Golden Agriculture and Healthway Medical closed unchanged.

Golden Agriculture closed unchanged today on lower volume at 56c, forming a doji in the process. MFI has dipped below 50% which indicates a breakdown in positive buying momentum. If the malaise continues tomorrow, we might see the counter do a gap cover to 54.5c. This is very close to the rising 50dMA while the rising 20dMA is at 54c. If these supports break, strong support is provided by the rising 100dMA at 50.5c. Overall, the uptrend is intact and I would buy more on weakness.

Healthway Medical's EGM took place today to seek shareholders' approval on plans to expand in China. Shareholders' approval are also sought for the share placements to IFC and five substantial shareholders. Some were expecting this to give the counter a bit of a boost but that did not materialise today as the price hit 18.5c, the previous XR high before retreating to 17.5c, forming a graveston doji. Indeed, the bullish picture from yesterday did not follow through as the volume today was significantly reduced, suggesting a lack of strong buy ups.


As I mentioned in an earlier post, I've sold a third of my remaining investment in Healthway Medical at 17.5c and will sell more at 18.5c. Technically, if the counter does a pull back to 15.5c, which is where we find the rising 20d and 50d MAs, that might be a good entry price as the trend is still up.


This counter has run up from a recent low of 13.5c on 11 Feb to the high of 18.5c today. MFI shows how it went from being oversold to overbought in the same period. We should not be disappointed if it decides to take a break.

STI and AIMS-AMP Capital Industrial REIT.

STI's movement today shows indecision as it started the day higher, see-sawed a bit and closed almost unchanged at 2839.54. What we can say for sure is that the 50dMA at 2810 provides initial support and the rising 100dMA at 2780 provides a stronger support. It remains to be seen if it could overcome the gap resistance at 2850. If it overcomes 2850, it is good news for the bulls.


I know many out there are turning cautious and even bearish but the higher lows and the higher highs on the MFI are encouraging. We see that in the OBV as well. Failing to move higher, the STI should not come crashing down either. Please see my earlier post on how the STI might behave in March: STI: Marching in place in March.

Turning defensive, I bought more units in AIMS-AMP Capital Industrial REIT today at 21c. Fundamentally, I like the numbers. Please see:AIMS-AMP Capital Industrial REIT. This is probably the best value for money industrial property REIT in Singapore right now. Increasing the weightage of this REIT in my portfolio diversifies away from an emphasis I've had on Saizen REIT in recent months.
Technically, the price looks like it has bottomed at 20.5c and has begun to move up. The MACD did a bullish crossover with the signal line and the stochastics has started to move up from the oversold region. 21.5c is the resistance provided by the flat 50dMA. It might take a while for the counter to move up in price but the limited downside makes it technically attractive to increase my investment here.

Golden Agriculture: Buy signal confirmed.

Crude palm oil (CPO) closed up 1.46% today or RM39 to close at RM2,709 (US$811).  The outlook is bullish and CPO's price might push higher yet.  As mentioned in my previous post on Golden Agriculture, this is good news indeed for the company.

Golden Agriculture did a bullish gap up today, closing at 56c, forming a white spinning top.  Indecision?  Seeing how the spinning top did not take place after at least several consecutive days of upmove in price (because at least several days in one direction is required to qualify price movement as a trend), it is unlikely to be a trend reversal signal. 

The buy signal seen in the MACD is confirmed today.  50% on the MFI has lived up to expectations and acted as a support, preventing the index from declining which would have signalled negative buying momentum.  All in all, chances of Golden Agriculture's price pushing higher seems good.  In the event that 57c is taken out, 59c (138.2% Fibo resistance) would be the resistance to watch. Support remains at 50c, a many times tested candlestick support and resistance level which coincides with the rising 100dMA.

Healthway Medical: A boost from DMG & Partners.

Healthway Medical's target price was revised upwards by DMG & Partners to 26c from 21c after being reduced from 28c not too long ago.  Target price is raised this time "taking into account the potential growth that the new clinics can generate, despite an enlarged share base."  Why didn't they take this into account the last time when the target price was reduced to 21c (the reason given for the lower target price being the dilution from an enlarged share base then)?  It went on to say that "Healthway can potentially open another 30 medical centres in China....This would fuel earnings growth going forward."

Let's look at the charts today.  Price moved to touch a high of 18c after breaking a stubborn resistance level at 17c, forming a white spinning top in the process.  Spinning tops usually signify indecision and are generally treated by chartists as possible reversal signals.  The MFI has moved into overbought territory while 18c happens to be the 138.2% Fibo resistance as well.  However, the expansion in volume today, as price pushed upwards, is impressive and is more than three times the volume of the last session.  This suggests that the price might push higher yet.  If this happens, the XR high of 18.5c will be tested next.

