Charts in brief: 21 Jun 10.

Most counters in my watchlist are positive today as the STI gained to close just a whisker off 2,880. It would seem that the Chinese government has done the world a great favour by deciding to let the RMB strengthen. This is something I have believed should happen for some time. A stronger RMB would ameliorate the problem of inflation within China, raise the purchasing power of its people and improve standards of living. Increased domestic consumption would do a lot of good for China's own economy as well as the global economy. You might want to read what I wrote in an earlier post here.

STI +1.6%; More upside on window-dressing, says SIAS
Monday, 21 June 2010

© 2010 - The Edge Singapore

AIMS AMP Capital Industrial REIT: Volume expanded today and all trades were done at only one price, 22c. MACD has turned up.  MACD histogram has a buy signal. MFI has turned up, forming a higher low. OBV has turned up, suggesting increased accumulation.

CapitaMalls Asia: Price broke the resistance band of $2.19 to $2.21 which I identified earlier. Closing at $2.22 seems bullish but volume suggests that this might not be durable. This counter is probably rising due to a lack of sellers rather than an abundance of buyers. Nonetheless, the momentum is still good as suggested by the MFI and price might be pushed higher.

Courage Marine: The picture is somewhat similar to CapitaMalls Asia.  A white candle day on improved volume but not impressively so which suggests a lack of sellers rather than an abundance of buyers. MFI shows improving momentum while the OBV has turned up slightly.  It remains to be seen if resistance at 20c could be taken out. A significant resistance after 20c is at 21c.

FSL Trust: MFI and OBV continue to rise. Could 40c be taken out this week? The next resistance level which is likely to be a strong one as suggested by candlesticks and a declining 20dMA is at 42c.

Golden Agriculture: Price continues to be resisted at 55c although it touched a high of 55.5c today. Momentum is still positive and MACD is about to cross into positive territory. Volume is, however, unimpressive which probably resulted in the failure to take out 55c and instead formed a white spinning top which is a possible reversal signal.  Support is at 51.5c in case of a trend reversal.

LMIR: It seems that the merged 100d and 200d MAs are too strong to be taken out today. Price closed at 47.5c which is where we find the 50dMA, forming an inverted cross in the process. The negative divergence between price and volume continues to suggest LMIR has been rising on weak technicals. If the 50dMA does not hold up as support, the next support is at 46c as provided by the 20dMA.

Related posts:
AIMS AMP Capital Industrial REIT: Big boys.
Courage Marine: Triple bottom?
Golden Agriculture: Resistance remains at 55c.
LMIR: Testing resistance.
FSL Trust: Verona I.

AIMS AMP Capital Industrial REIT: Big boys.

This REIT is generally thinly traded but on some days trading volume would spike.  In recent weeks, I have noticed quite a few single large volume buy ups.  These buy ups were usually to the tune of millions of units. This morning at 11.27AM, 2,825,000 units were bought up at 22c. Again, a single large volume buy up.

I went through the manager's annual report over the weekend and they have a very clear idea on the REIT's direction and what they will do in time. They want to offload their Japanese property and concentrate on Singapore.  They want to offload some underperforming properties in Singapore too.  If they manage to divest these properties, they might pay down the REIT's loans or look for better prospects within the industrial real estate sector in Singapore.  In time, they want to venture into high growth China.

Looking at the OBV, it is obvious that there has been steady accumulation in recent times although the momentum has not always been positive. Has this REIT, with its relatively high yield, low gearing and big discount to NAV, heightened the interest of big boys?

A quick check on SGX's website reveals the following:
3 June 10 - APG ALGEMENE PENSIOEN GROEP N.V.  increased its stake from 8.935% to 9.307%. That was their second major purchase within a short time.  An earlier major purchase happened end of May which bumped up their stake from 7.862% . They currently own about 136,501 lots.

Given such a consideration, for anyone who is thinking of buying into this REIT, hedging with a position initially at or close to 21.5c resistance turned support might be a good idea.  It would be sweet to buy closer to the support of the trading range which remains at 20c. However, it might or might not happen.  Hedging is probably again the way to go.

