Charts in brief: 15 Mar 10

I decided to just do a summary, charts not included, to highlight what I think might be some interesting observations for a few counters I charted this evening.  I call this "Charts in brief" and this will be something I might do more often as and when I don't really have a lot to say about any counter in particular.

Golden Agriculture: The sell signal on the MACD is confirmed today.  Price closed at 57c, forming a doji, on reduced volume.  I am still waiting to accumulate at support.  Please see: Golden Agriculture: Waiting for support.

AIMS AMP Capital Industrial REIT:  MFI and OBV both turned up.  The MACD has crossed zero, suggesting a return of positive momentum.  An expansion in trading volume with the next upmove in price would be nice.  Please see: STI and Aims Amp Capital Industrial REIT.

Healthway Medical:  A black candle day but on much reduced volume.  OBV is flat.  So, no distribution.  MFI declined but is still in the overbought region.  Although the uptrend is intact, buying on weakness would be a safer option than buying now and hoping for a breakout.  Basically, the risk premium is much higher now.  Please see: Healthway Medical: A retest of recent high.

Saizen REIT: MACD seems set to make a bearish crossover with the signal line.  MFI has gone into oversold territory; buying momentum is weak. OBV has dipped.  This is a sign of distribution.  The uptrend is intact even if the price should retreat to 15.5c. I know many people ready to pounce on the counter if this should happen.  I would buy more on weakness.  Please see: Saizen REIT: March 2010 presentation.

Genting SP:  This counter has been enjoying a revival lately but on decreasing volume.  Daily volume has been lower with the price moving higher since 5 March, the day when price and volume spiked up.  This suggests that the buyers are, probably, mostly shortists covering their positions.  This is not to say that the price cannot move higher but without a significant number of new participants coming in on the long side, any move upwards would lack sustainability.  Please see: Genting SP: Stale bulls' second chance?

Saizen REIT: March 2010 Presentation

Regular readers would know by now that I am accumulating units in Saizen REIT as it is a huge bargain.  I have likened it to buying a $2.9m condominium unit for $1.6m before.  That analogy still stands.  On 3 March 2010, Saizen REIT's manager, Japan Residential Assets Manager Limited, presented their latest results and I would like to share some numbers here with fellow unitholders and other interested parties.

The NAV per Unit is S$0.40.  However, some are worried that the portfolio of properties under YK Shintoku might be foreclosed.  In case of foreclusure, the NAV per Unit excluding YK Shintoku would be S$0.36.  On top of this, some are worried about the dilution that would take place once all the warrants are exercised.  In such an instance, the diluted NAV per Unit would be S$0.28.  The diluted NAV per Unit is based on 1,446,357,417 Units and warrant proceeds of S$44.7 million.  Please find the full details at:
Saizen REIT: March 2010 Presentation

Saizen REIT is on track to resuming income distribution to unitholders in mid 2010 and its gearing level would fall upon the the full repayment of its CMBS loan for YK Keizan in April next month. A re-rating upwards by credit agencies is highly probable.


Although Saizen REIT's remaining CMBS loan for YK Shintoku is still being negotiated, personally, I do not foresee foreclosure taking place. If the loan is still being serviced, why would the lender want to proceed with foreclosure, especially with the punitive (aka lucrative) interest rate of 7% imposed on the borrower, more than doubling from the 3% before? Having said this, it would be in the interest of all unitholders that Saizen REIT's manager secures re-financing at a more reasonable cost soon.

June 2009 data from CB Richard Ellis, Colliers International, show that the average rental yield in Japan is the highest for residential properties at 5.5 to 6.5% p.a. This is followed by industrial properties, retail properties and office properties. Such high yields have attracted the attention of institutional funds which are expected to snap up assets at bargain basement prices. It is when things look the bleakest that the most opportunities are to be found. According to one Japanese investment bank analyst, for example, “we’ve been approached recently by many pension funds that want to increase their exposure to real estate because they realize prices are going down. They are happy to buy early because their return target is very low, maybe 5 percent.”

