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First REIT: Testing immediate support.

Thursday, February 10, 2011

On 4 February, I suggested that "Caution is advised. There could possibly be a better time to buy more."

I also said that "On the daily chart, right away, we see that the Bollinger Bands are squeezing. An imminent change in direction after a period of low volatility? Which way would it go? The MACD has been falling as a bearish crossover was completed sessions ago. Momentum is weakening. Immediate support is at 75c."

Today, First REIT's unit price declined to test immediate support at 75c. Volume increased perceptibly as price managed to close unchanged at 75.5c. The technicals are bearish and we see that the MFI's downtrend is very much intact, suggesting a declining momentum in demand.

If the immediate support at 75c should give way, we should see some support at 73c next. This is where the rising 50dMA is approximating now. How likely is it that 73c would be tested? Well, if we believe in symmetry, 77c was the adjusted high and with 75c as the neckline, this would give us 73c as the downside target. Seeing the price hugging the lower Bollinger band now, why would this be unlikely? I crave your indulgence as I enjoy my little games.

Related post:
First REIT: Buying more?


Anonymous said...

will drop ......... wait next dividend rise again


AK71 said...

Hi chan,

Thanks for sharing your assessment. :)

Anonymous said...

First reit is also my my first buy into investment world...
Kind of attracted to the dividend of 8% hope with the new opening in mid year will boost the pricing higher with some capital gain :)
Spencer Chua

AK71 said...

Hi Spencer,

I still have a fair value estimate of 80c/unit for First REIT. However, that's really based on some FA.

First REIT: XR and fair value.

Technically, the weakness could continue but downside should be quite limited.

A DPU of 6.4c for 2011 is more or less firm. So, I am not worried. Congratulations on your maiden purchase and I hope to hear from you again. :)

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