Healthway Medical: A retest of recent high.

Healthway Medical moved from 17.5c to retest the recent high of 18.5c in the last session but failed to move higher, establishing 18.5c as a strong resistance in the minds of market participants.  This is all the more significant when we remember that the price action was accompanied by volume more than four times that of the previous session.  This might be a bit more than disappointing for shareholders looking forward to the formation of a new high.  The nagging question on their minds: Is it a sign that distribution has started?

Technically, any price movement up or down without significant volume is seen as unsustainable.  What about significant volume without any significant price movement?  Usually, it means we have a stalemate between the bulls and the bears.  Neither camp is willing to give the other any satisfaction.  That the price managed to inch up 0.5c at the close was a small victory for the bulls.  That 18.5c remains a significant resistance was a small victory for the bears.

Looking at the MFI, the decline has halted and formed a higher low.  The buying momentum stopped weakening although it has not strengthened enough to form a new high.  Now, look at the OBV.  No sign of distribution.  Instead, accumulation has spiked.  This is bullish.  Finally, the sell signal on the MACD has been negated.  All signs point to the bulls having the upper hand, for now.  However, we have to remember that these are lagging indicators.  TA can never tell us what will happen for sure.

So, in the event that price does not move up but declines instead, we should have a plan.  The uptrend is intact.  So, my usual style is to buy at supports.  Initial support is where we find the merged 20dMA and 50dMA.  Connecting the two previous lows yields a trendline support that coincides with these merged MAs at 16c.  This should be the initial support and also a strong one, albeit in the short term.

Related post:
Healthway Medical: A beautiful symmetry again.

Saizen REIT: A symmetrical triangle?

On 23 Feb, I had a post titled: "Saizen REIT: Obvious uptrend."  In that post, I said, "... given the trend of the longer term MAs, the downside is very limited from current levels. Any upward push in price will meet with initial resistance at 17c and if this is overcome, the recent high of 18c might be tested..."

Well, the initial resistance of 17c was not overcome.  In the last session, Saizen REIT closed at 16.5c after touching a low of 16c, forming a dragonfly doji. OBV is flat which suggests a lack of significant distribution or accumulation.  The MFI has dipped into oversold territory.  MACD's sell signal has not been reversed.  Lethargy is a signature of Saizen REIT's price action.

I have drawn a trendline resistance connecting recent highs and a trendline support connecting recent lows.  What looks like a symmetrical triangle took shape with its apex sometime in April.  Symmetrical triangles are not the most reliable patterns in charting but, if valid, a price action in the prevailing trend is not far off.  In this case, the trend is UP.  The ascending MAs make this quite obvious.

My decision to accumulate Saizen REIT from 13c to the current price is informed by a thorough FA with the understanding that it is terribly undervalued. Even if the REIT's portfolio of YK Shintoku were to be foreclosed and even after all the warrants are converted into regular units, Saizen REIT would still have a NAV of 29c per unit. At 16.5c, it is still a good 43% discount to NAV. I have blogged about this quite extensively and shan't dwell on the fundamentals too much in this post but I will say this again, "Think contrarian!"

A video interview with Marc Faber (Posted Mar 12, 2010 07:30am EST by Peter Gorenstein):



"If you are going to put money to work in stocks both market watchers think Japan is the place to be. After a 20 year bear market and despite high-debt-to-GDP levels, the pair think the market has become too cheap to ignore. Always a contrarian, Faber believes the lack of interest in Japanese stocks makes it one of the most compelling buys in the world. "

Related posts:
Saizen REIT: Obvious uptrend.
Passive income with high-yields: Saizen REIT.
Japan's debt issue and Saizen REIT.

Golden Agriculture: Waiting for support.

Having sold almost all of my investment in Golden Agriculture two days ago, I am now waiting for the price to correct to supports before buying again.

We have a sell signal on the MACD today after the price declined for two days, closing at 56.5c, after touching a low of 55.5 today.  The ascending 20d and 50d MAs have merged and should provide initial support at 55c.  I have also drawn a line connecting the previous two lows which would give an indication of where the trendline support is in the next session, 54c.  If this uptrend is violated, the ascending 100dMA would be called upon as support, 51c.

Even though we have a sell signal on the MACD and even though the MFI shows lower highs and lower lows, suggesting a weakened buying momentum, the price decline has been accompanied by lower volumes.  If we look at the OBV, we do not see any obvious distribution activity either, which is a contrast with what we observed for the month of January after the price peaked at 65.5c.  For anyone thinking of accumulating at supports, the low volume sell down plus benign signs in the OBV provide positive confirmation.

Healthway Medical: A beautiful symmetry again.

On 11 January, I had a post titled "Healthway Medical: A beautiful symmetry."  In that post, I said: "I am a believer in chart patterns. See how the cup formation troughed at 9.5c and topped out at 14.5c? The target price in case of a breakout of the top of the formation is just a projection of the trough to the top and beyond which gives us 19.5c. This target price was reached in just one week from the midpoint of the cup pattern at 12c."

Now, I observe a similar symmetry in Healthway Medical's chart once more.  Recent bottom was formed on 11 Feb at 13.5c before price moved up, formed mini ascending triangles before breaking out on 3 Mar.  The neckline?  16c.  Target price of the mini ascending triangles would be a projection of the bottom at 13.5c to the neckline at 16c and beyond which gives us 18.5c which was hit on 9 Mar.  OK, interesting geometry lesson.  Now what?

This suggests that 16c is an important support and resistance.  The merged 20d and 50d MAs which are rising in tandem would be at 16c soon and re-inforce the importance of this price level in the near term.

Price has not been able to form a new high since 9 Mar. Dwindling volume suggests a lack of buying interest.  This is confirmed by the lower high formed on the MFI signifying a reduction in buying momentum.  A sell signal was registered on the MACD yesterday and confirmed today.  So, is the price going to crash?

Looking at the MFI sometimes provides an incomplete picture without the OBV.  If we look at the OBV, we will see that there is no strong distribution going on.  So, although the MFI suggests a slowing down in buying momentum, the OBV reassures by suggesting that the counter is not undergoing any distribution.  The logical conclusion is that weak holders are once again being shaken out.  However, this does not mean that price will not drift lower.  We might see 16c tested yet.  That coincides with the fundamental fair value I have ascribed to the shares of Healthway Medical when I did a revaluation on 24 Feb: "Healthway Medical: An updated valuation."

If 16c fails to hold, we could possibly see 13.5c tested and would relegate Healthway Medical to a wide trading band although the rising MAs at the moment suggest that the uptrend is still intact.

Related post:
Healthway Medical: A beautiful symmetry.
Healthway Medical: An updated valuation.