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Charts: China Minzhong, Wilmar, Yongnam, Sabana REIT, AIMS AMP Capital Industrial REIT.

Friday, May 18, 2012

I have a friend who told me that he wants to buy more of China Minzhong at 50c. Why 50c? He can't quite say. Anyway, at 50c, I would have lost almost half of my initial investment in the company...



What does the chart say? Momentum is definitely negative and the MACD is still in decline. What is encouraging is the reducing volume over the last three sessions although it remains elevated. Today, a white spinning top was formed. Could this be a reversal signal?

Well. the OBV is still in decline which suggests distribution is ongoing even as price weakened. The MFI though seems to be forming a higher low.

The MFI takes into consideration both volume and price and is often seen as a measurement of demand momentum. So, it is telling us that there is some demand coming back as the stock was savagely sold down. A rebound could be on the horizon and we could see gap closing at 68.5c in such an instance.

Wilmar's technicals have nothing encouraging for the bulls apart for the formation of a black hammer today.



This reversal signal would need confirmation in the next session but with the other technicals very bearish, it would be a nice surprise if a reversal does happen.

Yongnam has been sold down. It touched 22c today, a level not seen since August last year.



I have looked through Yongnam's numbers and they actually still look quite good. However, the lower highs on the MFI are obvious and buying momentum is absent. So, price could drift lower which could see it testing the low of 21.5c hit last August.

Although there has been some distribution going on as suggested by a mildly declining OBV, most shareholders are just holding on. Look at the volume. Look at where the OBV was last August and where is it now. Although price has reached the low levels of last August, OBV is at a much higher level.

To me, the price weakness of recent sessions is nothing alarming. It is not a result of rampant selling. It is just that without buyers share price could continue to drift lower.

I know quite a few people are looking to possibly adding more units of Sabana REIT to their portfolios.



MACD has crossed into negative territory. MFI, a measure of demand hit 50% and turned down. The OBV suggests that distribution is ongoing. The very high volume today formed a black hammer. The high volume suggests a heightened state of activity and the black hammer suggests that bears had the upperhand. Further weakness could see supports at 93c (100dMA) and possibly 90.5c (200dMA) tested.

AIMS AMP Capital Industrial REIT's chart is similar to Sabana REIT's but uglier.



The MACD has plunged headlong into negative territory while the MFI went into oversold territory. Very bearish. The OBV suggests that strong distribution activity is ongoing. Indeed, look at the trading volume spiking today. Immediate support is at $1.08 and if that goes, we could see $1.035 tested.

26 comments:

INVS 2.0 said...

Hi Ak71,

This proves that Sabana is more stable than AIMS during economic shocks. I am considering adding both, should prices weaken further.

Howyuan said...

Hmm..i am waiting to add Sabana, but no free bullets until end of the month. Haha..

JCK said...

Hi AK

Thanks for the charts updates on Sabana and AIMSAMP Cap.

The AIMSCAP Cap looks like a swan dive!

AK71 said...

Hi INVS 2.0,

I don't know if it proves anything like that but I am looking forward to possibly lower prices. :)

AK71 said...

Hi Howyuan,

It seems that many people are waiting to add as well. When there are many waiting to buy in, price might not fall by much. Will see. :)

AK71 said...

Hi JCK,

Minimum splash and a perfect 10! ;p

Ray said...

Buy in tranches, the Euro mess may have some time to continue brewing. Prices may continue dropping.
Any TA can be thrown out of the window when a major FA news break out.
That's how my fingers got burnt :(

AK71 said...

Hi Ray,

Nibbling on the way down? Sounds like you have a plan. :)

FoodieFC said...

I am watching wilmar quite keenly. As for sabana, there is still room for it to drop more before I even think of acquiring more of it.

There are lots of opportunities now. =)

AK71 said...

Hi FoodieFC,

Yup, as prices continue to fall, better value is emerging. :D

JCK said...

AK

Have been nibbling...so far reaching 15% of my Total target
asset in SREITs....very slowly

:)

Hoepfully we can see yields in excess of 10% returns soon! ;0)

AK71 said...

Hi JCK,

Sounds like a plan. ;)

I believe many are waiting for a 10+% distribution yield as well. :)

AK71 said...

CHINA MINZHONG (58 cents, down 3.5, and new post-listing low): CEO Lin Guo Rong bought 100,000 shares at 58.5 cents each, half of what he
last bought in Sept’11 at $1.03 each. The S-Chip has once again come under intense pressure,
dropping from $1.15 in February, making the fall worse than the last round, when it dropped from
$1.08 in late October to 66.5 cents less than 2 months later. What volatility!

(Source: Lim & Tan, 18 May 2012)

Unknown said...

Hi
I think this is because of China slowdown, all commodity stock are down hwavily, Olam and noble.
But i think CMZ have found the floor hopefully.
I bought today at 60c.

victor.

AK71 said...

Hi Victor,

Technically, China Minzhong looks like it is ripe for a little bit of a bounce. ;)

Premier Wen Jiabao is in the news as he pledges to concentrate on growing the economy in China. This has improved sentiments.

Ray said...

its always good to hear CEO of a company buying shares. I see from the chart there is strong support at 57c. hopefully it will rebound from here...barring anything major coming from Spain (not really Greece this time).

AK71 said...

Hi Ray,

Yup, definitely. The CEO is telling everyone that he feels confident enough to invest in the company and that Mr. Market is currently mispricing its shares too much to the downside.

Technically, price seems to have found a floor. The MACD looks set to form a bullish crossover with the signal line albeit in negative territory.

There is a higher low on the MFI which forms a positive divergence with the declining share price. So, we could see a little bounce in price but I am hazarding a guess that the limit to the upside is provided by the declining 20dMA at 70c or so.

The weekly chart suggests that the longer term trend is still down although a firmer push upwards could see a test of resistance provided by the 20wMA at 90c. The probability of this happening is not high though.

Ray said...

Wilmar seem to also be having positive divergence.
Price forming lower lows but MACD histogram is moving higher.

PLs correct me if im wrong, im not that great with TA :)

AK71 said...

Hi Ray,

You are right with the MACD histogram. They move faster than the MACD and do not lag as much but they are also more dicey. Personally, I don't use the histograms much.

To me, a positive divergence between price and the MACD histogram tells me that there is some support for share price. So, a long position has a greater measure of safety.

AK71 said...

China Minzhong:

MFI and MACD have been moving higher as price consolidated/declined. Volume seems to be drying up too. Could be a good time to add some.

Wilmar:

Similar to China Minzhong. Might add some.

Ray said...

Buy fear. Sounds simple enough. But takes alot of balls.
Hands burnt but the recent fall.

AK71 said...

Hi Ray,

Even fear has different stages. I learn not to buy when prices are plunging. Buy when prices are consolidating and when oscillators are rising or forming higher lows. Easy enough a lesson but fingers are itchy sometimes...

Ray said...

ha ha, cant say I dont have similar itchy fingers :)

but the problem is, with this scary economy, any bad news get blown out of proportion so easily. All TA get thrown out of the window when a bad FA news emerge.

AK71 said...

Hi Ray,

Yes, Michael Kahn said that for a few months during the global financial crisis all TA tools were useless. I remember that well.

This is why I am taking small bites as I want to make sure that the paper losses I suffer are manageable.

Ray said...

Hi AK,

Yongnam's share price seem to have found a bottom. Are you adding more?

AK71 said...

Hi Ray,

It does look like it is basing.

I am quite happy with my current level of exposure to Yongnam. Not thinking of adding. Well, not unless value is even more compelling.

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