Golden Agriculture: FA and TA.

I retain a very small long position in Golden Agriculture. The price of crude palm oil (CPO) has made a new low for 2011, closing at RM3,040.

"Inventories are likely to accumulate in the coming months, unless prices fall to around MYR2,700-MYR2,800/ton, levels that might spur strong physical demand for the commodity and prompt traders to buy on dips, said a trading executive in Kuala Lumpur...

"June output is expected to rise 7%-10%, from 1.74 million tons the previous month, and end-June stocks could rise by as much as 24% to 2.38 million tons." Dow Jones Newswires, July 05, 2011 07:17 ET (11:17 GMT).

The longer term fundamentals, given the strong and growing demand for the vegetable oil, are still intact. However, short term weakness could present rather strong downward pressure on prices. Therefore, I am exercising caution and not adding to my long position in Golden Agriculture. This decision is also informed by technical analysis.

If we look at Golden Agriculture's daily chart, the symmetrical triangle is quite obvious. Two thirds to its apex, we could see a movement breaking the triangle in the near future. Up or down? With price finding it hard to recapture support provided by the 200dMA, the bias is towards the downside. With the ADX indicating a lack of trend, look to the Stochastics for clues. It is turning down from the border of the overbought region. Some softness in the counter's share price would not be surprising.

A look at the weekly chart shows that the Stochastics has broken support. A weakened momentum is obvious. If price were to break the symmetrical triangle to the downside, we could see a test of support provided by the 100wMA. 61c? Could happen.

Long holders could be walking on thin ice here. Good luck.


Related post:
Golden Agriculture: Strong resistance.

Golden Agriculture: Accumulation mode.

Anyone who has been following my blog recently would know that I have been accumulating shares of Golden Agriculture. Today, I bought more shares in the company at 66.5c a share. Do I intend to buy more if price should weaken? Yes, I would.

I am confident that the demand for crude palm oil (CPO) will strengthen as an edible oil as well as for the production of bio-fuel. With increasing affluence in Asia, especially in India and China, consumption is on an upward trajectory. With crude oil once again north of US$100 a barrel, we could see a stronger return of bio-fuel as a less expensive alternative. The fundamentals support higher CPO prices in future.

CPO has retreated to RM3,270 a ton from a high of RM3,960 in February. This is a decline of more than 17%. There are signs that the steepest part of the correction is over as price has managed to stay above RM3,230 a ton since late March.

Golden Agriculture's fortunes are probably the most levered to the price of CPO amongst the CPO companies listed in Singapore. Its share price took a dive from a high of 83c on 4 Jan 2011 to just 61c on 23 Feb 2011 for a loss of 26.5%. Devastating for anyone who got in at or near the high? Quite. Could price continue to move south?

Well, technically, I get the impression that the counter is oversold. As the ADX is at 11 and the DIs approximate 20, there is no strong trend or a trend per se. Volume has reduced again today as price found support at 66c and this is where the uptrend support which originated on 23 Feb is found. Stochastics is still in oversold territory and could we see it forming a higher low?

I always say that TA is about probabilities and never certainties. So, in the event that price moved lower, where is the next support? If the trendline support originating from the low of 23 Feb were to break, I see the next support at 65c. This is also a more ideal entry price I identified some time back when I was thinking of re-initiating a long position in this stock. More ideal because it was the top of a very lengthy basing process which started in early January 2010 and ended in October of the same year.

By drawing a Fibo fan using the low of 23 Feb and the high of 11 Apr, 65c is also where we would find the 78.6% Fibo fan line next week. For good measure, I used the low of 25 May 2010 and connected it to the low of 23 Feb 2011 which gave me another trendline support. Guess what. This line actually approximates the 78.6% Fibo fan line mentioned earlier.

65c could be the next strong support. If price were to test 65c, I am buying more.

Golden Agriculture: Long term uptrend is intact.

I have felt bulllish about crude palm oil (CPO) since 2009 and made some money divesting my investment in Golden Agriculture in 2010 when its share price shot through the roof. With the fundamentals of CPO still strong and likely to strengthen with the higher price of crude, I am convinced that Golden Agriculture will do better in time and I traded its shares on a few occasions as well.

However, I refused to chase as Golden Agriculture's share price rose higher and hit a high of 83c on 4 January. In fact, I was warning readers of the glaring negative divergence which saw the MACD forming lower highs and the share price formed higher highs. Patience will be rewarded (usually) and today I got back in on the long side once again at 67c/share which is where we find the rising 200dMA.

