NOL: Bleeding badly.

On 2 February, I cut losses on NOL as its share price rebounded believing that "shipping industry will face a chronic situation of oversupply and weakening demand this year and possibly the next."

Blow-out 1Q12 Net loss. Neptune Orient Lines (NOL) reported a 1Q2012 Net Loss of USD 253.6 mil, blowing away our already pessimistic FY2012 (read: full year) net loss estimates of USD 160 mil, not to mention consensus estimates of a FY2012 USD 31 mil loss. We maintain our SELL call on NOL and reduce our Target Price further to SGD 0.85 based on 0.8x forward P/B. The bleak outlook in the shipping industry, coupled with global economic uncertainties will likely push a firm recovery for NOL to 2014. (Source: Kim Eng Research)

Neptune Orient Lines (NOL) reported a net loss of US$254m in 1Q12. Logistic revenue grew 7% YoY to US$394m but was unable to offset the 4% fall in Liner revenue to US$2.0b. Group revenue slipped 3% YoY to US$2.4b. Liner revenue shrank despite a volume gain of 4% YoY because average revenue per 40-foot unit (FEU) came in at 7% lower. Management said NOL’s Efficiency Leadership Programme is on track to achieve US$500m of cost savings in 2012. Freight rates have so far in 2Q12 averaged 33% higher QoQ and current rates should see NOL return to profitability in 2Q12. And with NOL expected to turn profitable, we maintain our fair value estimate of S$1.38/share and BUY rating on NOL. (OCBC Research)

Who do you believe?

Related post:
NOL: Cutting losses on a strong rebound.

NOL: Cutting losses on a strong rebound.

Months ago, I made an ill fated decision to go long in NOL. It was a decision based purely on TA and it was a trade that went awry. Straying from my tried and tested methodology of FA + TA plus a lack of a cut loss price has resulted in holding on to paper losses. I should perhaps stick to what I know best.

In more recent times, I traded shares of NOL and made some money. I bought as its price went to a low of sub $1.00 but by $1.22, I had divested. The strength with which its share price broke out of what seems to be a range has taken me by surprise although there were signs that price could have found a floor, if not the bottom.

Even so, the entire upmove in the broader market has taken much more seasoned investors by surprise. Just when we thought the market would be range bound and moving sideways for months to come, Mr. Market decided to shock us.

So, am I euphoric and think that everything is fine now and that prices will recover to what they were a year ago? I am not perfect but I am perfectly aware that, fundamentally, we are not out of the woods. Shipping industry will face a chronic situation of oversupply and weakening demand this year and possibly the next. Higher bunkering fees do not help.

Technically, I see immediate resistance at $1.45 or so and I am using this rebound to cut some losses. If $1.45 should be taken out cleanly and if the bullishness persists, a stronger resistance is at $1.55.

Related post:
NOL: Is the worst over?

REITs, NOL, ARA and Hyflux.

Hope everyone had an enjoyable long weekend and is not missing the holidays too much.

The bullish movement in the stock market should put smiles on the faces of long holders. Has the bear been vanquished? I think it is too early to think so. So, we might want to make use of the bullish sentiment to lighten our long positions.

For me, I am still heavily invested in selected S-REITs as they could continue to deliver predictable passive income even in a zero growth environment. This is quite different, however, from thinking that S-REITs' unit price would not suffer in tandem with the broader market in the event of a crash. Indeed, it would be naive to think so although, with stronger balance sheets, we should not see the same magnitude of decline as in the last global financial crisis.

If we believe that money should go to where it is treated best, any significant decline in the unit prices of the S-REITs in my portfolio would tempt me with higher yields to add to my long positions. For now, I am keeping the status quo with regards to my S-REITs portfolio.

What about lightening my long positions? Share prices of certain companies went up quite a bit yesterday and I tried to sell some.

Today, my sell order for NOL at $1.22 was filled. With this partial divestment, I made some pocket money from Mr. Market. Why $1.22? That was the high of early September. Indeed, a safer resistance to sell at would be $1.18 as it has been tested many times. I took a chance that the buying momentum could push price pass $1.18 and it paid off. Indeed, price touched a high of $1.23.

