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In the last two sessions, I spoke of reversals for CapitaMalls Asia and Golden Agriculture and how their prices are likely to move higher.
CapitaMalls Asia disappoints today as its price closed at $2.29, supported by the 50dMA, forming a black hammer in the process. A black hammer is actually another possible reversal signal. The trading volume continues to decline which re-inforces the picture of a low volume pullback. The MFI turned down, forming a lower high while the OBV is more or less flat. All these suggest that the selling is half-hearted at best.
I continue to believe that buying at the current price has limited downside even though the buy signal on the MACD yesterday was negated today.
Golden Agriculture, on the other hand, put on a satisfying show of strength as it gapped up and closed at 57c, forming a bullish white candle in the process today. Volume has also expanded with the rise in price, suggesting some sustainability. The MACD's buy signal is confirmed as it moved upwards today, poised to do a bullish crossover with the signal line. OBV continues to rise, signalling ongoing accumulation.
MFI, however, continues to decline, suggesting weak buying momentum. We want to see the MFI turn up as that would signal a strengthening buying momentum. Otherwise, any appreciation in price might turn out to be mediocre.
Saizen REIT has a new substantial shareholder, Credit Suisse Securities (Europe) Limited. Credit Suisse Securities (Europe) Limited bought 2,149,000 units on 25 March 10, making it a substantial shareholder with 49,659,000 units or 5.2112 % of Saizen REIT. Percentage of issue share capital computed based on unit capital of 952,927,055 units. Saizen REIT closed unchanged at 16.5c today. Longer term MAs are all rising and the longer term uptrend is intact.
Last Friday, I suggested that a reversal might be on hand as price action formed a white spinning top, with stalling selling pressure and continuing accumulation.
MFI turned up today and OBV is still rising as price action formed a white hammer. Suggestion is for the price to continue rising with immediate resistance being provided by the 20dMA at $2.32. Breaking this will see the recent high of $2.41 tested as resistance and I have an eventual target of $2.55 which should be the top of a longer basing process. The MACD has a buy signal today.
Buying at the current level has limited downside as it would be almost at the support provided by the 50dMA at $2.29. Vested.
------------------------------------------------ Growth May Slow But "There's No New Recession Anywhere in Sight"
Posted Mar 26, 2010 01:51pm EDT by Peter Gorenstein
My sentiments are similar for 2010. This guy makes sense.
And, as for a double-dip recession, Achuthan says it isn't in the cards. "There's no new recession anywhere in sight. In 2010, the business cycle remains your friend," he says with confidence.
---------------------------------------------------
IMF foresees rapid US growth
AFP - Tuesday, March 30
WARSAW (AFP) - – The US economy looks set to return to relatively rapid growth soon, International Monetary Fund chief Dominique Strauss-Kahn said here on Monday. "The US economy, whilst it has been hard hit by the crisis, may recover rather rapidly," Strauss-Kahn said in a speech at the Warsaw School of Economics, during a visit to Poland.
"It's a flexible economy," noted Frenchman Strauss-Kahn, who is managing director of the Washington-based global lender.
"We'll see how rapid the recovery in the US economy can be. But I'm rather confident that the US economy will grow rather rapidly again quite soon," he added.
In January, the IMF raised its forecast for US growth this year to 2.7 percent from output in 2009, from its earlier 1.5-percent forecast. Strauss-Kahn did not say whether the IMF was set to revise its forecast upwards again.
Last Friday, I suggested that Golden Agriculture spotted a Bullish Harami Cross pattern. OBV showed a cessation of distribution and a reversal to accumulation.
Price action formed an inverted white hammer today with OBV continuing its rise and the MFI upturning, suggesting a return of buying momentum. The MACD also spots a buy signal today. The support at 54.5c is confirmed and is underpinned by the 50dMA. Immediate resistance at 56c. In the event that this is taken out, next resistance is at 57.5c. This is followed by 60c, the recent high.
The rising 100dMA is at 52c and the rising 200dMA is at 47c. The longer term uptrend is intact. In the immediate term, we want to see the price closing above 55c to rejoin the uptrending channel to resume the short term uptrend. A close above 56c would be a firm signal that the short term uptrend is back in play. Vested.
Golden Agriculture was sold down yesterday due to negative news regarding Sinar Mas group:
Cargill wants Sinar Mas to address concerns over its agri practices. Cargill has threatened to drop Sinar Mas as a supplier if it fails to address general concerns over alleged illegal logging, a statement on its website said. Top European palm-oil buyers such as Unilever and Nestle have already stopped buying palm oil from Sinar Mas after Greenpeace released a report about forest clearing by Sinar Mas. A statement on the Cargill website said the firm had asked the secretariat of the Roundtable on Sustainable Palm Oil (RSPO) − an industry body of planters and green groups − to investigate the allegations made by Greenpeace "about illegal forest clearance and the Indonesian palm oil company, Sinar Mas.".....
There are two listed plantation companies listed under the Sinar Mas Group: Golden Agri and PT Smart. If Cargill pulls Sinar Mas from its supplier list, Golden Agri’s reputation in the palm-oil products market could be further dented. Furthermore, Cargill would become the third client to remove Sinar Mas from their supplier lists. To recap, Unilever and Nestle have stopped buying from the Sinar Mas Group since Dec 09 and Feb 10, respectively. Unilever accounted for 3% and Nestle for 0.2% of Golden Agri’s sales in 2009. Should Cargill follow suit, the impact could be more material at around 5% of its sales...
