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Cache Logistics Trust: Weekly chart.

Sunday, April 24, 2011

For quite a while now, I have been investing for income. However, friends and readers of my blogs in the early days would know that I am not averse to investing for capital gains as well. Logically, who would be averse to investing for capital gains?

For a longer term picture, I like to look at weekly charts. Looking at the weekly chart of Cache Logistics Trust, it is obvious that it has been in a downtrend for months, well, since mid September 2010. I feel that a rebound is probably on the cards, if not a reversal. Why? The MACD has formed a double bottom and the distance with the declining signal line has narrowed. We could see a bullish crossover in time although it would almost certainly happen in negative territory.

Next, look at the OBV. Since forming a low in the week of 21 February, it has not formed a lower low and this is although price went on to touch new lows. This suggests that smart money is accumulating units in this REIT as price weakened in the longer term.

In terms of candlesticks, a white hammer was formed last week. This is following the preceding week's big black candle. This is a bullish signal which, of course, needs confirmation. If confirmed, immediate resistance are at 95.5c (20wMA) and 96.5c (50wMA). Overcoming these resistance levels would give a target of 98.5c which is resistance currently provided by the trendline resistance which approximates the upper Bollinger band.

With the next income distribution due to be announced on 26 April, chances of an upward movement in unit price is rather good. I have been accumulating and wish fellow unitholders the best of luck.

Related post:
Cache Logistics Trust: Testing supports.


Png said...

Hi AK71, can I know where do you find out when a company will announce its next income distribution date? (in this case for Cache, you mention is 26-Apr-2011).

Another thing, I read the presentation slides for its AGM and the NAV stated is 0.91. Today, it closed at 0.945. So does it mean that this REIT has exceeded its NAV and the current trading price is likely to fall?

Sorry for the noob questions as I'm trying to grasp some of these concepts after being inspired by your 50k passive income achievement!

I do hope to emulate that achievement as best as I can! :)

AK71 said...

Hi Png,

The first question is an easy one. The information is found on SGX's homepage:

As for the second question, we must make a distinction between value and price. They are not the same thing. Fundamental analysis (FA) is about value while technical analysis (TA) is about price.

Is Cache Logistics Trust overvalued since it is trading at 94.5c per unit when its NAV/unit is only 91c? This is a question about value. Is its unit price going to fall because it is trading above its NAV? This is a question about price. To answer questions on value, use FA. To answer questions on price, use TA. ;)

I am happy to share what I know in my blog but there could be contraints due to the resources which are at my disposal and what I can do in a blog. I would suggest that you get a couple of good books on FA and TA to start with. It takes time to learn anything and that's normal.

Finally, set targets which are not too daunting to begin with. Set targets which are achievable and raise those targets over time. You will enjoy the process more that way. Good luck. :)

Png said...

Thanks for the reply!

AK71 said...

Hi Png,

You are welcome. :)

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