Is SPH the bluest of them all?

Some readers are disturbed by my write up on F&N and Keppel Corporation yesterday.  Well, if I had long positions in those counters at this point in time and if the positions were big and if they were bought at recent highs, I would be disturbed too.  Would they become blue black chips?

So, are there no bastions of strength left, seeing how F&N and Keppel Corporation are in precarious positions?  Aren't blue chips supposed to be the strongest of them all?  Well, the color blue ranges from a very light baby blue to a very dark midnight blue.  Things are always relative, remember?

I have mentioned quite a few times in my blog and elsewhere that my favourite blue chip has been SPH for quite some time.  I like their core business.  I like the Paragon building.  I like how they have diversified into property development.  I like their relatively high NAV.  I like their relatively low PE.  I like their current assets.  I like their relatively generous dividend payouts. Relative?  Relative to other blue chips, that is.  I also like the fact that Dr. Tony Tan is at the helm.  So, the fundamentals are good.  What about the technicals?

Technically, SPH is less volatile compared to Keppel Corporation and is more similar to F&N.  SPH is very comfortably positioned in its uptrend. Unlike F&N and Keppel Corporation which are both hanging onto their trendline supports for dear life, we see SPH forming a white spinning top in the last session, closing at $3.70.  Trendline support which I have drawn in orange is at $3.59 thereabouts.

The white spinning top looks like it's setting up for a possible morning star formation.  Sounds familiar?  Price will have to open above $3.72 and close higher in the next session for this to be valid.  I have drawn a trendline resistance in brown color.  This connects recent highs.  Any move up in price should meet with resistance provided by this trendline, currently at $3.76 or so.  Not much upside?  Looks like it.

What about the downside?  I am not delusional.  I do not think that SPH is immune to negative sentiments. The MFI continues to decline and at 35%, it is not oversold yet.  The index has been forming higher lows and if we connect these lows, we see a gently rising support line.  The probability is greater for the buying momentum to continue weakening towards this line.

As buying momentum weakens, a decline in price might see the orange color trendline support tested.  That would be a nice level to buy some.

SPH is my single largest investment in a blue chip company for a few months now.  I am in no hurry to divest and would in fact buy more as it weakens to support.

A tale of two blue chips: F&N and Keppel Corp

A late night chat with La Papillion in his cbox led to a comparison between F&N and Keppel Corp.  I decided to do a TA on both counters to see which one has relative strength.

F&N's close at $3.83 is supported by the rising 200dMA and the trendline support which I have drawn in orange color.  Further decline in price would mean that the uptrend is over and it's a double whammy for F&N as the 200dMA which is an indication of long term trend would be violated at the same time. A quick look at the weekly chart indicates the next support to be provided by the 100wMA which is at $3.65.

Using two sets of Fibo lines, we see that the $4.00 mark has two Fibo lines which are very close to each other which indicate that it is an important support.  This is further confirmed when we realise that it is a many times tested candlestick resistance turned support as well.  Breaking this critical support on 2 Feb was a very bearish sign.

The MFI continues to decline and has formed a new low.  It is nearing the oversold region.  That the volume has been diminishing as the price weakened in the last two weeks is a positive for the bulls.  There is a chance we might have a candlestick formation known as the morning star if the price opens higher than $3.89 in the next session and closes higher.  For those who have bought some in the last session or two, good luck.

Keppel Corp's chart, relative to F&N's, shows some strength.  Overall, Keppel Corp's price is being held down by a gently rising 200wMA. Everytime its price approaches the 200wMA, it would pull back. The 200wMA is currently at $8.87.

The buying momentum has not weakened as much as F&N's as could be seen in the MFI.  The index has been forming higher lows and recently formed a lower high.  However, breaking the 100dMA support on high volume to form a doji at $8.18 isn't exactly comforting. 

Of course, it is possible that the price action is setting up for a morning star formation as well.  This will transpire if next session sees the price opening above $8.20 and closing higher.  In the next session, we will also have confirmation if the 100dMA is now a support turned resistance at $8.26 thereabouts. 

I have drawn the trendline support in orange color and just like F&N, Keppel Corp is resting on the trendline and if price weakens further in the next session, the fast rising 200dMA is at $7.75 and should provide support. 

Both blue chips, in my opinion, have a strong thrill factor at the moment. To those who are vested, sit tight for the ride and good luck.

Related post:
Revisiting Keppel Corporation.