However, the formation of a shooting star on the back of higher volume today suggests that NOL's share price could be heading lower from here. If $1.18 cannot serve as support, we could see price retreating to $1.10 which is where we find the 50d and 100d MAs merging.

I was not so lucky with another two counters, ARA and Hyflux.

People would say that ARA's trading volume is so thin most of the time that TA is inaccurate here. I didn't really bother using TA this time as I simply remember selling at $1.30 the last time and tried to do it again this time. Its share price did touch $1.30 last evening but my sell order was not filled. Trying to sell again today at $1.30 proved to be futile.

Well, it is back to the waiting game. If $1.30 should be taken out, I wonder if the next target is $1.45? Allow me my little day dreams.

As for Hyflux, the many white candle days on the back of expanding volumes led me to think that we could possibly see gap closing at $1.365 or even see a test of the support turned resistance of $1.39. Deciding not to be too greedy, I entered a sell order at $1.36. Unfortunately, it turns out that I was still too greedy.

Anyway, looking at the chart, immediate supports are at $1.24 and $1.225. The formation of a black candle on the back on lower volume is good news for long holders. However, that the black candle covers more than half of the preceding day's white candle is ominous. The MACD is rising strongly but it is still in negative territory. So, things could go awry.

I partially divested some of my investment, locking in a small gain in the process. I am just simply managing risk here by reducing exposure. If price should continue its upward trek, I would still stand to gain.

Finally, turning our attention away from the stock market, I have put up new blog posts on my recent trip to Japan. See them at Travel Photos and Videos. More to come. :)

Outside Lumine, Shinjuku. Kitty, "Hey! You can do it!" Believe it!

Related post:
Hyflux: Broke resistance.

NOL: Is the worst over?

Despite negative sentiments towards shipping companies, NOL's chart is showing signs of bottoming. If it has not bottomed, it has certainly found a floor and a rather strong one at that.

The long white candle formed today was on the back of relatively high volume. Fibo lines show that $1.175 is a rather strong resistance and if we could overcome this convincingly, next resistance levels are at $1.19 and $1.205.

The MACD has formed a higher low and has once again ventured into positive territory. Momentum has once again turned positive, if only barely so. The MFI is set to form a higher high which suggests a return of demand. Being above the 50% line, we could see some support afforded by this line in case of a retracement in price.

For a longer term picture, look to the weekly chart for clues. The MACD has been rising since the middle of August but it is still in negative territory. The MFI is currently supported by the 50% line. It also looks like we could be seeing the formation of a double bottom.

More importantly, for the first time in a long time, price is above the 20wMA. The week, however, has not ended. So, the situation is still fluid.

A pattern is not formed until it has formed, of course. However, the worst could be over for NOL.

CPL, CMA and NOL: Resistance levels to look out for.

We had a very nice rally today. The upward march on the STI was almost uninterupted all the way from the start of the session. In an earlier blog post on 17 October, I mentioned that there seems to be a bias for further upward movement and it has taken almost two weeks to materialise.

Now that a rally is underway, for investors who are already vested, do we ask if the rally could continue tomorrow? No. We should ask if the rally were to continue tomorrow, where are the resistance levels? We should be looking for exit prices.

For investors who are not vested and who are knocking themselves on the heads for being overly bearish, they want to know where are the supports so that they could consider buying on pull backs. However, given the strength of the rally in Europe right now, chances of a retest of supports could be rather slim. If I had missed the boat, so be it. That's my take.

For CapitaMalls Asia,  a long white candle tested the high of 17 Oct at $1.31. Overcoming this resistance level will see a cluster of resistance levels ahead: $1.33 as provided by the declining 100dMA followed by $1.36, a many times tested resistance level in early September.

In very bullish conditions, we could see the gap at $1.395 filled. Where should I place my sell order? As is my usual style, I will partially divest at each resistance level.

Capitaland could test resistance at $2.71 as a white candle was formed today on the back of very much higher volume.

