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AIMS AMP Capital Industrial REIT: At $1.02 resistance.

Wednesday, February 1, 2012

On 19 January, I mentioned that if sentiments remain bullish, we could possibly see resistance at $1.02 for the REIT's unit price tested. My overnight sell orders at $1.015 and $1.02 were filled today.

Could the REIT's unit price push higher? It could but anyone thinking of buying into the REIT now might want to bear in mind that the REIT goes XD on 3 February and we could possibly see the REIT's unit price weakening then. Risk premium for going long is much higher now.

Momentum oscillators like the RSI and the Stochastics show the REIT to be very overbought and for a rather prolonged period by now. Only the MFI is not overbought.

The MFI takes into consideration price and volume and shows demand compared to the RSI. However, the MFI being where it is now is also the result of relatively low trading volumes.

Volume is the fuel that drives rallies. So, without volume, we could see the rally fizzle out in time.

Related posts:
AIMS AMP Capital Industrial REIT: Partial divestment.
AIMS AMP Capital Industrial REIT: 3Q FY2012.


INVS 2.0 said...

Hi Ak71,

Wanted to sell AIMS initially but felt that it was better to ditch Starhill for AIMS to get higher yield. I will give this chance a miss due to exhausted sell limit and reap dividends instead. :D

AK71 said...

Hi INVS 2.0,

That sounds like a plan too. Indeed, investing in REITs is primarily for income.

I only trade approximately 10% of my holdings in REITs, keeping the rest for regular income. :)

Ray said...

Hi AK,

With low volume in the current price hike, do you think the fall in price after XD would be greater than the amount of dividends paid? Any correlation you observed in the past?
If so, it pays to sell now and collect back cheaper later. Ok I know your answer = "nobody can predict the market" lol. But your hunch?

AK71 said...

Hi Ray,

Yes, TA is about probability and not certainty. Mr. Market will do what he wants to do. ;)

If we look at the charts, upon XD, REITs do tend to weaken in price. Even the "stronger" ones like Cache Logistics Trust would see unit price weaken more than the preceding DPU, given enough time.

This might not always be true, of course. ;)

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