit more" investors and the "know a bit more than a bit" investors.





I started out as a "know nothing" investor in my university days and would buy anything analysts recommended.  

Chasing after the flavor of the month was a regular exercise.  I would be very happy if I made money and would be very sad if I lost.  

I had no technique to speak of and did not employ FA or TA.  I did diversify since I must have had more than twenty different stocks in my portfolio at any one time.  

Did that help to reduce risk?  I think not. 

I was constantly worried about whether my stocks would make or lose money.  I didn't know what they were doing most of the time.  I would jump at the slightest noise.  Now, I'm sure just reading this short paragraph has stressed you out.






A couple of years after graduating from university, I did a diploma in business administration.  

One of the things I had to learn was financial accounting and that started me on FA.  I became a "know a bit more" investor.  

My portfolio was still very diversified and it had many counters brought forward from my "know nothing" days.  

It was really time consuming to go through every stock and much of my FA was half baked.

I then read somewhere that if we had more than 10 counters in our portfolio, that's too many.  That made sense.  






I tried to rationalise and drop some counters which were non-performers or loss makers. I tried to concentrate more of my resources in blue chips: ST Engineering, SPH and SFI are some that I do remember.  

I also loaded up big time on Capitaland at one stage but sold way too early because a friend painted a vivid picture of how the property market would not do well then. 

Lesson to take away from this: if you had done your FA well, hold with conviction and if you were not able to do this, hedge by halving your exposure, not abandon the entire position.





I decided that I was "kiasu" but I was also "kiasi".  So, strong dividend payouts became a big plus for me. 

I went in big time on REITs and other forms of trusts for the same reason, attracted by the high yields.  

I also lost big time because of REITs and other forms of trusts in this recent financial meltdown. 

Lesson to take away from this:  if someone just talks about high yields and big discounts to NAV without ever mentioning gearing, make it a point to question him or find out for yourself.





The immediate past financial crisis was in many ways the turning point of my life as a stock market investor.  Burnt badly, I decided to beef up my FA and to learn TA.  

I became a "know a bit more than a bit" investor.  What this means is that I became a bit more rigorous in my FA, depending on myself more than ever compared to listening to other people, and started using TA to find fair entry and exit points. 

I decided to extract the bad investments made in the past and put them in a frozen portfolio as a constant reminder of what I did wrong as well as the type of people I should be wary of.  

I have another portfolio of good investments from the time before the crisis and a portfolio of new investments. 






I am still as "kiasi" as ever and still want to generate a reliable passive income stream from the stock market with less risk.  

I would be very happy once I am able to achieve a passive income stream of 100k a year from the stock market.

Being "kiasu" as well, I want to grow my wealth more rapidly and in my portfolio of new investments, I am actively trading stocks of only three counters and, yes, you guessed it, they are Golden Agriculture, Healthway Medical and Saizen REIT.  Well, I guess I am trading more the former two. 

I have been accumulating units in Saizen REIT and have not sold any yet as I believe that it is still too cheap. 

For the first time in years, I am spending less time monitoring my invesments. I do not have to actively monitor more than the usual three stocks on a daily basis.  

Any time I spend doing FA, most of it is devoted to these three stocks and that gives me enough confidence to put much of my cash in them and because I put much of my cash in them, I am more careful in monitoring them.  It's a loop!  





I am not suggesting that you follow my style.  I am just sharing with you what has worked for me and what has not.  

For sure, I am far from being a "know something" investor like Warren Buffett. 

I do not think I will ever move on from being a "know a bit more than a bit" investor but this is enough for me, for now.


Related posts:
1. Grow your wealth.
2. Rationale for divestment.
3. Monitoring our stocks.
4. 101 investment choices.

A slow day

Something is wrong with Chart Nexus today.  Data for last Friday is missing.  So, I won't bother including the charts today.  Good excuse for me to do less work.

Healthway Medical: Price action formed a wickless black candle, the most bearish of candles.  The bearish crossover on the MACD has accentuated.  Bollinger bands are squeezing.  More downside would not surprise me.  20dMA is support turned resistance at 16.5c.  Supports at 15c and 14c will most likely be tested in time. I did not manage to reduce exposure at the 20dMA today.  Will see what happens tomorrow.

Golden Agriculture: The 20dMA and 50dMA are both flattening.  Might this be the start of some sideways trading?  MFI is in oversold territory and the MACD's buy signal from last Thursday has not been nullified.  20dMA provides resistance at 56c while 50dMA provides near term support at 51.5c.  100dMA which has also flattened is at 48c.  I still believe that if price moves to touch the 20dMA, it would be perfect to reduce some exposure.