If $2.71 were to be taken out convincingly, we could see the gap at $2.79 filled eventually. Before $2.71, we have the declining 100dMA to contend with. This MA approximates $2.68 in the next session.

NOL formed a nice white candle today on the back of relatively high volume. Immediate resistance is at $1.19, the high of 13 Oct. Given the momentum of the upward movement, chances of a continuation in the next session is high.

Overcoming $1.19 would see $1.24 and $1.27 as the next two resistance levels, the 123.6% and 138.2% Fibo lines respectively. $1.27 also approximates the position of the declining 100dMA.

With container shipping business very much in the doldrums, the 138.2% Fibo line could be a strong resistance, if tested at all. Remember that 38.2% is also a golden ratio.

Good luck.

NOL: A messy ascending triangle?

Could this be an ascending triangle I see in NOL's chart?

Although ascending triangles are usually seen as a continuation pattern in an uptrend, a breakout could send NOL's share price higher to test resistance provided by the descending 100dMA which is currently at $1.32.

The 20dMA is set to form a golden cross with the 50dMA and is likely to provide immediate support at $1.115 in case of a pull back.

MACD shows that momentum is clearly positive now while the MFI shows higher lows, suggesting that demand is strengthening. The MFI which takes into account both share price and trading volume could test the 50% line for support if volume continues to dwindle while price stays at resistance.

As NOL's share price seems to be finding a floor if not bottoming, looking at the Stochastics provides us with insight as to why it seems to be having a hard time moving higher. This momentum oscillator is, after all, more accurate in situations where prices are moving sideways. The Stochastics has risen into overbought territory.

All in all, this TA seems to suggest that buying if the share price should pull back to support is a good idea because there seems to be a bias for an upward movement in the shorter term.

Capitaland, CapitaMalls Asia and NOL: Closing charts.

CAPITALAND

Volume increased over the last session but the bulls were not strong enough to have the share price close above the 50dMA. Closing at $2.52 is where we find resistance provided by the declining 50dMA.

Although price did touch a high of $2.56, forming a white spinning top suggests indecision and is a sign of weakness.

The counter has, in the meantime, broken out of its immediate downtrend. Immediate support is provided by the flat 20dMA at $2.49.

CAPITAMALLS ASIA

CapitaMalls Asia's chart looks more promising. Another white candle was formed today on higher volume. $1.25 could be resistance turned support.

Further upward movement in price could see the gap at $1.33 filled. Immediate support is at $1.25.

NOL

Although a black candle was formed today on relatively higher volume, there is reason to be optimistic. Why?

The decline in price only travelled halfway down the white candle from the previous day. This suggests that the bears were lacking in conviction and there were enough buyers to keep the share price from falling too much.

A decline to immediate support at $1.125 could see more buying momentum.

NOL: Found a floor.

It seems to me that NOL's share price has found a floor, if not the bottom.

If we were to draw a trendline connecting the highs since 5 Jan 11, it is obvious that the long term downtrend remains intact. This trendline approximates the declining 100dMA which makes this the MA to watch. Then, why do I say the share price has found a floor?

Looking at the MACD, we see that it has been rising since hitting a low in late August. In the last session, it broke into positive territory which signifies the return of positive momentum.

The last three sessions also saw the share price trading above the 50dMA, suggesting that this MA could be resistance turned support. This is approximately at $1.125. If this support holds strong, we could see price rising to test resistance provided by the 100dMA which approximates $1.30.

Given the circumstances, buying closer to support could be a good idea for a trade.

NOL: A quick trade.

On 12 July, NOL formed a white candle and I mentioned that I was wary of its reliability as it was formed on relatively low volume. I also used Fibo lines to determine where stronger supports could be found. Then, I added to my long position at these supports. See blog post here.

On 19 July, NOL formed a white hammer and I wondered if price could rise to test $1.45. See blog post here.

For the last three days, I have been in the queue to sell at $1.45. Today, it was done.

With price closing at $1.42, will it be going lower from here? I am not so sure because I see a higher low on the MACD. A positive divergence has formed, it would seem. If $1.45 were to be taken out convincingly, we could see price going higher to $1.56.

Noble Group, NOL and CapitaMalls Asia.

