FSL Trust: 4QFY10 results.

I have been divesting my stake in FSL Trust as its unit price strengthened in recent weeks. The last time I sold some was at 48c on 7 January, less than a fortnight ago. Then, I said "My long position in FSL is for a trade and the entry was not based on fundamentals, which are lacking. So, reducing my long position, locking in gains at resistance and at signs of weakening demand, at least partially, is prudent although it could limit gains in case of further price appreciation."

Despite what the management says, the Trust's numbers are really weak as it reported its results today and the following should cause some concern:

1. Reduction in net cash from operations which reduced year on year by 19.6% and quarter on quarter by 7.8%.

2. A full year net loss of US$5.67million whereas it registered a profit of US$8.42million the year before.

3. A loan tranche maturing in April 2012.

See Press Release here.

Technically, volume has been rising as price stayed in a tight trading range between 47c and 47.5c mostly. 48c was only tested in three sessions. Today, volume was very thin as a BUY signal appeared on the MACD histogram. The 20dMA has been rising and is now at 47c while the 50d and 100d MAs are rising to meet the declining 200dMA. Golden crosses in the making? Perhaps. The MFI, however, has turned down after hitting 50% which acted as resistance. The overall picture is one which suggests further upside in the current time frame could be limited.

FSL Trust released its results after 8pm tonight. So, it remains to be seen how the market would react tomorrow. If the support provided by the 20dMA at 47c should break, stronger support could be found at 45c which is where the 50d, 100d and 200d MAs are approximating. I would sell into strength and 48c is the resistance to watch.

Related post:
FSL Trust: Sold some at 48c.