Saizen REIT: Price action refused to touch 15.5c today.  Extreme low volume day.  The 50dMA, 100dMA and 200dMA have flattened.  Should we expect sideways trading for a while from now?  MACD has a buy signal, for what it's worth.  MFI is stubbornly at 50%.  Buying momentum is at equilibrium.  This might be a frustrating time for potential buyers and sellers alike.  I am still queueing to accumulate at 15.5c.

Portfolio strategy.

Done my weekly reading of The EDGE.  Goola Warden, Darryl Guppy and Michael Kahn are people whose articles I enjoy reading.  I have also learned a lot about TA from their writings.  In this issue of The EDGE, all of them have gone decidedly bearish about the prospects of global stock markets.  My own reading of the STI shows that the uptrend is still intact but the index is in a rather dicey situation should it not confirm the reversal signal seen in the last session.  With the US market closing in the red in the last session, the STI has to look to the SSE and HSI for leadership and we might agree that it is not all that promising.

So, what are we to do?  I have taken much of my profit off the table three weeks ago.  I have been averaging back into the market as prices came down to supports.  Looking ahead, I plan to continue accumulating high yielding counters at attractive valuations.  This remains the core of my investment strategy as my long term aim is to acquire a reliable passive income stream from high yields.

Which high yields would I want to accumulate?  After all, you might remember that I revealed a long list of high yields which I currently own.  Please see:  Grow your wealth and beat inflation.

One high yield which I have been constantly accumulating and will continue to do so is Saizen REIT.  Amongst the S-REITs, it is hard to find another REIT with as compelling a valuation. Having said that, there are a few others which I am keen on and I will keep an eye on.  They are AIMS AMP Capital Industrial REIT, LMIR and Suntec REIT.  Any decline in unit prices of these REITs will be an opportunity for me to further secure yields of >10% p.a. from various sources.

I would be looking out for opportunities to partially divest my remaining investment in Healthway Medical as I stated in a comment to this post: Healthway Medical: Dwindling volume.  I said: "Healthway Medical does look like it is suffering from fatigue of late. With more shares being issued and with the lower target price by DMG, it is probably difficult for the counter to form a new high anytime soon."

I will also be keeping an eye on Golden Agriculture.  If the 100dMA support at 48c breaks, it is very bearish.  Any move up towards the 20dMA at 56c in the near future provides an opportunity to reduce exposure.

I still like the long term fundamentals of Healthway Medical and Golden Agriculture.  However, as Darryl Guppy expressed so well: "Markets are efficient at recording the emotional behaviour of participants.  They are less efficient at reflecting the economic fundamentals."  I have also said that it is important to know when to buy but it is also important to know when to sell: Rationale for partial divestment.

Good luck in the new week!

STI: What now?

In reply to a question from a visitor to my blog, Anthony, on whether the decline in the STI is the beginnings of another bear market, I said, "We will have to pay attention to the trend. The STI, despite its current weakness, is still trading above the channel support. The uptrend is intact. The market is just going through a much needed correction."

I have drawn the channel resistance and support in brown color here.  We see how the price action yesterday formed a white spinning top with the high of the day resisted by the 100dMA.  Index movement stayed within the confines of the up channel.  We now have to see if the reversal signal is confirmed next week.  MFI is still declining, indicating a weakening buying momentum and the index seems poised to enter oversold territory as a new low is inevitably formed.

If the STI does break down, there is some way to fall and I expect the rising 200dMA to provide some support.  That is at 2,550 thereabouts next week.  I have also identified two support levels in red based on candlesticks support and resistance.  Let us hope we never have to test those levels.  Then again, Mr. Market pays scant attention to our hopes.

Healthway Medical: Dwindling volume.

Healthway Medical closed at 16.5c after touching a low of 16c on the back of reduced volume.   Without any significant expansion in trading volume, any upward movement in price is likely to be unsustainable.  In fact, the chances of a downward drift in price is a more likely scenario when volume dries up.

The interest in Healthway Medical's rights also hit a low note today as the price touched an intra day low of 7.5c.  This is a far cry from the first day of trading when it traded as high as 9.5c!  This also means that the purchasers of these rights would be able to own more Healthway Medical's shares at only 15c after paying another 7.5c by 9 Feb 2010, the deadline for the acceptance and payment of the rights.  Why buy the mother share at 16.5c then?

Personally, I see 15c as an important XR support level, followed by 14c.  For anyone who is interested in owning more Healthway Medical's shares at this point in time, buying the rights at 7.5c seems like a better idea than buying the mother share.