Just a quick look at some charts:

Noble Group's share price formed a bullish engulfing candle on high volume. If we turn on the MA envelope, we see how it touched the lower boundary and bounced off. Stochastics is in the oversold region and could turn up. Could share price rise to $1.90?

NOL's share price formed a white hammer on high volume. Similarly, Stochastics is in the oversold region and could turn up. Could it rise to $1.45?

CapitaMalls Asia. Connecting the lower highs since 6 October 2010 makes me wonder if we could see the downtrend resistance tested again. Likely to be a long drawn process. Will probably have to see gap closing at $1.55 first.

Good luck.

Capitamall may explore purchase of Ion mall next year, CEO says
Tuesday, 19 July 2011

© 2011 - The Edge Singapore

Noble Group, Altius to set up oil seed plant in South Africa: Update
Tuesday, 19 July 2011

© 2011 - The Edge Singapore

NOL: A white candle.

A white candle formed on NOL's chart today. For most of the day, I saw a black spinning top after its share price gapped down at the start of the day. So, the rather large buy up, after market closed, which pushed up NOL's share price to close 1c higher was somewhat surprising.

However, the white candle was formed on lower volume compared to the previous session's black candle. Share price could possibly have risen due to short covering and not because of an abundance of buyers.

The white candle also did not manage to cover even half the length of the previous day's black candle. So, a white candle is nice but it might not mean that NOL has found its base.

Share price did touch a lower low today at $1.41 while the MACD flattened. This is encouraging. If the MACD should turn up clearly in the next session or two, we would have the positive divergence which I mentioned in my previous blog post on NOL.

Now, the MACD is a lagging indicator which is the case with other momentum oscillators. So, I would use Fibo lines to help suggest where I might find stronger supports for NOL's share price in case of further weakness.

I see the golden ratios at $1.39, $1.375 and $1.36. I could possibly add to my long position at these prices if they were ever tested as the chances of a positive divergence forming are rather good.

NOL: TA update.

NOL has been one big disappointment. So, is this the fault of the counter? Nope. We can only be disappointed if we have expectations and when they are not met. It was a mistake and I will accept it as such.

However, downtrends are rivers of hope. NOL's share price could be overdue for a rebound. This does not mean that I think a rebound is imminent though.

Look at the daily chart and we could see the potential for a double bottom set up or a positive divergence. Wait to see if the recent low of $1.44 would be tested again. If it were to happen on much thinner volume before turning up, it would be good news for bulls. Or if a lower low in price were to be formed with a higher low on the MACD, we would have a positive divergence. In either scenario, we could have the conditions for a rebound which could test resistance provided by the declining 50dMA which coincides with the downtrend resistance.

In a downtrend, sell at resistance.

An elaboration on my methods.

Someone asked me why have I given up on NOL. Naturally, he asked this after reading my blog post on NOL last night which was a rather short blog post and quite unlike my usual style. Well, the facts were simple and brevity was appropriate.

The reason for buying more shares in NOL is no longer valid, from a technical perspective. I buy in a downtrend only when I see the building up of a positive divergence. Once that picture is negated, I stop buying. I do not throw good money after the bad.

Do not throw good money after the bad? This sounds familiar. Yes, it is conventional wisdom and I have said this at other times in my blog too. Such wisdom is also applicable to someone who is investing based purely on fundamentals. For example, my decision not to add to my remaining long position in Healthway Medical was premised on its worsening fundamentals.

So, what am I going to do with my shares in NOL now? Unlike conventional cut loss strategy which would see a certain percentage of loss given as a trigger, I prefer to cut loss on technical rebounds. This would mean at or close to resistance. This would reduce the realised loss of the trade and the likelihood of whipsaws as well.

What if a rebound did not happen? Well, remember that downtrends are rivers of hope. They are rarely one straight line downwards. However, TA is about probability and never certainty. So, herein lies the flaw in my methods. If a rebound did not happen, I could end up with more shares in my frozen portfolio. Brrr...

If you like my methods, by all means, use them. I share them freely. If you are unsure, explore the different methods out there and take your time to decide on what you are comfortable with that works. Good luck.