If we remember how in the last two occasions when the 200dMA was tested, it failed to hold up, we would treat any buying at this support as a hedge. So? A smallish long position just in case it does hold up. Put in a larger buy position at the trendline support which I have drawn in red. This is a long term support which started on 26 May 2010. If this were to fail, the next long term support is the one which originated at the bottom on 28 Oct 2008. This trendline support, I have drawn in orange color. I will accumulate if there should be further weakness.

Golden Agriculture: Black spinning top.

Golden Agriculture started the day bullishly enough but ended the day at 72.5c after touching immediate support at 72c. A black spinning top was formed, suggesting market indecision. This could be a reversal signal as indecision in an uptrend is not good news for bulls.

Support is currently provided by the flat 100dMA. With the momentum oscillators in their overbought territories, a pull back is not unlikely. Breaking support at 72c could bring out the sellers. However, the steeper uptrend which started on 15 March would still be intact if its trendline support holds up and this would be at 70c or so in the next two sessions. If this were to fail, the next supports are at 68.5c (50dMA) and 66c (200dMA).


Related post:
Golden Agriculture: Overcame resistance at 72c.

Golden Agriculture: Short term uptrend broken.

The negative divergence between the rising share price and falling MACD which we have observed for weeks is showing its colors. Price broke support at 78.5c provided by the 20dMA on 10 Jan and, in the last session, fell to test support at 76c provided by the rising 50dMA.

Price falling below the 20dMA suggests that the shorter term uptrend could be over. Drawing a trendline support linking the lows of 8 Oct and 24 Nov verifies this as price closed below this support for the first time in months.

How low could the price fall to? No one can say for sure but drawing a trendline support linking the lows of 30 Sep and 8 Oct coincides with the rising 100dMA and, to me, this suggests a much stronger support at this level and would be a more ideal entry point. The 100dMA is currently at 68.5c.

Fundamentally, I believe that demand for Crude Palm Oil would remain strong with higher consumption in Asia. I would look out for a chance to accumulate on any sharp pullbacks.

Related post:
Golden Agriculture (3 Jan 11)

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?

Golden Agriculture: Breaking the 200dMA.

CPO at RM2,543 and Golden Agriculture's share price is at 53.5c. The 200dMA is at 54c and closing below this MA is bearish.  The question to ask is could this bearishness be short term in nature.

Although the MFI's dramatic decline has continued, signalling a rapid fall in demand, it is bordering on oversold.  The RSI has, in fact, plunged into oversold territory, suggesting that the strong selling pressure might be overdone.  Looking at the OBV, we do not spot any heavy distribution activities.  This suggests that the selling could be by weaker holders.  In fact, look at the volume and we realise that, although higher than the previous three sessions, it is not dramatic.

Drawing upon the gentlest of uptrend lines from the low of 25 May, we find the next support at 52.5c.  Look at the weekly chart and 52.5c is where we find the 50wMA and this has proven to be a reliable support before.  Very interestingly, look at the MFI and RSI in the weekly chart. They are rising and as price fell in the last three weeks, the MFI continued rising. If price bounces off 52.5c, we could have a reversal on hand.


"Palm oil prices must rise to around MYR3,000 ($955) a metric ton to curtail demand for exports, as bouts of bad weather have limited palm production growth in Indonesia and Malaysia, the world’s top palm oil producers, leading vegetable oils analyst Dorab Mistry said Thursday evening. 

"Global consumption of vegetable oils for food and biofuels will likely grow by 6 million tons during the year to March 2011, while growth in supply of those oils will likely be a dismal 2.3 million tons due to adverse weather around the world, Mistry said in a speech prepared for an industry conference in Belem, Brazil."

-By Shie-Lynn Lim, Dow Jones Newswires;
August 26, 2010 09:00 ET (13:00 GMT)

Golden Agriculture: CPO broke double top.

Crude palm oil (CPO) formed a 15 months high yesterday (RM2,730), breaking the double top formation (RM2,710) mentioned before. Fundamentally, this is very good news for Golden Agriculture.

Golden Agriculture started at 61c today before closing at 60c after touching a low of 59c.  Volume was quite low. The sell down lacks conviction and this is good news for the bulls. The MFI has formed a higher high but it might decline to retest 50% which is also where we find a longer term uptrend support. 

In case of a pull back, expect immediate support at 58c, this is also where the rising 20dMA would be in the next few sessions.  58c could be a good entry price, especially if we notice the uptrend starting 30 June approximates the 20dMA. 

Fundamentally, strong CPO prices would underpin performance of Golden Agriculture.  Technically, the uptrend is obvious and it should be safer to buy at supports in an uptrend.

Golden Agriculture: Uptrend.

