Charts in brief: 19 Mar 10.

AIMS AMP Capital Industrial REIT: This is more a buy because of the strong fundamentals but it's interesting to see how the price has not been able to move beyond 21.5c this week.  The price is basically being resisted by the flat 50dMA at 21.5c.  The rising 20dMA is currently at 21c and it looks like it is on course to do a golden cross with the 50dMA.  Nice. This might take another couple of weeks.  This counter is still basing and the top of the base formation is at 23c.

China Hongxing: A sell signal is seen on the MACD today, the first in almost two weeks.   The descending 20dMA nears 15c next week and this might pressure the price to move lower.  Please see: China Hongxing: Downside target?

FSL Trust: It had a nice run up recently but the price action has detached from the upper limits of the Bollinger bands. Is this a sign that price will correct downwards? If we observe how the price action has been affected by the rising 20dMA recently, we would notice that the 20dMA was pushing up the price, forming steps in the process. So, FSL Trust has been doing a correction using time instead of a correction in price. Could it continue its winning streak? The technicals point to the negative.

The MFI has been in decline in the last few sessions, suggesting that the buying momentum is fizzling out.  The MACD's rise is also less vigorous now and the distance with the signal line has narrowed, increasing the chances of a bearish crossover.  The 200dMA has also flattened, together with the 50d and 100d MAs.  Being trapped in a sideways trading range might a more probable near term development.  Support is seen at 60c thereabouts, the confluence of the 50d and 100d MAs.

Golden Agriculture:  MACD seems poised to make a bearish crossover with the signal line.  Price action formed a doji today, signalling indecision.  Someone said to me that the price refuses to fall to the supports I have identified.  Well, we could consider a hedge and buy a bid above initial support which means buying at 56c.  Hedging has always worked for me.  All MAs are still uptrending and I believe that buying at supports is still the way to go.

Healthway Medical:  Similarly here, the MACD seems poised to make a bearish crossover with the signal line.  Although the MFI has been forming lower highs and lower lows, the malaise has been accompanied by decreasing volume.  So, there is no heavy selling. 

Rising 20d and 50d MAs are at 16.5c and 16c respectively.  It remains to be seen if the price action will respond to these two MAs or will it respond more to the 100dMA like what happened in mid-February.  Remember that low volume does not mean that price cannot drift lower.  This is quite evident in the price decline which happened from 26 Jan to 12 Feb on declining volumes.  The 100dMA is currently at 14c.

Saizen REIT:  Saizen REIT closed unchanged at 16.5c, a price it has maintained for the last three sessions.  This is admirable if we notice how the counter has been subjected to some heavy selling which suggests that support is strong.  The uptrend, though gentle, is quite obvious.

LMIR: Weakness is an opportunity.

LMIR closed 1c lower at 49.5c today, supported by the 50dMA.  Forming a wickless black candle on increased volume, more downside looks probable.  However, with the 20d and 50d MAs merging and rising in tandem, we should see support at 49c.  The trendline support nears 49c next week and 49c also happens to be a 38.2% Fibo support.

There is obvious distribution taking place today and this can be easily seen in the OBV but the longer term picture of accumulation is intact.  MFI continues to form lower highs and higher lows and the index does not indicate any trend per se.  The MACD turned down towards the signal line and we will have to wait and see if a bearish crossover takes place or if there will be a reversal.

I bought more units at 50c and 49.5c today.  I will now wait to see if the 49c support holds up next week.  If the 49c support breaks, we might see LMIR moving lower to test the recent low of 47c or even move to test the rising 200dMA as support.  The 200dMA is currently at 46c.

I mentioned that I have been waiting for months to buy more at 46c and I am probably not the only one.  If LMIR does test the 200dMA at 46c, I'm going to buy many more units to lock in a yield of almost 11%.  This weakness presents an opportunity to accumulate.

Related post:
LMIR: More units at 10% yield.

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.

LMIR: More units at 10% yield.

I have liked the Indonesian economy for some time now.  In fact, I've liked it before the onset of the last crisis.  I was accumulating units in LMIR when many others were giving it the "Indonesian discount".  During the last crisis, I bought more units in LMIR.  Just like units in First REIT which I bought at 42c during this last crisis, these units are for keeps as they have an estimated annual yield of 14.5% on average.  They have also appreciated nicely in price, of course.