Related post:
NOL: Positive divergence negated.

NOL: Positive divergence negated.

NOL's positive divergence has been negated. The ADX suggests a strengthening downtrend.

After strong moves downwards, a rebound is possible and if it were to test resistance, it would be a good opportunity to reduce exposure.

Neptune Orient said to plan $200m sale of 10-year bonds
Wednesday, 08 June 2011

© 2011 - The Edge Singapore

NOL completes US$1.1b loan agreements
Thursday, 02 June 2011

© 2011 - The Edge Singapore

NOL: Moving average envelope.

NOL suffered heavy selling today and touched a low of $1.71 before closing at $1.73. Such an intense sell down could see a follow through the next day.

However, it is interesting to see that despite the heavy selling pressure, we still have the potential for a positive divergence to form. Much would depend the price action in the next session.

The lower range of the moving average envelope should provide some support at $1.68 in the event of further selling down. Any recovery in price could see gap cover at $1.82. The way I look at it, anyone who is still thinking of shorting NOL at the current prices should think twice.

I would probably add to my long position by purchasing at $1.68 if it should be tested as support. Downtrends are rivers of hope.

Capitaland, CapitaMalls Asia and NOL.

This is going to be a quick blog post as I am feeling somewhat enervated this evening.

Capitaland is causing some people some concern. Is the price going to retreat further after touching a new low of $3.07? I believe questions like this are futile. Nobody knows the answer. TA is about probability after all.

However, we can say that chances of a rebound, if not a reversal, are higher now. With a lower low in price, the MACD spots a higher low. Yes, we have a positive divergence. However, it does not mean that price could not go lower, mind you.

In the event that the positive divergence delivers the goods, look to the declining 50d and 100d MAs for resistance, currently at $3.28 and $3.37 respectively.

CapitaMalls Asia saw volume increasing significantly today with its previous low at $1.57 tested, forming a  black candle in the process. It remains to be seen if $1.57 could hold up as support or, if a lower low were to form, whether the MACD could spot a higher low. Yes, looking out for a positive divergence.

Things look pretty dicey right now.

NOL is yet another counter which is spotting a positive divergence. Lower low in the share price but a higher low in the MACD. However, with such a persistent downtrend and with a narrow trading range, it could take a mammoth effort for share price to break resistance provided by the declining 50dMA in case of a reversal effort.

Let's see if the share price could open and close higher than $1.81 (today's high) in the next session. If successful, we could have a morning star setup, a three stick reversal pattern. That would be promising.

NOL completes US$1.1b loan agreements
Thursday, 02 June 2011

© 2011 - The Edge Singapore

NOL and Golden Agriculture.

Today, my buy order for NOL at $1.80 was filled. NOL is in a persistent downtrend. Why am I buying more shares at $1.80 a piece? Well, it seems to me that a positive divergence is forming. As price broke the previous low formed on 5 May 2011, volume reduced comparatively. Sellers are less enthusiastic this time round.

The MACD histograms seem to be forming a higher low while the MACD has not turned up yet but could form a higher low too. A rebound could see a test of $1.88 as resistance in the near term. If it should happen, I would reduce my long position in the stock.

Today, my buy order for Golden Agriculture at 67c was also filled. This is at 1 bid higher than the support at 66.5c I identified in an earlier blog post. A hedge, nothing more. Why? Remember that I said we could be seeing the early stages of a head and shoulders formation when the price failed to form a higher high (that is higher than 73.5c)? I said that the neckline of that potential formation is at 65c. This case is still a possibility.

Of course, TA is about probability, not certainty, and we should make our moves accordingly. Today's white hammer formation is promising with price closing at 68.5c on relatively high volume. If price were to continue moving higher, immediate resistance is found at 70c. Closing above 70c could see 72c tested next.

NOL: Reporting a loss.

NOL reported that it has made a loss due to increasing fuel prices and too much new capacity entering the market. Marine bunker fuel averaged US$600.02 per metric ton in the first quarter in Singapore trading compared with US$469.19 a year earlier, according to data compiled by Bloomberg.