I have sold a third of my remaining position in Healthway Medical today at 17.5c which I've identified as the XR equivalent of 19.5c CR.  This is also fundamentally trading at 10% higher than the fair value I've ascribed to Healthway Medical's shares, which is 16c.  I will sell more if its price moves to retest 18.5c.  Beyond 18.5c, the ultimate bullish target I have is 21.5c which is the XR equivalent of 24c CR I arrived at a couple of months ago.  At 21.5c, I would divest almost all of my investment in the company.  I would have hit my targetted investment returns then.

I maintain that buying into Healthway Medical at prices higher than 16c now is a bet on a very strong improvement in future earnings, strong enough to recover all the EPS lost in dilution and more.  It has to be more or else, Healthway Medical's fair value would stagnate.  I would prefer to be cautious in the midst of too many potentials, especially when mostly positive potentials have been emphasised.

Related post:
Healthway Medical: An updated valuation.

Money management: Is gambling a bad thing?

At first glance, the title of this post seems like a rhetorical question.  After all, the Chinese people have a saying, which literally translated would say "Ten gamble, nine lose." 

Even though the odds are stacked against us, many are attracted by the excitement that gambling offers and the possibility of instant riches.

Personally, I don't have a very strong stand for or against gambling.  However, from the standpoint of money management, anything that might cripple our finances should be avoided. 

At face value, rationally, since the chances of losing money is much higher compared to making it, gambling should be avoided like the plague (or H1N1, in today's context).

A real life story which I remember to this day was a TV interview with Ng Man Tat, a Hong Kong actor.  Before that interview, Ng was churning out movie after movie with Stephen Chow Sing Chi, the Hong Kong king of comedy, for a few years.  It was during that interview that I understood why. 

Ng was addicted to gambling and lost a fortune.  He approached Chow Yun Fatt, a Hong Kong superstar who has gone international, a very good friend, and asked for a loan but was turned down.  Initially, Ng was very angry with Chow but later on he became grateful as he worked hard to pay off his debts. 

Ng said that if Chow had helped him to pay off his debts, he would never learn and be rid of his addiction to gambling.

Many, if not all, of us must have a story or two to tell about the misfortune that gambling has brought to people we know directly or indirectly. 

However, we have also heard stories of people getting really rich through gambling, haven't we?  I remember reading in the papers how, over the years, in some months, the Singapore Sweep's top prize (which is S$2.2m today) was won by foreign workers who went back to their home country, bought land, became landlords, got married and lived happily ever after. 

OK, the last bit is just my imagination.

So, what am I trying to say? 

Well, I don't think gambling is totally bad.  It is not one of those things which is clear cut like a hit and run (which is what Dr Silviu Ionescu, the Romanian diplomat, is suspected of doing here in Singapore), rape, robbery or murder.  These are just plain evil. 

Gambling is more of a grey area.

From a money management standpoint once more, if we budget a small sum of money for entertainment and classify gambling as one form of entertainment, as long as we stay within what is budgeted, gambling would not become financially crippling and it might even be rewarding. 

The Chinese people have a saying, "mai ge xi wang", or "buying a hope".  This, I feel, is not a bad thing. 

If you are a regular reader of my blog, you could probably tell that I'm a pragmatist, not an idealist.  Everyone has his or her own beliefs and values.  Gambling is one of those issues that will always attract strong opinions.  That is why I thought about it for a long time before deciding to blog about it. 

I hope I won't be flamed for my ideas. -.-"

Interesting article:
http://sg.news.yahoo.com/cna/20100302/tap-130-casino-games-prove-popular-shops-231650b.html

China Hongxing: Another S-chip bites the dust.

Flipping through the latest issue of The EDGE, I found a full page write up on China Hongxing.  It is rather negative with a title like "China Hongxing unveils plan for cash pile, but analysts fear it is coming too late".

"China Hongxing's fast growing cash pile has been a source of consternation for investors for more than a year.  Some were irked by the company's apparent refusal to invest the money or return it to investors... Some were even concerned whether it actually had the cash reflected in its accounts."

Analysts are downgrading the prospects of the company en masse despite the company reporting a net cash position of 22c per share.  The share price closed at 14c on 5 March.  CIMB-GK and Kim Eng Securities even ceased coverage of the company altogether.

I decided to take a look at China Hongxing's charts.  Looking at the MACD, it is in negative territory, pulling away downwards from the signal line. The MFI has dipped into the oversold region and formed a lower high, signalling negative buying momentum. 