Hedging and precious metals.

I have always liked hedging. Why? Because there are very few absolutes in this world. Anything is possible and we can only work on probabilities.  So, plans which do not take into consideration how things might go awry are not sound ones. Even with hedging and contingency plans in place, we might still end up with the shorter end of the stick sometimes. Well, the Chinese has a saying: "Humans plan but the Heavens fulfill."  Sometimes, things do go wrong.  Do what we can to reduce risks but we cannot eliminate risks.

My greatest losses in investments usually resulted from not taking enough precautionary measures to reduce risks. Sometimes, I just threw caution to the wind and went with my heart and, in most such instances, ended up with a broken heart and a thinner wallet. Actually, the pain from such experiences is good in a perverse way because I would then go back to basics and become very cautious again. This is what being human is about, perhaps.

Gold has hit a new record high of US$ 1,258 an ounce.  I have talked about buying physical gold as a hedge against all other forms of investments and against fiat currencies for some time now.  However, with gold's price rising higher and higher, silver is looking more and more attractive.

On 7 February, I blogged about how silver offered more value than gold. I said "Silver is currently trading at the higher end of the Gold:Silver ratio since 1980. Silver is now US$15.15/oz while gold is US$ 1,052.20/oz. This gives us a ratio of 69.45 to 1. This is closer to the historical high of 99.8 to 1. So, there seems to be some truth in the claim that silver is undervalued now and that it is a laggard in the realm of precious metals or it could also mean that gold is simply too expensive. Some hedging might not be a bad idea."

At that time, a reader mentioned that it might be better to wait for US$12 to US$13 an ounce before accumulating silver and my reply was "Yes, I saw the head and shoulders pattern and the neckline broken. There is support at US$15. This, however, was violated recently as price dipped below US$15 for a while but recovered. I see support at US$14 as well. US$12-13? Possible, of course.

 "But with limited downside compared to the potential upside, I prefer to average in slowly. After all, TA shows where the supports are but it does not mean that the supports will be hit. I will buy some at current price level and if it weakens, I will accumulate. I believe in hedging."
 
Anyone who went ahead and started a Silver Savings Account with UOB back in February then would be in the money today. 

Now, with gold at US$ 1,258 an ounce and silver at US$ 19.17 an ounce, one ounce of gold would buy you 65.62 ounces of silver.  Compared to 7 February when one ounce of gold could have bought you 69.45 ounces of silver, the rate at which the price of silver is rising since then is faster than gold's.  If we believe in charting, silver's longer term trend is still up and I would buy more on weakness.

Related post:
Gold at US$1,210 an ounce.

Golden Agriculture: Resistance remains at 55c.

55c is still the resistance to watch.  Volume is drying up as price might have peaked for now. We see a negative divergence between price and volume. Immediate support is at 51.5c, as provided by the gently rising 200dMA. 

The declining 50dMA seems set to form a dead cross with the flat 100dMA in the next session. This might exert some bearish pressure on the share price. The MACD is rising but is still in negative territory and the recent recovery in price might turn out to be just a rebound. 

The MFI has declined but it remains to be seen if it could bounce off its own uptrend support.  If it could, it would suggest that positive buying momentum is still alive which provides hope for bulls here.

Personally, I would wait for a test of support at 51.5c if I really want to have a long position in this counter as its technicals are not particularly strong at the moment. With CPO price firmly in a downtrend, neither are its fundamentals.

Asian plantation stocks, including those in Singapore, lack catalysts to head higher over next 12 months as industry fundamentals not supportive, says Macquarie, according to Dow Jones.

 Macquarie says CPO prices may face pressure given record soybean inventories (palm oil is substitute for soybean oil), narrow price discount between CPO and soy oil, increased CPO inventories due to seasonal recovery in production.

Asian plantation stocks lack catalysts, says Macquarie
Friday, 18 June 2010

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Golden Agri down 0.9%; China buy may be priced in
Friday, 18 June 2010

© 2010 - The Edge Singapore