Some people have asked me why not go buy some Japanese residential real estate? Well, obviously, I do not have deep pockets like the institutional funds. I won't be able to buy a single apartment in Japan, let alone a whole apartment block.
The way I see it, Saizen REIT's financial health has improved significantly and will continue to improve. With its units trading at such a deep discount to NAV, if I have the money, why bother buying the underlying assets? I would just buy the REIT. To make it more tantalising, Saizen REIT is likely to yield upwards of 10% p.a. when it resumes income distribution to unitholders from mid 2010.  This is much higher than the average of 5.5 to 6.5% yield for Japanese residential real estate as reported by CB Richard Ellis, Colliers International in their findings published in June 2009.

Some people I spoke to responded by saying they have missed the boat and lamented that they should have bought some units when it was 10c.  I would tell them that I started buying at 13c, not 10c, and I am still buying today.  Why? The fundamentals are still very compelling and the charts look good.

Related posts:
Passive income with high yields: Saizen REIT.
Buy Japanese real estate.
Saizen REIT: Long-term buy.
Saizen REIT: A symmetrical triangle?

China Hongxing: Downside target?

On 6 Mar, I had a post titled, "China Hongxing: Another S-chip bites the dust."  In that post, I said: "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."

In 12 Mar, Lim & Tan Securities, remarked that although China Hongxing's price has declined, at the current level, it is still expensive compared to peers.  "While Hongxing has declined 14% since we downgraded it to a Sell on 2 March ’10, we see no reason to change it due to its still demanding valuations and potential for more market share loss..."

Technically, I mentioned that "..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."

The decline in China Hongxing's price seems to have halted and rebounded as it was supported by the channel support at 14c.  The decline in price has been accompanied by a decline in trading volume.  The Stochastics has just turned up from the oversold region.  These indicators suggest that downward pressure is limited but it might be a temporary respite.

A broader head and shoulders pattern which stretched over a duration of about nine months is now quite obvious.  This, coupled with the obvious downtrend of all the moving averages suggest that more downside is on the cards.  Accumulating at supports in an uptrend is a good idea.  Accumulating at supports in a downtrend is a different story as supports could quickly become resistance.

Using Fibo lines, we see that 14.5c is a 123.6% support.  Unless there is an upmove with meaningful volume in the near future, a test of the 138.2% Fibo support is most likely and that is at 13c.  Thereafter, the 150% Fibo support is at 12c. Further downside cannot be discounted as a valid head and shoulders pattern would see the ultimate downside target somewhere at 10c.

The following video clip is quite funny.  It has a twist in the end.   I thought since this post is about a sneakers manufacturer, why not?  In case you are wondering, no, I'm not working for Microsoft and they are not paying me to do this.  Enjoy:



Related post:
China Hongxing: Another S-chip bites the dust.

Healthway Medical: A retest of recent high.

Healthway Medical moved from 17.5c to retest the recent high of 18.5c in the last session but failed to move higher, establishing 18.5c as a strong resistance in the minds of market participants.  This is all the more significant when we remember that the price action was accompanied by volume more than four times that of the previous session.  This might be a bit more than disappointing for shareholders looking forward to the formation of a new high.  The nagging question on their minds: Is it a sign that distribution has started?

Technically, any price movement up or down without significant volume is seen as unsustainable.  What about significant volume without any significant price movement?  Usually, it means we have a stalemate between the bulls and the bears.  Neither camp is willing to give the other any satisfaction.  That the price managed to inch up 0.5c at the close was a small victory for the bulls.  That 18.5c remains a significant resistance was a small victory for the bears.

Looking at the MFI, the decline has halted and formed a higher low.  The buying momentum stopped weakening although it has not strengthened enough to form a new high.  Now, look at the OBV.  No sign of distribution.  Instead, accumulation has spiked.  This is bullish.  Finally, the sell signal on the MACD has been negated.  All signs point to the bulls having the upper hand, for now.  However, we have to remember that these are lagging indicators.  TA can never tell us what will happen for sure.

So, in the event that price does not move up but declines instead, we should have a plan.  The uptrend is intact.  So, my usual style is to buy at supports.  Initial support is where we find the merged 20dMA and 50dMA.  Connecting the two previous lows yields a trendline support that coincides with these merged MAs at 16c.  This should be the initial support and also a strong one, albeit in the short term.