Much of my funds was held in my investments in Healthway Medical and Golden Agriculture for many months.  I divested much of my positions in these two counters in January 2010 and again earlier this month, bagging some nice gains in the process.  See: Rationale for partial divestment. 

With the gains from the partial divestments, I have since increased my exposure in AIMS AMP Capital Industrial REIT and Saizen REIT to increase the size of my high yield portfolio.  After all, the core aim of my investment activities is to generate passive income streams with high yields. 

I have also been waiting for a chance to buy more LMIR at 45c to 46c since January when it declined after forming a high of 53c.  Unfortunately, it never did sink that low.

In LMIR's latest report, its NAV is a higher 83c per unit with gearing at a very healthy 10.5%.  At today's price of 50.5c, the discount to NAV is almost 40%! Yield is also a very attractive 10% at the current price of 50.5c.  The numbers are good.

Fundamentally, I believe in the strength of the Indonesian economy.  Susilo Bambang Yodoyono has led the country through the recent crisis without it sinking into a recession and the economy is likely to register even stronger growth in the next two years.  Indonesia has a large domestic economy and domestic consumption accounts for 60% of its GDP.  LMIR will be a key beneficiary of such a situation in an improving economy.

On the REIT level, LMIR's very low gearing will allow it to make yield accretive purchases without having to resort to asking for funds from existing unitholders.  LMIR will also have a ready stock of malls from its sponsor, Lippo, in Indonesia.  In the event that such purchases take place, we would most likely see an increase in the REIT's distributable income.  I also like the fact that Singapore's Mapletree, a Temasek company, is a partner in the joint management of LMIR.  LMIR has a strong pedigree.

Although I like the fundamentals of LMIR, I have been waiting for an entry point using TA.  On hindsight, when LMIR was testing the lower limits of the Bollinger bands at 47c, those instances could have been good opportunities to buy some units but the MACD was negative and the price could have gone lower.  So, I held back.

Anyway, I have been waiting for a couple of months but the merged 20d and 100d MAs are moving up in tandem now and seem to be giving LMIR a much needed push upwards.  Also, the price action seems to have formed a mini double bottom in February with the neckline at 50c.  This neckline is also a many times tested resistance for LMIR and will be a strong support one day, as a result.  Today, LMIR traded at and above 50c.  We will need confirmation on whether 50c is the new support in future sessions.

MACD has turned positive and the the OBV shows gradual long term accumulation.  All signs point to an increased level of safety in buying LMIR now.  Any negatives?  The volume remains low which seems to indicate a lack of sustainability.  However, if we remember, apart from a few occasions, LMIR has always been a relatively thinly traded counter despite having 1.075 billion units in issue.  If we look at the list of shareholders, we will know why:

1. Lanius Ltd                         19.7%
    (includes Lippo Karawaci)
2. Mapletree                          13.2%
3. Stichting Pensioen              9.9%

4. CPI Capital Partners Asia  8.4%
5. ABN Amro Asset Mngmt  6.4%

The free float is only 42.4% of all available units!

So, I decided to buy up some units today at 50.5c to increase the weight of LMIR in my high yield portfolio.  If 50c is confirmed as the new support for LMIR, I will buy more.  More units at 10% yield in the bag!

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The following was added on 18 March 2010:

Indonesia c.bank revises up GDP, sees low H1 prices


JAKARTA, March 11 - Indonesia's central bank has revised up its 2010 economic growth forecast to 5.5-6.0 percent from an earlier 5.0-5.5 percent rise, helped by stronger exports, deputy governor Hartadi Sarwono said in a statement on Thursday.


The central bank, which maintained its economic growth forecast for 2011 at 6.0-6.5 percent, also forecast no significant inflationary pressure in the first half of 2010. Stronger economic growth was being partly led by exports, Sarwono said.


"Besides strong domestic demand, the recovery especially comes from external factors, which is in line with the global economic recovery," he said in a statement on the central bank's website .


Southeast Asia's biggest economy reported a surge of nearly 60 percent in exports in January to $11.57 billion, bouncing back from a low base a year earlier... - Reuters - Friday, March 12


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Lippo Mapletree Indonesia Retail Trust.
First REIT: This one is for keeps.