I have drawn the downtrend channel for China Hongxing in light green. 14c is currently at the channel support.  However, if this breaks, the next support is at 12c and a stronger one is at 10c.  Any upmove from 14c is likely to be just a rebound from oversold conditions and would meet with resistance at 16c, thereabouts, which is provided by the descending 20dMA.  If, in the unlikely event that the 20dMA is taken out, very strong resistance is provided by a confluence of the 50d, 100d and 200d MAs, which are at 19c, thereabouts.

Healthway Medical falters while Golden Agriculture shines?

Despite a return of positive momentum, Healthway Medical was unable to overcome the initial resistance of 17c which was identified in my post two days ago.  Instead it closed at 16.5c today, forming a gravestone doji in the process.  This is ominous.  Also of note is that the repeated attempts to overcome resistance is not accompanied by any meaningful increase in volume. The upmove might just falter unless we have an expansion of volume with the next push up.  Finally, the MFI is fast approaching the overbought region and bears watching.

Golden Agriculture's price action formed a white hammer today and closed at 54.5c.  This suggests that a trend reversal is at hand.  This is coupled by a buy signal on the MACD.  MFI has hit 50% which has acted as support on two other occassions in the recent past.  An upmove in price would meet with initial resistance at 57c, followed by 59c. 

Fundamentally, the price of crude oil has been on the rise (currently US$81.93 per barrel) and crude palm oil has risen in tandem, closing at RM2,670 today.  This bodes well for Golden Agriculture.

Saizen REIT: Buy signal.

For the first time in weeks, we have a buy signal for Saizen REIT in the MACD on the weekly chart as the price closed at 16.5c.  We see how the MACD seems to be pulling away ever so slightly from the signal line.  This is a positive sign.

On the daily chart, the MACD continues to pull away from the signal line further away into positive territory.  20dMA and 50dMA continue to rise in their merged form, providing a strong support.  The Bollinger bands squeezed four sessions ago and are expanding now, marking a departure from lower volatility as price sets off in one direction, which is up, in this case.

The MFI has formed a higher high which marks positive buying momentum.  Using the technical tool, Ichimoku, we see that Saizen REIT's price has emerged from the upper limits of the cloud (the translucent blue area) and this means that it has emerged from resistance and is free to move higher.

It might still be early days but the signs are promising.  We will need confirmation next week on whether Saizen REIT's price will continue its positive movement.  Good luck to fellow unitholders.

Genting SP: Stale bulls' second chance?

Genting SP experienced a white candle today on increased volume.  As the price touched 91.5c, approaching the 50wMA (93.5c), it lost momentum and closed at 90.5c.  Volume, although higher, is not significantly so.  The suggestion is, therefore, that the buy ups are half hearted.

The MFI and Stochastics are still in oversold regions and seem to suggest that if a reversal does happen, it is not unexpected.  We might want to remember that in a bearish scenario, MFI and Stochastics can stay oversold for a very long time.  MFI and Stochastics are also more accurate indicators in a trendless situation.

So, the price won't go higher?  If the 50wMA (93.5c) is taken out in the next session, we might see the price rising to the 20dMA, which is descending sharply and should be at 97c then.  All eyes would be on whether the price action would be able to break through the 20dMA to close higher, failing which, a resumption of the downtrend is more likely. I still see strong supports provided by the 100wMA (74c) and the 200wMA (70c) then. 

Do people really believe that the opening of Universal Studios on 18 March would have a huge positive impact on Genting SP in the near term?  The jury is still out.  More likely, this upmove is the stale bulls' second chance to reduce exposure or to get out totally as the downtrend is still intact.  Short sellers should find shorting closer to resistance almost irresistable given the bearish technical indicators.

Genting SP: When is it safer to buy?

On 25 Feb, I wrote the following about Genting SP:

"Genting SP continues to weaken as expected. The highest it got to this week was 98c to give stale bulls a chance to reduce exposure. Closing at 91c today hugs the lower limits of the Bollinger bands. The downtrend seems ready to continue as the MFI continues to decline indicating reducing buying momentum. In the unlikely even that the price moves up in the next session, resistance is at 98c.

"Looking at the weekly chart, we see a precarious situation. Price is hugging the lower limits of the Bollinger bands and the MFI continues to decline just like in the daily chart. However, what is important is that it has closed below the rising 50wMA which is at 92.5c. If price is unable to recapture this support level to close at or above 92.5c in the next session, which is the last trading day of the week, the chart would look very ugly. The ultimate downside target would be 74c, a support level provided by the rising 100wMA. Although there would be intial support at 80c, such a potentially huge fall in price would be too tempting for short sellers to ignore."

Today, Genting SP continued its downward slide, closing at 84.5c.  Momentum oscillators such as the MFI and Stochastics show that the counter is oversold.  The MACD plunges deeper into negative territory.  Longer term MAs are descending with the exception of the 200dMA which now acts as resistance in the event of any rebound.  This is at 98.5c. 