58.5c is a natural resistance turned support if we look at the candlesticks formed in the last three weeks.

The current uptrend support approximates the rising 20dMA and would be somewhere around 57.5c in the next session. Price could decline, break support at 58.5c and hit 57.5c in a whipsaw before rebounding.

Since the price hit a low of 48c in May, the MFI, OBV and RSI have been rising together with the rising price. So? Growing demand, continual accumulation and bouyant price movement. All good news for bulls.  If this continues, price could push upwards to retest 62.5c.  Could it overcome this resistance level?

Crude Palm Oil (CPO) has recovered strongly in a steep line upwards and is now at RM 2,661.  This is not far from the double top which saw CPO at around RM 2,710.  Golden Agriculture would benefit from higher CPO prices and the market knows this.  If CPO price breaks RM 2,710, we could see Golden Agriculture's share price rally to a new high.

Golden Agriculture: Further divestment at 60c.

I hope Golden Agriculture made many happy today as the reversal signals seen a few days ago followed through nicely.  The price closed at 60c today, the previous high. My overnight sell queue at 60c was done towards the end of the day.

Looking at the chart, it is obvious that Golden Agriculture is firmly back in the uptrend channel.  Price action formed three wickless white candles in a row, reminiscent of a pattern which chart watchers call the Three White Soldiers and this pattern could signal more upside to come.

MFI rose above 50% convincingly, signalling positive buying momentum.  OBV continues to rise, signalling continuing accumulation.  The MACD has crossed the signal line in a bullish crossover.  All the momentum oscillators are bullish and also hint of more upside to come.

I have drawn some Fibo lines to determine the next resistance levels to watch in case of further upside.  I would like to draw your attention to 63.5c and 64.5c as these would be in closer proximity to the uptrend resistance in the course of the new week.  64.5c was also the closing and opening prices of the peak achieved in mid January on the 11th and 12th respectively.  This price would likely be fresh in the memories of market participants and would thus be a strong resistance.  I do not expect it to be taken out for now but I could be wrong.

Bugbear? Volume has not expanded in this latest move up in price and this suggests that we should not be too euphoric. I have put my remaining Golden Agriculture shares in the queue to sell in case its price hits the resistance levels I have identified in the preceding paragraph.

Certainly, from a fundamental perspective, the very strong showing by crude oil which is trading at almost US$85 a barrel as of now might have a spillover effect on crude palm oil and this would surely benefit Golden Agriculture.

Related posts:
Golden Agriculture: Reversal confirmed.
Golden Agriculture: Partial divestment at 57.5c.

Golden Agriculture: Partial divestment at 57.5c. (Rabobank's John Baker speaks.)

Golden Agriculture breached the resistance at 57.5c and closed at 58c, forming a nice bullish white candle in the process.  In my usual style, I partially divested at resistance on the way up and it's 57.5c in this case.  I have put in a sell queue at the next resistance of 60c, the previous high.

Although price action formed a white candle today, the slight reduction in volume creates a bit of unease, especially when volume expanded on the STI as the index tumbled almost 46 points to close at 2,887.46.

OBV continues to rise and MFI has turned up, indicating continuing accumulation and a return of positive buying momentum.  This is comforting.  MACD has touched the signal line and a bullish crossover seems imminent.

-------------------------------------------------------
Baker Says Palm Oil `Stands Out' Among Soft Commodities.
22 March 2010, Bloomberg.

Golden Agriculture: Approaching supports.

The price of crude palm oil declined RM57 or 2.2% today to close at RM2,538.00.  Since testing the three months high of RM2,710, CPO's price has been in retreat.  There is a danger that we might see the formation of a double top.  This is quite clear in CPO's three month chart.  The neckline? RM2,400.00.  This situation bears watching.

On 12 March, in a post titled, "Golden Agriculture: Waiting for support", I said that "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." 

These observations are more or less still valid except that the trendline support is now higher up at 54.5c which also coincides with the gap support.  Interestingly, 54.5c has been a gap support and gap resistance in the recent past before 5 March. It is also a many times tested candlestick support and resistance level.  This implies that it should be a strong support if tested.

Golden Agriculture's price retreated 1c today to close at 56c.  This is after starting at a high of 57.5c in the morning.  So, we have a wickless black candle today.  Very bearish.  The MACD looks set to make a bearish crossover with the signal line. 

Expecting further weakness in price, I am ready to accumulate at supports.  However, if the price breaks through all the near term supports I have identified including 54.5c which I expect to be a strong support, I would wait to buy more closer to the rising 100dMA which would be around 51.5c next week.

Golden Agriculture: Buy signal confirmed.