DMG and Partners, who initiated coverage of Healthway Medical earlier this month and issued a buy call with a target of 28c has issued a new lower target of 21c yesterday.  They cited the enlarged capital base due to the new shares from the rights issue as well as a share placement exercise as the reasons for lowering the target price.  It may be coincidental but this gels with my XR eventual target price of 21.5c compared with my CR eventual target price of 24c earlier.

Golden Agriculture: Oversold.

Golden Agriculture closed above the 50dMA at 52c, almost forming a dragonfly doji, which is usually a bullish sign.  The MFI declined and dipped into oversold territory today.  We have the conditions for a possible reversal.  Any downside should be restricted by the 100dMA at 48c while initial upside resistance is provided by the 20dMA at 56c.  With all the longer term MAs still rising, although gently, the downside risk for Golden Agriculture seems limited for now.

With recent upgrades of the prospects of crude palm oil (CPO) by RBS Asia Securities and BNP Paribas for 2010, with the former going so far as to say that Golden Agriculture has a fair value of 71c, a floor for the counter at 50c is not unreasonable.

A quick peek at the weekly chart shows an imminent golden cross between the rising 20wMA and the descending 100wMA.  Spotting a probable reversal is always exciting and Golden Agriculture is making my heart beat a little faster.

Saizen REIT: Positive newsflow.

Saizen REIT's CEO bought another 100 lots at 16c yesterday.  Persistent insider buying is a hallmark of this REIT.  A positive development on its loan for YK Keizan has also eliminated the need to draw on a bridging loan which would have entailed considerable interest expense.  YK Keizan's loan would be fully repaid using only internal resources by April.

Saizen REIT closed at 15.5c today.  I might get my wish next week to buy more at this price.  If I am lucky, I might even get to buy more at the 100dMA.  This coincides with a longer term 38.2% Fibo line and is likely to be a strong support.  That's at 15c.

Saizen REIT will be presenting its results on 11 Feb, just before the Chinese New Year.  That gels with my chart reading on a probable breakout timing on the upside.  A narrowing of the Bollinger bands gives some credence to this reading as well.  Initial breakout targets remain at 19c and 21c for now.

Golden Agriculture: Reversal confirmed.

Golden Agriculture closed at 52.5c, confirming the reversal signal given by the inverted hammer yesterday. The critical support at 50c held.  The MACD has a buy signal today with a green histogram after more than 2 weeks' worth of red ones.  MFI is at 29% and this leaves much room for its price to move up if indeed that's the direction in the next few sessions.

A new set of Fibo lines show resistance at 56c (38.2%) which happens to coincide with the 20dMA, 58c (50%) and 59.5c (61.8%).

I did not manage to get any at 50c, the critical support level, but that's ok as I have been accumulating shares of Golden Agriculture as its price moved downwards this and last week.

The fundamentals for crude palm oil remains compelling and I would accumulate shares of Golden Agriculture if its price weakens to supports instead of moving up in the near future.

Healthway Medical: Waiting for a pullback.

Healthway Medical closed at 17c on low volume and a declining MFI.  We can see from the line I've drawn on the MFI that the buying momentum did not bounce off the line which would have meant a strong follow through in the buying momentum.  Let us see if the rising 20dMA could push the price higher as the Bollinger bands begin to squeeze.

Trading volume has been on a downward trend since peaking in the first week of trading in 2010 on 7 Jan.  Conventional wisdom is that if volume does not expand meaningfully, any price movement upwards is unlikely to be durable, especially for a counter with a huge float such as this one.

Looking at the weekly chart gives a more sobering picture.  Healthway Medical's recent candlesticks are largely beyond the upper limits of the Bollinger bands and the MFI is firmly entrenched in the overbought region.  In fact, it is getting more overbought by the week.  I will wait for a pullback before accumulating more shares of this company.

Saizen REIT: Still accumulating

I am back in Singapore.  It's nice to have access to the internet without paying more.  It's also nice to be surfing the net with my big LCD screen.  Happy!

My overnight buy queue for Saizen REIT at 16c was filled today.  I would have liked to buy at 15.5c and I still have a queue at that price level.  However, I rationalised that it's only 0.5c.  No big deal.  I am still some way from the target I've set for myself in terms of the number of Saizen REIT units I want to have in my portfolio.  I'll buy in slowly at 16c.  If Saizen REIT does not revisit 15.5c, I would still be accumulating.

Saizen REIT's price action formed a graveston doji today.  I won't be too worried since there was only one trade done at 16.5c and only 7 lots were transacted.  16.5c is now resistance provided by the rising 20dMA.  The flat 100dMA provides support at 15c.  With the MFI forming a higher low, it shows the buying momentum, though weakened, is very much alive.

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.