The long awaited technical rebound.

I keep saying that downtrends are rivers of hope and that prices do not go down in a straight line. This is quite natural but in despair and desperation, it is all too easy to give up and throw in the towel. This is capitulation.

Capitaland and CapitaMalls Asia are both in downtrends. This is quite obvious. With no signs of reversals to the upside, I recently added to my long positions with the simple believe that they are very oversold and technical indicators were prime for a technical rebound.

Of course, there was no way to know if or when the technical rebound was going to take place. However, the feeling was that any further downside could be limited in case a rebound did not take place anyway.

Now that the rebound has happened, it is important not to become delusional to think that prices could continue going up to hit the old highs. With the downtrend intact, the thing to do is to sell if resistance levels are tested. The question is at what price levels do we sell at? Well, my way is to search out the resistance levels and I see $2.91 and $2.94 for Capitaland.

Wait a minute, do I not think the share price could go higher to test resistance provided by the trendline which is approximating $3.20? Well, it could, of course, but that is a long shot and, bearing in mind that I added to my long position recognising the strong downtrend the counter is in, the thing to do is to lock in gains and to reduce exposure.

What about CapitaMalls Asia? Well, I am still hopeful that its share price could do a gap cover at $1.55. However, I also recognise that we could find resistance at $1.50 to be quite significant.

Therefore, locking in gains at $1.50 would be a good idea if it were to be tested. Let's see how things turn out tomorrow.

Related posts:
Capitaland: Average buy price of $2.81.
CapitaMalls Asia: Bought at $1.37.

STI rises 1.3% to 3,053.51 at closing
Tuesday, 21 June 2011

© 2011 - The Edge Singapore

CapitaLand to double portfolio in China in 5 years, Lim says: Update
Tuesday, 21 June 2011

© 2011 - The Edge Singapore

Win a Lancome Maqui Miracle Liquid Foundation.

Maqui miracle natural brightening creator is a foundation with 12 hour long wearing formula with high UV protection. It gives your skin a natural inner healthy glow with the Aura-Bright technology!

Win a Lancome Maqui Miracle Liquid Foundation worth $72.00! One lucky winner will be picked every week!

Contest ends on 30th June 2011. Take part today!

Win $30,000 worth of prizes

Plan a Family Day Out on 25 June 2011 at Waterfront Promenade @ Marina Bay.

Stand a chance to win $30,000 worth of prizes in our lucky draws at Family Day Out!

Switch and click now!

CapitaMalls Asia: Bought at $1.37.

Similar to Capitaland, I am still waiting for a technical rebound in the share price of CapitaMalls Asia before reducing exposure. The counter is dreadfully oversold and a technical rebound is probably overdue. However, in extremely bearish circumstances, a counter could stay oversold for a very long time. As always, a huge dose of luck is required.

Today, I bought more shares of CapitaMalls Asia at $1.37 per share. Why? Is there a positive divergence? Nope. So, why am I buying when there is no reversal signal? The same reason why I bought more shares in Capitaland and if you remember, price went lower the next day. So, will price move lower tomorrow for CapitaMalls Asia? Your guess is as good as mine.

From the ADX, it is obvious that CapitaMalls Asia is in a downtrend and the trend is strengthening too. If we look at the MACD, it is set to form a lower low. However, if we connect the two earlier lows, the MACD could have hit support. As if to support this thesis, price action almost formed a white hammer today. On the back of high volume, price formed a doji as it closed at the day's opening price of $1.40 after hitting a low of $1.36.

After such a rapid and steep decline in price, the rebound could be equally forceful. We could perhaps see gap cover at $1.55 in such an instance. This would also approximate the position of the declining 20dMA. Wish me luck.


Daryl Guppy: A different reality in China. Despite the much-anticipated hard landing, bubble bursting and general collapse in China, the reality is a little different. The China market fills the growth gaps left by the US market for those companies smart enough to work in the Chinese environment, and meet the growing demands of Chinese consumers. This demand is fuelled by mandated wage increases and the structural shift towards a domestic consumer economy.
The EDGE, 20 June 2011.




Related post:
CapitaMalls Asia: Daily versus Weekly.

Golden Agriculture: A steeper trendline resistance.

Has Golden Agriculture's share price turned bearish? I would not say bearish exactly since the uptrend that started on 23 Feb 2011 is still intact. However, the inability to form a higher high is worrisome. Having said this, price could go as low as 66c in the next couple of sessions and the uptrend would still be intact.

Looking at the chart, the trendline resistance that started on 30 May 2011 has immediacy compared to the one which started on 11 Apr 2011. It is currently at 68c. There is more downward pressure in the current timeframe.

Is there no chance of a rebound? Well, although the Stochastics has just risen out of the oversold territory, we could be walking on thin ice here. If we believe in chart patterns, it seems that a symmetrical triangle is forming. If this triangle is valid, we should see a sharp movement in price in either direction two thirds of the distance to the apex. It could happen soon.

