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CPL, CMA and NOL: Resistance levels to look out for.

Thursday, October 27, 2011

We had a very nice rally today. The upward march on the STI was almost uninterupted all the way from the start of the session. In an earlier blog post on 17 October, I mentioned that there seems to be a bias for further upward movement and it has taken almost two weeks to materialise.

Now that a rally is underway, for investors who are already vested, do we ask if the rally could continue tomorrow? No. We should ask if the rally were to continue tomorrow, where are the resistance levels? We should be looking for exit prices.

For investors who are not vested and who are knocking themselves on the heads for being overly bearish, they want to know where are the supports so that they could consider buying on pull backs. However, given the strength of the rally in Europe right now, chances of a retest of supports could be rather slim. If I had missed the boat, so be it. That's my take.

For CapitaMalls Asia,  a long white candle tested the high of 17 Oct at $1.31. Overcoming this resistance level will see a cluster of resistance levels ahead: $1.33 as provided by the declining 100dMA followed by $1.36, a many times tested resistance level in early September.

In very bullish conditions, we could see the gap at $1.395 filled. Where should I place my sell order? As is my usual style, I will partially divest at each resistance level.

Capitaland could test resistance at $2.71 as a white candle was formed today on the back of very much higher volume.

If $2.71 were to be taken out convincingly, we could see the gap at $2.79 filled eventually. Before $2.71, we have the declining 100dMA to contend with. This MA approximates $2.68 in the next session.

NOL formed a nice white candle today on the back of relatively high volume. Immediate resistance is at $1.19, the high of 13 Oct. Given the momentum of the upward movement, chances of a continuation in the next session is high.

Overcoming $1.19 would see $1.24 and $1.27 as the next two resistance levels, the 123.6% and 138.2% Fibo lines respectively. $1.27 also approximates the position of the declining 100dMA.

With container shipping business very much in the doldrums, the 138.2% Fibo line could be a strong resistance, if tested at all. Remember that 38.2% is also a golden ratio.

Good luck.


Anonymous said...

Is Hyflux in your radar?

AK71 said...

Hi Anonymous,

I believe Hyflux's balance sheet is looking somewhat precarious. This is not a statement on its viability, of course.

Personally, I would rather look at Sound Global (the former E-pure) which is a company I was heavily invested in during the last recession. :)

You might be interested in this blog post:

Do your own due diligence and good luck. ;)

Anonymous said...

Thanks very much indeed for sharing. I do however have different views personally. Preference share provides better cash flow flexibility which Hyflux needs compares to Short term loan especially viewing on its business model, a rational step. When raw material / construction cost is drastically heading south, and the contract is secured at the higher price, slower project execution might not be a bad thing. A big chunk of the current order book is from PUB which Hyflux is familiar with, will lower project execution risk in near future compared to those from MENA.

AK71 said...

Hi Anonymous,

It seems like you have done your due diligence on Hyflux and arrived at a conclusion. I hope you make some good money in your investment. :)

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