Crude palm oil (CPO) closed up 1.46% today or RM39 to close at RM2,709 (US$811).  The outlook is bullish and CPO's price might push higher yet.  As mentioned in my previous post on Golden Agriculture, this is good news indeed for the company.

Golden Agriculture did a bullish gap up today, closing at 56c, forming a white spinning top.  Indecision?  Seeing how the spinning top did not take place after at least several consecutive days of upmove in price (because at least several days in one direction is required to qualify price movement as a trend), it is unlikely to be a trend reversal signal. 

The buy signal seen in the MACD is confirmed today.  50% on the MFI has lived up to expectations and acted as a support, preventing the index from declining which would have signalled negative buying momentum.  All in all, chances of Golden Agriculture's price pushing higher seems good.  In the event that 57c is taken out, 59c (138.2% Fibo resistance) would be the resistance to watch. Support remains at 50c, a many times tested candlestick support and resistance level which coincides with the rising 100dMA.

The case for crude palm oil.

Some of us might be aware of the criticisms made against oil palm plantations in Malaysia and Indonesia.  The following paragraph from an article in the New Straits Times summed it up nicely:

"Environmental non-governmental organisations and parliamentarians in the EU and US allege that the new demand for palm oil in their newly developed biofuel industry will lead to deforestation in Malaysia and Indonesia to accommodate the expanding cultivation of oil palm. The alleged conversion of forests is then linked to habitat loss, biodiversity and now global warming. " By Yusof Basiron, 24 Feb 2007, New Straits Times.

The Malaysians have launched very convincing counter arguments to the contrary.  Here, I would like to share a short video clip found on YouTube:



There is some truth to the claims that Western developed economies seem to be practising double standards in their criticisms of oil palm plantations.  Some figures shown in this next video clip are quite telling:



The developing world has the right to economic growth, growth which the Western developed economies enjoyed at the expense of the developing world in the past.  If they want the developing world to cut down on what they call environmentally detrimental practices, they should make appropriate contributions.  To me, this seems to be the decent thing to do.

Small, mid and large caps

The STI gained 51.4 points to close at 2,745.02 on relatively low volume.  This might have been the rebound that stale bulls were waiting for in order to reduce exposure in some index linked counters.

Healthway Medical closed at 14c today and it remains to be seen if this support would hold or would 13c, the next support, be tested.  The declining volume continues to confirm a lack of selling conviction and as the price declines, the chances of supports holding become higher in this light.  With the MACD declining and positioned just above zero, there is almost no doubt that the upward momentum is over.  MFI confirms this as it did not rebound off the trendline support today, confirming a lack of buying momentum.  Now, we have to pay attention to the Bollinger bands.  See how the price action has been hugging the lower limits of the Bollinger bands?  We want to see the price action detaching and moving inwards towards the 20dMA.  That would be the first sign that the correction might be at an end.  This would likely be followed by a consolidation phase.  Strategy: I'm holding on to my Healthway Medical shares and will add to my position again once I see signs that the correction has ended.

Price of crude palm oil (CPO) closed at RM 2,561 as it continues its upward climb after reaching a recent low of almost RM 2,400.  It looks likely that it will continue to rise and test the trendline resistance.  Given the current weak sentiments, a lower high would seem to be more probable.  Golden Agriculture seems to echo the relatively positive performance in CPO and closed at 51.5c, forming a white candle in the process.  However, this is on relatively low volume which makes the upward move in price less convincing.  This is echoed by the MFI as it stays flat, signalling a lack of buying momentum.  A flat 50dMA at 52c provides immediate resistance.  If this is taken out, a declining 20dMA provides a stronger resistance at 54c.  Strategy: Look to the MACD (blue line) for signs.  Once it closes in on the signal line (red line), that is a sign of a possible reversal.  Of course, to be safe, wait for confirmation as the MACD crosses above the signal line.

Saizen REIT ends at 16c on another low volume day.  There is not doubt that the counter is stuck in sideways trading but the uptrend is intact.  Let us see if the report due to be delivered in the morning of 11 Feb 10 will provide some stimulus here.  Strategy: Accumulate.

Keppel Corporation closed at $8.34 on a white candle day as it's resisted by the 50dMA.  It did manage to safely stay within its uptrend although the diminished volume does not make this convincing.  The overall picture is quite pleasing as the upmove today means that the low of $8.12 formed in the last session is a higher low.  Will the price break resistance tomorrow to test the recent high?  MFI shows that the buying momentum has an upward bias and bulls might breathe a sigh of relieve yet.