Related post:
Healthway Medical: A beautiful symmetry again.

Saizen REIT: A symmetrical triangle?

On 23 Feb, I had a post titled: "Saizen REIT: Obvious uptrend."  In that post, I said, "... given the trend of the longer term MAs, the downside is very limited from current levels. Any upward push in price will meet with initial resistance at 17c and if this is overcome, the recent high of 18c might be tested..."

Well, the initial resistance of 17c was not overcome.  In the last session, Saizen REIT closed at 16.5c after touching a low of 16c, forming a dragonfly doji. OBV is flat which suggests a lack of significant distribution or accumulation.  The MFI has dipped into oversold territory.  MACD's sell signal has not been reversed.  Lethargy is a signature of Saizen REIT's price action.

I have drawn a trendline resistance connecting recent highs and a trendline support connecting recent lows.  What looks like a symmetrical triangle took shape with its apex sometime in April.  Symmetrical triangles are not the most reliable patterns in charting but, if valid, a price action in the prevailing trend is not far off.  In this case, the trend is UP.  The ascending MAs make this quite obvious.

My decision to accumulate Saizen REIT from 13c to the current price is informed by a thorough FA with the understanding that it is terribly undervalued. Even if the REIT's portfolio of YK Shintoku were to be foreclosed and even after all the warrants are converted into regular units, Saizen REIT would still have a NAV of 29c per unit. At 16.5c, it is still a good 43% discount to NAV. I have blogged about this quite extensively and shan't dwell on the fundamentals too much in this post but I will say this again, "Think contrarian!"

A video interview with Marc Faber (Posted Mar 12, 2010 07:30am EST by Peter Gorenstein):



"If you are going to put money to work in stocks both market watchers think Japan is the place to be. After a 20 year bear market and despite high-debt-to-GDP levels, the pair think the market has become too cheap to ignore. Always a contrarian, Faber believes the lack of interest in Japanese stocks makes it one of the most compelling buys in the world. "

Related posts:
Saizen REIT: Obvious uptrend.
Passive income with high-yields: Saizen REIT.
Japan's debt issue and Saizen REIT.

Golden Agriculture: Waiting for support.

Having sold almost all of my investment in Golden Agriculture two days ago, I am now waiting for the price to correct to supports before buying again.

We have a sell signal on the MACD today after the price declined for two days, closing at 56.5c, after touching a low of 55.5 today.  The ascending 20d and 50d MAs have merged and should provide initial support at 55c.  I have also drawn a line connecting the previous two lows which would give an indication of where the trendline support is in the next session, 54c.  If this uptrend is violated, the ascending 100dMA would be called upon as support, 51c.

Even though we have a sell signal on the MACD and even though the MFI shows lower highs and lower lows, suggesting a weakened buying momentum, the price decline has been accompanied by lower volumes.  If we look at the OBV, we do not see any obvious distribution activity either, which is a contrast with what we observed for the month of January after the price peaked at 65.5c.  For anyone thinking of accumulating at supports, the low volume sell down plus benign signs in the OBV provide positive confirmation.

Healthway Medical: A beautiful symmetry again.

On 11 January, I had a post titled "Healthway Medical: A beautiful symmetry."  In that post, I said: "I am a believer in chart patterns. See how the cup formation troughed at 9.5c and topped out at 14.5c? The target price in case of a breakout of the top of the formation is just a projection of the trough to the top and beyond which gives us 19.5c. This target price was reached in just one week from the midpoint of the cup pattern at 12c."

Now, I observe a similar symmetry in Healthway Medical's chart once more.  Recent bottom was formed on 11 Feb at 13.5c before price moved up, formed mini ascending triangles before breaking out on 3 Mar.  The neckline?  16c.  Target price of the mini ascending triangles would be a projection of the bottom at 13.5c to the neckline at 16c and beyond which gives us 18.5c which was hit on 9 Mar.  OK, interesting geometry lesson.  Now what?

This suggests that 16c is an important support and resistance.  The merged 20d and 50d MAs which are rising in tandem would be at 16c soon and re-inforce the importance of this price level in the near term.

