China Hongxing: Another S-chip bites the dust.

Flipping through the latest issue of The EDGE, I found a full page write up on China Hongxing.  It is rather negative with a title like "China Hongxing unveils plan for cash pile, but analysts fear it is coming too late".

"China Hongxing's fast growing cash pile has been a source of consternation for investors for more than a year.  Some were irked by the company's apparent refusal to invest the money or return it to investors... Some were even concerned whether it actually had the cash reflected in its accounts."

Analysts are downgrading the prospects of the company en masse despite the company reporting a net cash position of 22c per share.  The share price closed at 14c on 5 March.  CIMB-GK and Kim Eng Securities even ceased coverage of the company altogether.

I decided to take a look at China Hongxing's charts.  Looking at the MACD, it is in negative territory, pulling away downwards from the signal line. The MFI has dipped into the oversold region and formed a lower high, signalling negative buying momentum. 

I have drawn the downtrend channel for China Hongxing in light green. 14c is currently at the channel support.  However, if this breaks, the next support is at 12c and a stronger one is at 10c.  Any upmove from 14c is likely to be just a rebound from oversold conditions and would meet with resistance at 16c, thereabouts, which is provided by the descending 20dMA.  If, in the unlikely event that the 20dMA is taken out, very strong resistance is provided by a confluence of the 50d, 100d and 200d MAs, which are at 19c, thereabouts.

Healthway Medical falters while Golden Agriculture shines?

Despite a return of positive momentum, Healthway Medical was unable to overcome the initial resistance of 17c which was identified in my post two days ago.  Instead it closed at 16.5c today, forming a gravestone doji in the process.  This is ominous.  Also of note is that the repeated attempts to overcome resistance is not accompanied by any meaningful increase in volume. The upmove might just falter unless we have an expansion of volume with the next push up.  Finally, the MFI is fast approaching the overbought region and bears watching.

Golden Agriculture's price action formed a white hammer today and closed at 54.5c.  This suggests that a trend reversal is at hand.  This is coupled by a buy signal on the MACD.  MFI has hit 50% which has acted as support on two other occassions in the recent past.  An upmove in price would meet with initial resistance at 57c, followed by 59c. 

Fundamentally, the price of crude oil has been on the rise (currently US$81.93 per barrel) and crude palm oil has risen in tandem, closing at RM2,670 today.  This bodes well for Golden Agriculture.

Saizen REIT: Buy signal.

For the first time in weeks, we have a buy signal for Saizen REIT in the MACD on the weekly chart as the price closed at 16.5c.  We see how the MACD seems to be pulling away ever so slightly from the signal line.  This is a positive sign.

On the daily chart, the MACD continues to pull away from the signal line further away into positive territory.  20dMA and 50dMA continue to rise in their merged form, providing a strong support.  The Bollinger bands squeezed four sessions ago and are expanding now, marking a departure from lower volatility as price sets off in one direction, which is up, in this case.

The MFI has formed a higher high which marks positive buying momentum.  Using the technical tool, Ichimoku, we see that Saizen REIT's price has emerged from the upper limits of the cloud (the translucent blue area) and this means that it has emerged from resistance and is free to move higher.

It might still be early days but the signs are promising.  We will need confirmation next week on whether Saizen REIT's price will continue its positive movement.  Good luck to fellow unitholders.

Genting SP: Stale bulls' second chance?

Genting SP experienced a white candle today on increased volume.  As the price touched 91.5c, approaching the 50wMA (93.5c), it lost momentum and closed at 90.5c.  Volume, although higher, is not significantly so.  The suggestion is, therefore, that the buy ups are half hearted.

The MFI and Stochastics are still in oversold regions and seem to suggest that if a reversal does happen, it is not unexpected.  We might want to remember that in a bearish scenario, MFI and Stochastics can stay oversold for a very long time.  MFI and Stochastics are also more accurate indicators in a trendless situation.

So, the price won't go higher?  If the 50wMA (93.5c) is taken out in the next session, we might see the price rising to the 20dMA, which is descending sharply and should be at 97c then.  All eyes would be on whether the price action would be able to break through the 20dMA to close higher, failing which, a resumption of the downtrend is more likely. I still see strong supports provided by the 100wMA (74c) and the 200wMA (70c) then. 

Do people really believe that the opening of Universal Studios on 18 March would have a huge positive impact on Genting SP in the near term?  The jury is still out.  More likely, this upmove is the stale bulls' second chance to reduce exposure or to get out totally as the downtrend is still intact.  Short sellers should find shorting closer to resistance almost irresistable given the bearish technical indicators.