If price could find strong support at 66c and in the process forming a white candle which ultimately breaks resistance, there is a chance of further upside in price. If price should break support at 66c on the back of higher volume, we will probably see the start of a new downtrend.




Related post:
Golden Agriculture: Contra at 68.5c.

Staying positive on S-REITs.

In the recent weeks, shares of property developers, telecoms companies, commodities companies, shipping companies, gaming companies etc have mostly declined in price.

So, in a sea of red, is staying uninvested the way to go? Very probably, many are doing just that. Personally, I am staying invested and mostly in selected S-REITs. In an environment of greater volatility, S-REITs' unit prices have demonstrated resilience and my portfolio of S-REITs has remained relatively unscathed in the recent market weakness.

Some asked me if it is safe to invest in S-REITs now or add to their long positions. Truthfully, I cannot give any answer in the affirmative. I will ask you to instead consider the more discussed circumstances in which S-REITs could fail.

1. Interest rates suddenly shoot through the roof when the time comes for S-REITs to refinance.

2. Credit drying up, leading to S-REITs being unable to refinance at any price.

3. Tenants defaulting en-masse leading to S-REITs being unable to meet their financial obligations.

4. Value of properties declining to the point where gearing exceeds 40%.

Then, ask ourselves how likely are these events to take place in the next two years. I have given some thought to these points and I remain sanguine about the situation.

1. It is unlikely that interest rates would shoot through the roof overnight or over the next two years. We must see some pretty strong inflationary pressure before interest rates would go higher. U.S. interest rates being revised upwards by 0.25% every few months is hardly catastrophic. Unless funds are able to get higher returns with similar or lower risks elsewhere, I do not see S-REITs turning unattractive, all else remaining equal.

2. The Great Depression delivered a lesson which has not been forgotten if the actions by central banks around the world were anything to go by. Any businessman would know that credit is the lifeblood of the economy. Credit dries up, businesses come to a halt and great hardship would follow. Central banks will ensure that this never happens again. We came pretty close in the last great recession and already got a fleeting glimpse of what could happen if credit dried up completely.

3. The supply of industrial space is likely to remain tight in Singapore in the near future and I have blogged about this. If the economy takes a sudden turn for the worse, we could see some tenants defaulting but it is unlikely that tenants would default en-masse. Even in the last recession which was one of the worst I have seen, nothing that serious took place. With interest cover ratios of 5.7x or more, industrial S-REITs are not about to make me lose sleep at night.

4. Most S-REITs are conservatively geared. Even with a gearing level of 32%, we have to see property valuations dropping by some 20% before gearing would hit 40%. A 20% decline is pretty severe and I do not think it likely unless the current valuations are frothy. If we look at the current valuations of industrial properties S-REITs, they are still very much below the peak before the last recession.

Although I remain sanguine about the fundamentals of the S-REITs I am vested in, I do recognise that prices are driven by sentiments. If Mr. Market should go barking mad and is willing to sell to me at prices which would give me distribution yields in excess of 10% like it did in the last recession, I would gladly increase my long positions. Yes, that is my plan. Keep a warchest ready and seize the opportunity if it should present itself.

Related post:
Investing in REITs: A flawed strategy?

Capitaland: More downside?

My purchase of more shares in Capitaland yesterday at $2.81 per share, unfortunately, did not turn out well. Today, its share price closed at $2.75, the day's low. There are some very determined shortists. The bears have won for now. Well, this is the risk one has to accept if one were to go long in a downtrend when there are no clear reversal signals. Too bad for me.

I am going to employ Fibo lines which have worked so well for me on other occasions to help determine where would we find the next support. Taking the high of $4.23 as 0% and $3.08, a natural support as 100%, we see a clearer picture.

$2.81 is where we find the 123.6% Fibo line, not a golden ratio and, as it turned out, it was a weak support which held up for a while in the morning. The next support is at $2.64. This is provided by the 138.2% Fibo line, a golden ratio and likely to be stronger. In the absence of a rebound, I would keep an eye on this price if it should be tested.

Fundamentally, Capitaland is now trading at a 21.4% discount to its NAV of $3.50 per share. I still get a feeling that it is very oversold and that a technical rebound is overdue. Of course, Mr. Market does not care two hoots what I feel.

For investors still keen on property stocks, the key is to be extra selective. Daiwa Securities recommends CapitaLand, which it notes has underperformed the local market “significantly” over the last 12 months. “We believe the market has sold down CapitaLand shares to a level where nearly all of the future policy risk (in China and Singapore) has been priced in.”

Daiwa adds what while home prices in Singapore and China may stagnate or even decline, CapitaLand’s combined residential property exposure in the two countries accounts for less than 20% of its overall assets. Daiwa has an “outperform” rating and $3.50 price target on CapitaLand. The stock closed at $2.75 on June 17.
(Source: The EDGE Weekend Comment Jun 17)

Related post:
Capitaland: Average buy price of $2.81.

Golden Agriculture: Contra at 68.5c.

Golden Agriculture saw 90,289 lots changed hands today with 15,147 lots done at 68.5c after market closed.

