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CapitaMalls Asia: Gap closed at $1.325.

Friday, August 26, 2011

The last time I blogged about CapitaMalls Asia was on 15 August. At that time, I detailed the reason for not adding to my long position. That reason was technical in nature and is still valid today.

I did not sell as price went lower, saying I would only sell as price rebounds to test resistance. Downtrends are rivers of hope.

Yesterday, CapitaMalls Asia's share price rose dramatically on extremely heavy volume from an oversold position. Such moves usually have strong momentum which would carry over to the next session. This morning, it did just that and my overnight sell order at $1.325 was filled.

Why $1.325? This is where we find a gap resistance and gaps would usually be filled. Price touched a high of $1.33 and if we look at the chart, this is where we find the immediate downtrend resistance.

If $1.33 should be overcome convincingly, we would almost certainly see the counter's share price going higher. Why? Closing above $1.33 would signal to market participants that the immediate (and steeper) downtrend is broken. Long holders might return and more short sellers would cover their positions. This is a powerful combination that would usually push price higher.

In case the immediate downtrend is broken, we will find the next two gap resistance at $1.395 (approximating the 50dMA) and S$1.55 (approximating the 100dMA). I also expect the next downtrend resistance (which I drew in orange color) to be more formidable.

Related post:
CapitaMalls Asia: Pre-emptive strikes failed.


INVS 2.0 said...

Hi AK71,

Nice technical analysis. I am still a noob at that. Well, from the graph chart you provided, I saw the MACD line has crossed the signal 9-day line, which indicates an uptrend.

You also used the moving averages as resistance lines, with 50d, 100d, and 200d respectively. But I have no idea what is the bollinger band. Maybe a better indicator to replace the 20d moving average? :)

AK71 said...

Hi INVS 2.0,

When the MACD crosses the signal line upwards in negative territory, to me that signals a rebound, nothing more, especially when the MACD did not form a higher low.

Unless the MACD crosses zero into positive territory, things are still iffy. ;)

I switch on the Bollinger band because it includes the 20dMA. ;)

INVS 2.0 said...

Hi Ak71,

Thanks for the explanation. Lots more to learn on TA.

One thing that I spotted while using the chartnexus on various REITs. The top one AIMSAMP is still in despair. Mid-ones like Starhill are starting to rebound. While the below ones like CapitalMall are rebounding. Interesting phenomenon. :)

AK71 said...

Hi INVS 2.0,

You are welcome. :)

I have not been tracking the other two but with AIMS AMP Capital Industrial REIT, you would notice that its unit price is range bound.

Currently, its unit price is closer to the bottom of its range. I expect 19c to be a very strong support, if ever tested. Before that, we have 19.5c. ;)

FoodieFC said...

good good. rebound is good. but i wun be surprise if it starts falling again next wk

AK71 said...

Hi FoodieFC,

Indeed, don't be surprised. Have a plan for whichever direction the market moves and nothing can surprise us. :)

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