FSL Trust: The skies are clearing up.

Price stayed above the 20dMA in the last three sessions. The 20dMA, currently at 38.5c, is now resistance turned support. I decided to look at the 20dEMA as well.  The EMA gives greater weightage to recent prices and could sometime explain why price could not move past a certain point in the short term.  The 20dEMA is at 39.5c and seeing the price closed at 40c in the last two sessions is comforting.  However, the volumes were very low and the durability of the recent appreciation in price is questionable.  In fact, since a spike in volume on 18 Jun when the MACD made a bullish crossover with the signal line, volume has been reducing.

Let us look at some other technical indicators to gain more insights. The MACD is rising and pulling away upwards from the signal line in negative territory. The rising MACD is due to the upturning 20dMA, reversing its decline. Although this seems promising, the MFI has gone below its uptrend support due to the very thin volume in the last session as price stayed at 40c. Immediate demand seems to have reduced and some suspect that market participants are waiting for greater clarity.

Although the technicals are not totally inspiring, Mr. Market might spring a pleasant surprise on us and a further move upwards could see the gap filled at 43.5c which in the next session coincides with the declining 50dMA. Immediate support is a band from 39.5c to 38.5c. For anyone who wishes to buy into FSL Trust, technically, it would seem safer to do so now.

Related post:
FSL Trust: Above the 20dMA.

LMIR: Recovering for real?

In the last session, LMIR touched 48.5c, a lower high formed on 22 Jun. Is LMIR's unit price recovering for real and will it go higher? Can't say for sure but recent technicals are supportive of a more bouyant price as we see the MFI, a momentum oscillator that aggregates volume and price, forming higher lows since hitting a low on 21 May. However, trading volume has declined quite a bit in the last four sessions as price rose. Volume is the fuel of a rally and if it dries up, gravity could do its job.

If we look at the longer term trend, MFI has been forming lower highs and this trend suggests reducing demand.  OBV has been forming lower highs which suggests that there is greater distribution than accumulation.  In fact, the downtrend which started on 11 Jan 10 is still intact.

I blogged about my move to reduce some exposure in LMIR about a month ago at a lower high of 47c, recognising the longer term downtrend. On hindsight, that was a bit too soon and I should have used the long term downtrend resistance as a guide instead.

What is my plan now? Frankly, I do not know why the market dislikes LMIR apart from a suspicion that maybe it is applying an "Indonesian discount" to the REIT. I still like the fundamentals but the technicals are wanting. 47c is resistance turned support but it could become resistance again as the 50dMA is still declining. LMIR is probably on its second fan line (which I have drawn in orange color).  Both fan lines have their source at the low formed on 25 May at 42c. We could possibly see the formation of a third fan line in time which suggests that price could touch a low of 45.5c once more. This is a support shared by both fan lines and history might repeat itself.

I still have a large investment in LMIR despite the reduction in exposure I just mentioned. Although the technicals are pointing towards a higher probability in the continuation of the longer term downtrend, a significant increase in volume together with price moving higher would negate this.  Of course, there is no way we can tell if this would happen but it could.  We can only wait and see.

STI: 2,980 next?

How different things look after just one week. The much talked about head and shoulders pattern seems to be turning elusive. 2,400 points on the STI seems to have become just a horror story told to scare the uninitiated.  These are things which even experienced chartists thought quite likely, not just some amateur TA practitioners.  This is another example of how everything works on probabilities, never absolutes.

The MACD averted a bearish crossover with the signal line on 1 July.  On 6 July, a bullish engulfing candle was formed and the MACD started pulling away upwards from the signal line, another bullish sign. Now, a white candle is pushing the upper Bollinger band and the bullishness could continue to test 2,947 next or thereabouts as indicated by the 123.6% Fibo line and, possibly, 2,982, the 138.2% Fibo line. Could it go higher to retest the high of 3,037 achieved on 15 Apr? Who can say for sure?

2,890 is now immediate support as the 20dMA seems set to form a golden cross with the 100dMA next.

Related post:
STI: 2400 is still a real possibility.

SPH: Up channel?

Although it formed a black candle, SPH is still trading above the eventual target price of $3.88 I set for the mini double bottom formed in May/June earlier. It is also trading above a cluster of MAs which should now provide some support instead of resistance. The next target is $4.08 if the mini double bottom is a valid pattern.

MFI is in an uptrend and this suggests strengthening demand. So, although there is a sell signal on the MACD histogram, we could be seeing the beginning of an up channel. If this pans out, then, buying at channel support and selling at channel resistance could yield some nice gains. The channel support is now at $3.80 or so.

Of course, if price goes parabolic next week, SPH could hit $4.08 very quickly.  Then, I would sell more of my shares.  A parabolic move in price is mostly unsustainable.

My plan? If price drops to the cluster of MAs, approximating the trendline support, buy some.  If price goes higher and hits the $4.08 target, sell some.

SPH off 0.5%; Eyes on 3Q10 results, 2Q10 GDP. Investors pausing for breather while awaiting media group’s fiscal 3Q10 results, guidance for coming quarters due Monday. Some analysts expect more upside for stock pending Singapore’s advance 2Q10 GDP data due July 14.
Friday, 09 July 2010

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Related post:
Charts in brief: 5 Jul 10.