In my last blog post on Golden Agriculture, I identified 68.5c as the immediate resistance as provided by a confluence of the 20d, 50d and 100d MAs. So, I put in a sell order last night for those units which I bought at 66c yesterday. My sell order was filled, locking in a gross gain of 2.5c or 3.78% in one day. In uncertain times, I suppose it makes sense to lock in gains quickly and not tempt Fate, especially over the weekend.

If 68.5c could be overcome convincingly next week, the next significant resistance is at 70c. I might sell more of my shares in Golden Agriculture then.

Related post:
Golden Agriculture: Bought at 66c.

Capitaland: Average buy price of $2.81.

Readers might remember that I said I was waiting for a chance to reduce exposure to this counter. It means waiting for a rebound to reduce at resistance. I do not like selling as prices are on their way down. Of course, as I have mentioned before, this is also a flaw in my methods. If there should be no rebound, then, it is more stocks for the freezer. However, if we believe that downtrends are rivers of hope, then, rebounds are just a matter of time.

With Capitaland, price has continued to drift lower for a month or so now. No rebound. Some traders have thrown in the towel and called it quits, selling away their shares. This, to me, shows fatigue amongst long holders and, perhaps, many, if not most, of the would be sellers have sold. The counter's share price would have a better chance of going higher then.

Today, there was a fierce tussle between bulls and bears. Very high volume was chalked up as price closed lower at $2.82, after touching a low of $2.79, forming a black hammer in the process. We might not have seen the bottom yet but we could be seeing the corner of a floor.

There are no signs of a reversal yet and buying into Capitaland at $2.81 is based on a believe that the counter is oversold and that a technical rebound is overdue. Target to the upside is $3.00. Wish me luck.

Related post:
Capitaland: Daily versus Weekly.

Golden Agriculture: Bought at 66c.

Been another long day and I just settled down at 11pm or so. Will be another couple of weeks before I settle into a new routine. Until then, I will be blogging sporadically.

Today, my buy order for some shares in Golden Agriculture at 66c was filled. I also have another buy order at 65.5c which was not filled.

65.5c is at support provided by the trendline which started on 23 Feb. So, buying some at 66c, 1 bid above support seems like a pretty safe move. This is seemingly the case when volume has been reducing as price drifted lower. A low volume pull back suggests a lack of conviction on the part of sellers.

Looking at the ADX, we see a lack of trend, strong or weak. Therefore, look to the Stochastics for clues. It has declined into oversold territory. A rebound is probable. Immediate target is at the confluence of the 20d, 50d and 100d MAs at 68.5c. Overcoming this would see a higher target of 70c.

If price were to break support at 65.5c and close lower in the next session, we could see a retest of the 61c low. Good luck to fellow shareholders.

Related post:
Golden Agriculture: Critical support at 67.5c.

Cheap shopping and makan in Johor Bahru?

I read the terrible experience of the two Singaporean ladies who suffered at the hands of the Malaysian Immigration and Customs with much feeling. 

I have stopped going to JB for shopping and makan (Malay for "eating") for years now. The numerous reports of robbery, murder, burglary, car thefts etc raised a red flag. How these criminals seem to target Singaporeans really did it for me. 



However, past reports of how Singaporeans suffered at the hands of the Malaysian Immigration and Polis (that's how it is spelt in Malaysia, if I remember correctly) really angered me. 

Is it not enough that we have to worry about criminals? Do we have to worry about the law enforcers as well? Ahem, in Malaysia, yes!

My family used to go to JB regularly many years ago for recreation. I remember once when we were about to leave that my mom discovered her passport was not stamped with an exit stamp the last time we visited. It created a bit of an inconvenience that time when we were leaving the country. 

However, since she had an entry stamp, she was not fined or jailed for illegal entry and she could not be charged for overstaying as well since she just received another entry stamp for our then current trip. I remember she still had to pay a "fine" while we waited for her and my dad in the car.

From then on, we made it a point to check our passports carefully each time we went through Malaysian customs. Good thing we did too because on another trip later on, my dad's passport was not stamped upon entry. We stopped the car by the roadside and my dad walked back to the booth to get his entry stamp. It was a long walk and we waited for him in the car for more than 30 minutes. Thank goodness, no complications because his immigration "white card" (Malaysian immigration form) was all in order.

It has been many years since I was last in JB. I do not see why I should go to JB for shopping and makan just to save some $10 or so per trip. Actually, the imported goods are cheaper in Singapore. 

Unless we have a penchant for buying large quantities of Buatan Malaysia (Made in Malaysia) products, we can't save much money. The potential risks and the angst are just not worth the small savings.

Anyway, I get the feeling that Singaporeans are not welcomed in JB as they look at us as the reason for higher cost of living there. Why should we be so thick skinned to go to a place which does not welcome us? 

Give JB a miss, I say.

Want a good and inexpensive meal? Go to one of our famed hawker centres! I have blogged about quite a few too. 

Happy and safe makan! Burp!

Read articles here:
S’pore duo to file complaint against M’sia Immigration




(Added in November 2016)