FSL Trust: Higher volume and testing resistance.

Volume expanded today as price action formed a dragonfly doji. This is promising. The MACD has been rising above the signal line, although it is doing so in negative territory. The MFI has formed higher lows which suggest positive demand momentum. The OBV has turned up, suggesting that we are seeing some accumulation activity.

The 100dMA seems to be providing immediate and strong support with the Bollinger bands narrowing. A precursor of a breakout? Perhaps. Immediate resistance is at 44c and, in the event of a breakout, the eventual target is where we find the declining 200dMA, which is currently at 47c. Before that, expect resistance at 45c, the flattening 50dMA, and 46c, gap resistance.

Related post:
FSL Trust: Approaching target.

China Hongxing: Breakout.

On 29 Nov, I mentioned that "It pays to remember that 15.5c was itself a strong support which broke and it is where we find the gently declining 200dMA. It could prove a challenge to overcome this resistance level unless volume expands meaningfully on buy ups."

China Hongxing rose to the challenge today as volume expanded, taking out resistance at 15.5c. Closing at 17c is resistance provided by the falling 50dMA which just completed a dead cross with the rising 100dMA recently. Technically, China Hongxing has just broken out of its downtrend but it remains to be seen if 17c resistance could be turned into support. Falling back under 17c would mean that the downtrend is still intact. The jury is still out on this one. However, resistance at 15.5c is now immediate support.

Related post:
China Hongxing: Rebounding.

Healthway Medical and First REIT: Good news and good bad news.

First, the good news. In my last blog post on Healthway Medical, I mentioned that "If the buying interest follows through, we could see its share price rising to test resistance provided by the merged 100d and 200d MAs and that is at 17c." The counter closed at 17.5c today on expanded volume. Momentum oscillators have all turned up. Beyond 17.5c, I expect resistance to be found at 18.5c, a many times tested support and should be a strong resistance.

I expected 17c to be a strong resistance as it is where we find the merged 100d and 200d MAs as well as the downtrend resistance line.  So, a trading position entered on 22 Nov last month at 15.5c was divested at 17c today. I made some pocket money and that is the good news. Do I have any interest left in the company? Yes, I still retain 5% of my original stake in the company and I will continue to monitor its progress or the lack of progress in time to come.

Now, what's a good bad news? Well, it is a piece of news which seems bad but which is actually good. I am referring to the declining unit price of First REIT.

I mentioned in an earlier blog post that I see long term support at 67c as this was underpinned by the rising 200dMA. We see that 67c is also where we find the 123.6% Fibo line. Price, today, touched 66c which is where we find the 138.2% Fibo line.  38.2% is one of the three golden ratios and provided a stronger support.

My original intention was to wait to buy at 67c but, last Friday, I changed my mind and queued for the rights at 16c instead at the influence of fellow finance bloggers who bought the rights at 16.5c. Guess what, my buy queue for the rights at 16c was filled today. So, my effective cost would be 16c + 50c = 66c which means a yield of 9.7% based on the 2011 DPU guidance of 6.4c by the REIT's management. I am a happy man.

Am I not worried whether the price would decline further? No. Why should I worry? I cannot do anything to influence the price movement of the REIT. If the market is willing to sell a good thing to me at a lower price, I would buy. It's simple. So, would I buy again if the price declines further. Yes, I would. When?

If we look at the chart, we find the 150% Fibo line at 65.5c and the 161.8% Fibo line at 64.5c. As 65.5c is only a half cent difference from 66c (my effective buy price today), I would not bother putting in a buy queue at that price. I have put in a buy queue at 64.5c and I would be very surprised and very pleased if it could be filled in the next few days. At 64.5c, the yield would be 9.92%!

Some may be puzzled by how someone who bought more of First REIT at 95c and 96.5c, CR, could feel pleased with the declining unit price in recent sessions. Well, it is true that the TERPs of my purchases at 95c and 96.5c are 70c and 70.7c which are now in the red. However, let's be rational.

The recent weakness in First REIT's price is due to the selling down by one of its cornerstone investors, Golden Rainbow International Limited, which owned more than 9% of the REIT. I won't be surprised if they continued to sell down today. What's the reason for their massive sell-down?  Well, only they know the reason, I don't. It is a waste of time for me to guess why they have decided to sell.

The REIT's CEO, Dr Ronnie Tan Keh Poo, who is also a director, however, has been buying up the REIT's nil-paid rights as they got sold down. I like it when a REIT's management's interests are aligned with unitholders'. Dr Tan is unlikely to throw his hard earned money down the drain.

Technically, today's volume at 8.04m units is the REIT's highest in its history. However, notice how the black candlestick formed this session is not as bearish as the three black candlesticks before it. It actually started in the middle of the previous session's candlestick and it also formed a lower wick unlike the previous three candlesticks. Support is at hand. This is another reason I said that if my buy queue at 64.5c could be filled, I would be very surprised and very pleased. Good luck to us all.

Related post:
Healthway Medical: Broke out of resistance.
First REIT: Waiting at 67c.