Golden Agri, Kencana Agri, Healthway Medical and Genting SP.

On 12 Nov, I mentioned that Golden Agriculture could see its support at 70c tested sooner than later. That support was tested today. Its share price bounced off the support and closed at 72c, ending the session 1c lower.

I still see a negative divergence between price and volume. The MACD has completed a bearish crossover with the signal line but being in positive territory, it suggests that the retreat in price could just be a correction. In such a case, we could see price weakening further to 65c, the next major support, if the support at 70c fails to hold up.

Singapore palm stocks hurt by China price controls. Statement from China’s State Council Wednesday says Beijing will seek to tame rising food, energy prices. “We view the price control guidelines by the Chinese government as short-term negative for CPO prices as they may weaken import demand and prompt traders to liquidate their speculative positions,” says CIMB.     
Thursday, 18 November 2010

© 2010 - The Edge Singapore

On 22 Oct, I mentioned that I was wary of Kencana Agriculture because its chart "seems to display classic signs of negative divergence between price and volume, price and MACD, price and MFI as well as price and RSI.  The shorter term 20dMA seems to be flattening."

This picture has hardly changed as its price declined to 42c, the support provided by the 20dMA, on relatively low volume. This was after three attempts to break resistance at 45c without success. I could be wrong but we might be seeing the formation of a rising wedge. If such a pattern is valid, the downside target could be at least 39c, which also seems to be a rather strong support.

On 13 Nov, I mentioned that "With the MACD, MFI and RSI all in their respective downtrends, a retest of the support at 15c is rather likely" for Healthway Medical. The counter ended the session at 15c today. The down channel's support in the next few sessions is probably at 14.5c and we could see this tested if the support at 15c fails. I still feel that 15c is a relatively strong support and if it holds, we could see the formation of a double bottom.

However, with the MACD having completed another bearish crossover with the signal line in negative territory and without any sign of a positive divergence, it could be rather risky to buy in at this stage. The downtrend might have to run its course.

Genting SP's fortunes have taken a turn for the worse. On 12 Nov, I mentioned that "If the price starts at $2.18 or higher in the next session and manages to break resistance at $2.21 which is the 50% Fibo line as well as the 20dMA, we could have a recovery. Having said this, the MACD has been moving lower as price moved higher, presenting an obvious picture of negative divergence. I would treat any rebound as a chance to reduce exposure."

Well, price started at $2.14 in the next session and closed lower, forming a black candle that almost completely engulfed the white spinning top. Closing at $2.05 today, it has gone below the support provided by the 50dMA. The counter had not traded below the 50dMA in many months.

The negative divergence between price and the MACD is playing out. With the MACD approaching zero, momentum could quickly turn negative as the lower highs on the RSI suggest weakening buying momentum. If price does not recapture the 50dMA as support, immediate support is at $2 with the next support after that at $1.85.

Macquarie cuts Genting Singapore to Underperform.  Macquarie downgrades Genting Singapore to Underperform from Neutral; “we believe the current consensus expectations for Genting Singapore are overly aggressive. In our view, they do not capture the risk of competition from Marina Bay Sands, rising political risk and limited impact from junket approvals.”      
Thursday, 18 November 2010

© 2010 - The Edge Singapore

Related posts:
Saizen REIT, First REIT, Golden Agriculture, Genting SP.
Healthway Medical: 3Q 2010 results.

Golden Agri, Kencana Agri and IndoAgri.

Crude Palm Oil has crossed the RM3,000 mark today. The long term resistance at around RM 2,780 which was taken out days ago is most probably the new support now.  The fortunes of CPO counters should continue to improve.

If not for its problems with the environmentalists, I expect Golden Agriculture to be a big beneficiary to strengthening CPO price.  If it loses more customers like it did in the past, it might not be able to ride on the improving CPO price firmly like the rest.  Technically, Golden Agriculture is correcting from overbought conditions.  It should see support at 61c and that would be a safer entry price.

A friend sent me an email a couple of weeks ago, maybe more, which he received from his broker. His broker recommended a buy on Kencana Agriculture which is much smaller than Golden Agriculture in many ways. Looking at the charts now, I am wary of this counter because it seems to display classic signs of negative divergence between price and volume, price and MACD, price and MFI as well as price and RSI.  The shorter term 20dMA seems to be flattening.  Could this loss of momentum suggest something more ominous?

IndoAgri has clear signs of being overbought.  $2.44 is the top of a double bottom like formation and it is also where the 20dMA is approximating soon. When we look at the Fibo lines, it is also the 138.2% line. It is the support to watch in case of a retreat in price. A fair entry price? It could be but it does not mean that price could not retreat further.  The longer term uptrend support is where the 100dMA is approximating.  This is currently about $2.31.

My very first post on Golden Agriculture:
Why Golden Agriculture?