F&N today confirmed that it is indeed the weakest of the three blue chips I have been looking at in recent days.  The black candle formed today is accompanied by very much higher volume as price closed at $3.78.  MFI plunges deeper into the oversold territory and the MACD continues its descend and is pulling away from the signal line.  All these means that F&N is terribly oversold but such strong selldowns usually have some momentum.  It would be wise to wait a bit for some signs that the correction is over before going long.

SPH is, technically, the strongest blue chip here.  Today, I made an interesting observation.  Dare I hope?  It looks like a symmetrical triangle is forming in SPH's price action of late.  Look out for the MACD (blue line) closing in on the signal line (red line) as it might mean that it is ready to form a bullish crossover.  This would mean that price would probably break out higher .  With MFI forming a higher low, the buying momentum has an upward bias.  I guess a bit of hope doesn't hurt.

Golden Agriculture: 50dMA recaptured.

Today, crude palm oil (CPO) closed at RM2,498, up RM46 or 1.88%. Crude oil is again above US$77 and this is good news for CPO. Golden Agriculture's price action recaptured the 50dMA at 52c, closing at 52.5c.  That the 50dMA is resistance turned support needs confirmation tomorrow.  MFI is still at 20% which means that any move up in price has lots of room before the counter becomes overbought.  Initial resistance is provided by the 20dMA at 56c which is also a 38.2% Fibo resistance.

Golden Agriculture and Saizen REIT

Golden Agriculture (50.5c): Unable to close above the 50dMA today at 52c is not a good sign.  Trade volume although not expanding very much remains significant.  The fact that the MFI is bordering on the oversold region provides little comfort as it could stay oversold for a while if sentiments remain bearish.  Once again, the critical support level at 50c is in focus.  Investors with long positions in this counter like myself would want to see this support level holding up.  Fundamentally, the prospects for crude palm oil (CPO) in 2010 remain positive.  The price of crude oil will also appreciate in time as economic recovery this year gains traction on a global scale.  Golden Agriculture will remain a major beneficiary in such a situation.

Saizen REIT (16c): Another low volume day with the MFI bouncing at the 50% mark.  There is little to say here.  I am still in accumulation mode where this counter is concerned.

Golden Agriculture: Oversold.

Golden Agriculture closed above the 50dMA at 52c, almost forming a dragonfly doji, which is usually a bullish sign.  The MFI declined and dipped into oversold territory today.  We have the conditions for a possible reversal.  Any downside should be restricted by the 100dMA at 48c while initial upside resistance is provided by the 20dMA at 56c.  With all the longer term MAs still rising, although gently, the downside risk for Golden Agriculture seems limited for now.

With recent upgrades of the prospects of crude palm oil (CPO) by RBS Asia Securities and BNP Paribas for 2010, with the former going so far as to say that Golden Agriculture has a fair value of 71c, a floor for the counter at 50c is not unreasonable.

A quick peek at the weekly chart shows an imminent golden cross between the rising 20wMA and the descending 100wMA.  Spotting a probable reversal is always exciting and Golden Agriculture is making my heart beat a little faster.

Golden Agriculture: Reversal confirmed.

Golden Agriculture closed at 52.5c, confirming the reversal signal given by the inverted hammer yesterday. The critical support at 50c held.  The MACD has a buy signal today with a green histogram after more than 2 weeks' worth of red ones.  MFI is at 29% and this leaves much room for its price to move up if indeed that's the direction in the next few sessions.

A new set of Fibo lines show resistance at 56c (38.2%) which happens to coincide with the 20dMA, 58c (50%) and 59.5c (61.8%).

I did not manage to get any at 50c, the critical support level, but that's ok as I have been accumulating shares of Golden Agriculture as its price moved downwards this and last week.

The fundamentals for crude palm oil remains compelling and I would accumulate shares of Golden Agriculture if its price weakens to supports instead of moving up in the near future.

Golden Agriculture: High volume sell down

Golden Agriculture broke support provided by the 50% Fibo line at 56.5c to close at 55.5c after touching an intra-day low of 55c. This is on the back of pretty high volume and it seems that the negatives from lower crude oil and crude palm oil prices yesterday were too much to bear. Price is now supported by the rising 20dMA. With this type of high volume movements, there is usually some momentum and expectation is for the price to move lower tomorrow to test supports at 54.5c (38.2% Fibo line) and 54c (gap support). If those break, the next supports are at 51.5c (gap support) and a band between 50c to 51c (many times tested resistance turned supports).

Longer term fundamentals are still good. After selling off 90% of my position by the time it hit 62c last week, today I bought a chunk of Golden Agriculture's shares at the 20dMA support. This was a buy queue I put in last night. I will continue accumulating on further weakness.