The MFI on the weekly chart is not oversold yet while the MACD is on the verge of plunging below zero.  On a weekly basis, there is a strong suggestion of more downside as well.  Trying to make some money from this counter by punting on the long side is going to require a lot of courage and luck at this juncture.  Having said this, the downside would probably be reaching an inflection point in the near future. 

The proximity of the rising 100wMA and the 200wMA to each other would provide a very strong support at 74c and 70c, respectively.    For investors who really like this counter for some reason, they could consider accumulating then, especially if the MFI and Stochastics indicate heavily oversold conditions by then.

First REIT: This one is for keeps.

You might have experienced deja vu before.  

It has happened to me countless times.  

Psychic?  

Maybe but sometimes, things just fall into place in the strangest ways.

Today, I received a payment voucher from my broker on income distribution from First REIT.  

This is not a very glamorous REIT but I count it as one of the strongest in my portfolio.  

The generous distribution put a smile on my face.

Then, I wondered if I should blog about First REIT, using it as an example of the type of REIT we want to have in our passive income portfolio.  

I got home, checked my blog and found two comments from anonymous readers, both stating that they do not like REITs.  

So, that made up my mind for me.






I first bought some units in First REIT in 2007 for an average price of 75c per unit.  

Through good and bad years, it faithfully distributed income to unitholders every quarter:

In the first year, it distributed 7c per unit for a yield of 9.33%.

In the second year, it distributed 7.62c per unit for a yield of 10.16%.

In the third year, 2009, it distributed 7.44c per unit for a yield of 9.92%.

Throughout the years, First REIT did not have to raise funds from unitholders as its gearing remained conservative at slightly more than 15%.  

The management did not act irresponsibly, expanding recklessly during times when credit was easily available.  






Its NAV today is about 98c per unit.  

It is still trading at a discount to NAV although, at today's closing price of 82.5c, not excessively so.  

At the current price, the yield (assuming a distribution of 7.5c per annum) is still a respectable 9%.

You might remember that I said I bought more units of First REIT at 42c during this last crisis.  

I have received the full distribution of 7.44c per unit for the year 2009.  

This translates into a yield of 17.7% (this plus a capital appreciation of almost 100%)!  

In five and a half years, I would have recovered my capital (everything remaining equal).  

This one is for keeps.





First REIT, I believe, is a powerful example of what makes a good investment in REITs for the purpose of passive income generation.  

Let us leave out the units I bought at 42c as that happened under extraordinary circumstances and is unlikely to be repeated.  

Considering just the units I purchased at 75c, it is more than likely that I would continue to receive 10% yield per annum.

Human beings like to classify things, organising things into groups.  

This is not a bad thing in itself but having a system of classification helps us to think more readily in general terms, making quick generalisations in the process.  

This encourages economy and masks differences, differences which could potentially separate the gems from the trash.  

So, next time, if you see what seems to be a heap of trash and think of passing it by, think again. 





Related posts:
High yields: Successes, failures and the in betweens.
Seven steps to creating passive income from the stock market.
High yield portfolio.

The same three counters.

Healthway Medical touched 17c, the initial resistance identified yesterday with the MACD indicating a return of positive momentum.  However, that the price closed unchanged despite increased trading volume indicates that many holders are making use of the upmove to lighten their positions.  A rising MFI shows increasing buying momentum and this is some way from being overbought, suggesting that there might be more upside.  17c is still the resistance to watch.  17.5c is the XR eventual target, the equivalent of the CR eventual taget of 19.5c.

Golden Agriculture closed at 53c, supported by the 20dMA.  This pullback is on the back of lower volume, suggesting that the decline is due to weaker holders being shaken out and not due to any drastic distribution activity.  However, with the MACD forming a bearish crossover with the signal line and the Stochastics continuing its decline, we might see the 100dMA being called upon to act as support yet.  I would accumulate then.

Saizen REIT formed a rare white candle today as price closed at 16.5c with a relatively surprising large buy up in the last trade of the day.  The rising 20dMA and 50dMA have merged to form support at 16c, suggesting that this is probably a very strong floor for the counter.  MFI has formed a higher low, marking sustained positive buying momentum.  MACD marks a return to positive momentum and the Stochastics has turned up as well.  Is this the beginning of something more interesting for believers of Saizen REIT or is it another red herring?  Time will tell but my investment in Saizen REIT is informed by my FA and I am holding with conviction. 

Initial resistance is at 17c, a recent candlestick support turned resistance.  Ultimate resistance for the week is provided by the descending 100wMA at 19.5c.