Will things improve for NOL?

“Too much new capacity has entered the market this year,” said Jee Heon Seok, an analyst at NH Investment & Securities Co. in Seoul. “It should get better as we go into the peak season in the third quarter and fewer new ships enter service.” Source: The Edge.

Oil prices have come off their highs and are now under US$100 a barrel. Supply worries have eased. The spike in oil prices was probably due to speculative activities rather than a real increase in demand. As circumstances surrounding the supply of crude oil turn benign once more, it would benefit NOL and other transport companies, everything else remaining equal.

Technically, NOL's chart is spotting a positive divergence. There is a higher low on the MACD as price spotted a lower low. Volume has also reduced significantly over the last five sessions as price hugged the 20dMA for support.

I believe that there could be a knee jerk reaction to the news and we could see price decline to cover the gap at $1.86. Any further decline in price and we want to see support at $1.80 holding up.  If it does hold up, it might be a good opportunity to buy some.

Now, we know that Mr. Market has a perverse streak. Could not the price move up instead? Yes, why not? And the reason would be that things are not as bad as analysts had feared. I'm just guessing, of course. Then, expect immediate resistance in a band between $1.92 and $1.93, after which, there is the declining 50dMA at $1.95.

NOL reports first loss in year on fuel, cargo rates. Average revenue per box rose 3% in the period, trailing a 28% jump in fuel prices, as the introduction of more ships on Asia-Europe routes sapped rates.
Friday, 13 May 2011

© 2011 - The Edge Singapore

NOL: A favourable wind is blowing.

NOL was a star performer today as its share price advanced 9c or 4.9% to close at $1.93, the day's high. A long wickless white candle was formed on the back of very high volume. This bodes well for the bulls and we could see the company's share price pushing higher tomorrow.

Higher up, much stronger resistance would be felt in a band from $1.98 to $2.00.  The trendline resistance also approximates $2.00. To go higher, the downtrend that started on 5 January has to be broken decisively. Could it happen this week?

The MACD has formed another higher low although the counter's share price formed a lower low. Positive divergence? Yes, looks like it. So, to take advantage of the positive divergence, buy and hold?

Well, I am somewhat apprehensive as NOL is in a multi-month downtrend and conventional wisdom which believes that the trend is our friend would say that we sell at resistance in a downtrend. It might be prudent to err on the side of caution. When in doubt, I divest partially.

NOL up on improving container sector outlook. NOL said last week it carried 12% more cargo in the four weeks to April 8 from a year ago, helped by higher traffic on intra-Asia and Asia-Europe routes.
Monday, 09 May 2011

© 2011 - The Edge Singapore

NOL: Fundamentals and technicals.

NOL's decline in price came to a halt as news of falling price of crude oil gave a boost to the share prices of transportation companies. NOL should also benefit in time from the "tight capacity of container boxes as well as almost full deployment of container ships (which) would make freight rates very sensitive to any upturn in demand." Could we be seeing the early days of a reversal?

Citi cuts Neptune Orient target price, keeps buy
Friday, 06 May 2011

© 2011 - The Edge Singapore

Well, I bought into NOL at $1.95 and $1.90, believing that it was range bound with support at $1.90. We know what happened after the counter went XD. Price went on to touch a low of $1.80 two sessions ago, confirming that the counter is still in a downtrend. If price were to rise from here, where would the resistance levels be?

Employing a Fibo fan with high at $2.40 (5 Jan 11) and the low at $1.90 (17 Mar 11), it is clear to see that the 38.2% Fibo fan line provides a credible resistance but it was overcome on a few occasions. Therefore, I would expect the 50% Fibo fan line which coincides with the declining 50dMA to provide a stronger resistance if tested. The 61.8% Fibo fan line coincides with the confluence of 100d and 200d MAs and this could provide the ultimate limit to any upward movement in share price resulting from any possible bullish sentiments.

Although the share price has been declining, the MACD has not formed a lower low. Indeed a higher low looks likely. A higher share price with the MACD turning up could mean a test of those resistance levels identified. Good luck to fellow shareholders.