Price has not been able to form a new high since 9 Mar. Dwindling volume suggests a lack of buying interest.  This is confirmed by the lower high formed on the MFI signifying a reduction in buying momentum.  A sell signal was registered on the MACD yesterday and confirmed today.  So, is the price going to crash?

Looking at the MFI sometimes provides an incomplete picture without the OBV.  If we look at the OBV, we will see that there is no strong distribution going on.  So, although the MFI suggests a slowing down in buying momentum, the OBV reassures by suggesting that the counter is not undergoing any distribution.  The logical conclusion is that weak holders are once again being shaken out.  However, this does not mean that price will not drift lower.  We might see 16c tested yet.  That coincides with the fundamental fair value I have ascribed to the shares of Healthway Medical when I did a revaluation on 24 Feb: "Healthway Medical: An updated valuation."

If 16c fails to hold, we could possibly see 13.5c tested and would relegate Healthway Medical to a wide trading band although the rising MAs at the moment suggest that the uptrend is still intact.

Related post:
Healthway Medical: A beautiful symmetry.
Healthway Medical: An updated valuation.

Planning to travel? Check out ZUJI.

Do I make money from this blog?  I was asked this question recently.  Frankly, I started this blog out of curiosity last Christmas Eve as I was wondering what is this blogging business all about. I've always enjoyed sharing my ideas with friends and family.  So, I guess I've just moved up to the next level with my blog in that I am sharing my ideas with a bigger audience.  Of course, it helps that I actually enjoy writing.

I didn't know I could make money from blogging. However, I did discover quite quickly that there are many ways of making money through a blog, especially for a blog with a strong readership base.  I found out that there are sites which actually charge a membership fee and there are some which charge a fee for subscription (and within the first month of my blog being set up, I actually received an email asking me how much do I charge for subscription and, a little bewildered, I told the writer that it's free).

The most common way to make money from a blog is through ad placements.  For some time now, I've had ads in my blog.  There are companies which would pay according to the number of impressions my blog generates.  There are companies which would only pay if visitors actually click on the ads.  There are companies which would only pay if visitors click on their ads AND actually buy something.

I checked my account with ZUJI recently and found that someone made a purchase and I have been credited with a small percentage as a commission.  It works! 

So, when you plan your future holidays, please click on the ZUJI advertisement banner in my blog's header and see what they have to offer. You get a good deal AND make a small monetary contribution towards my blogging efforts at the same time.  Cool?  Thanks for the support.  :)

Golden Agriculture: Partial divestment at 59c.

If you have been following my posts on Golden Agriculture in recent days, you would get an impression of how TA works for me.  TA can never show us what will happen.  It can only show what might happen and there will always be two possibilities in price movement, up or down, with varying probabilities.  What we can see quite clearly would be things like supports, resistance and trend, amongst a few other things.  TA informs on fair exit prices in the event that price goes up and in the event the price goes down, what are safer entry prices.  If the uptrend is intact, buy at supports and wait to sell at resistance; if the price does not move up but moves back down to support, consider increasing exposure.

Using Golden Agriculture as a case study, let us do a recap:

In my post of 5 March, I mentioned that Golden Agriculture's price action formed a white hammer, closing at 54.5c, suggesting that a trend reversal is at hand.  Initial resistance at 57c, followed by 59c.  On 8 Mar, I mentioned that the white spinning top formed was unlikely to be a trend reversal signal because it did not take place after several consecutive days of upmove in price.  On 9 Mar, yesterday, a doji was formed, another possible trend reversal signal and it was accompanied by a decline in the MFI.  I suggested that if the malaise continued today, the counter might do a gap cover to 54.5c where it will have initial support and I would accumulate on weakness as the uptrend is intact with the rising 100dMA at 50.5c.

So, the strategy?  Divest at resistance of 57c and 59c in case of an upmove.  Accumulate on weakness in case of a move down to 54.5c and 50.5c as the uptrend is intact.  Whichever direction the price moves, we have a plan. My overnight sell queue was done and I have partially divested at 59c this morning, retaining a smallish position in case the price continues to move up.  This is a hedge, which is another one of my strategies.

For anyone who has been following my trading strategy so far, I hope you have made some good money.  Remember, it is never wrong to take profit.

Related post:
Rationale for partial divestment.

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.