Golden Agriculture's price action today formed a doji, closing at 54.5c, seemingly recapturing this support level. A doji formed after a long black candle in the previous session is a possible two stick reversal pattern which chart watchers call the Bullish Harami Cross pattern.
Although the MFI is down, suggesting a weakening buying momentum, the OBV has turned up suggesting that distribution has stopped for now and, indeed, reversed to see some accumulation.
We will need confirmation in the next session to see if the reversal signal is valid. In the event of a reversal, the initial resistance is at 56c, a many times tested support turned resistance. This is followed by 57.5c and 60c, the recent high.
A possible reversal signal is observed in CapitaMalls Asia's chart today: a white spinning top. This has happened on the back of lower volumes as its price declined, suggesting a classic textbook case of a low volume pullback. MFI has flattened while the OBV is still showing a gradual rise. This suggests that the selling momentum has stalled and that accumulation is ongoing.
The 50dMA seems determined to act as the immediate support as its rate of decline slows. The price action is caught between the 50dMA and the 20dMA which has flattened at $2.31.
Bollinger bands will squeeze as the volatility in price action falls. The probability of an upward movement in price is higher than a downward movement in this instance. The target of such an upward movement is the top of the base formation which is also where we find major resistance and that is at $2.55.
It is quite obvious that Saizen REIT is rangebound between 16c and 17c since late February. The gradually rising MAs suggest that the longer term uptrend is intact.
Today, a single buy order at 3pm mopped up the entire sell queue at 16.5c. 1,627 lots bought up. This caused the MFI and OBV to turn sharply up. The MFI has been dipping in and out of the oversold region recently. There is a lot of room for the index to move in the event of an upturn in price before it becomes overbought.
Is the high volume buy up today a one-off event or is it the beginning of more aggressive buy ups? Your guess is as good as mine. My purchase of Saizen REIT units is based on its compelling valuation and a potential upgrade by rating agencies. I shall wait and see.
Golden Agriculture broke all supports today on higher volume to touch a low of 53c before closing at 54c. That the OBV and MFI both show obvious decline indicates heightened selling pressure.
The rising 100dMA is at 52c which happens to be the recent low as well. This should provide some support in the event that the price continues to decline. This is where I will queue to buy more but I will not break my piggy bank because if this breaks, the rising 200dMA is at 47c. That is some way to fall.
Is this a whipsaw or the start of a downtrend? It is hard to say at this point in time but it is never wrong to be cautious especially when today's decline happened on the back of much increased volume.
---------------------------------------------------------- From Budi Wijana, Vice President Director, PT SMART Tbk, in response to the Indonesia Stock Exchange’s letter dated 18 March 2010:
"Nestle has recently announced that it has discontinued the Company as its supplier for Nestle’s manufacturing in Indonesia arising from a recent Greenpeace’s report based largely on earlier related allegations. We will continue our dialogue with Nestle and seek ways to verify the Greenpeace’s report.
"We would like to reiterate our commitment to the production of sustainable palm oil, our full compliance with the Indonesian Government rules and regulations, and our adherence to the Roundtable on Sustainable Palm Oil’s principles and criteria for sustainability.
"Sales to Nestle represented approximately 0.2% of the Company’s total sales in 2009. The outstanding contracts will be fulfilled by Nestle. Nestle’s decision will not have a material impact on the Company’s financial condition because the size of its purchases is not significant and our products have ready buyers and a strongly established and growing demand base in both the local and export markets."
A declining MFI shows weakening buying momentum but a flat OBV says that there is no distribution. So, the overall picture is one where selling is being absorbed quite well. This is all the more impressive when we realise that the volume is the highest in seven sessions. However, the volume is still lower than ten sessions ago when price action hit a high of 18.5c. Therefore, overall, the picture of a low volume pullback is still intact.
Forming a doji at 16c today is meaningful. I have suggested that 16c is an important support as it is the midpoint of the recent high at 18.5c and the recent low of 13.5c. If 16c holds up, we would have the formation of a higher low but if 16c breaks, Healthway Medical could see the formation of a double top. I would keep an eye on 16c. It is critical that it holds up.
LMIR's chart looks like it might be in the early stages of a symmetrical triangle. Since late January, the price action has been trapped between 47.5c and 51c. Stochastics has turned up and seems ready to emerge from the oversold region.
Using Fibo lines to determine where the supports are, we see clearly that 48c and 47.5c are important supports. 47.5c is the support to watch. If it breaks, the symmetrical triangle is out the window and we have to see if the rising 200dMA holds up well as the new support then.
As the reason for buying more units in LMIR recently is to lock in a yield of 10% per annum, I am unfazed by any near term weakness in the counter's price. In fact, I bought more at 48c.
CapitaMalls Asia: Price closed below the trendline support today at $2.29, after touching a low of $2.28 (the 38.2% Fibo line). Technically, this is supported by the declining 50dMA. The decline is on the back of low volume with the MFI and OBV more or less unchanged. These signs suggest that a benign low volume pullback is taking place. However, this does not mean that price would not continue to drift downwards. If the $2.28 support is broken, the next support level is at $2.25 which would see me buying more.
AusGroup: Nice up day with price closing at resistance provided by the 50dMA at 60c after hitting a high of 61.5c on the back of increased volume. MFI and OBV have both turned up which suggest that buying momentum and accumulation are both moving up a notch.
We have a buy signal on the MACD as well and it seems poised to cross above zero. Resistance is provided by the merged 100d and 200d MAs at 63c. Initial support is at 58.5c. A negative is the long wick on the white candle which suggests selling later on in the session today. This adds a cautionary tone in an otherwise positive picture.
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