FSL Trust: 4QFY10 results.

I have been divesting my stake in FSL Trust as its unit price strengthened in recent weeks. The last time I sold some was at 48c on 7 January, less than a fortnight ago. Then, I said "My long position in FSL is for a trade and the entry was not based on fundamentals, which are lacking. So, reducing my long position, locking in gains at resistance and at signs of weakening demand, at least partially, is prudent although it could limit gains in case of further price appreciation."

Despite what the management says, the Trust's numbers are really weak as it reported its results today and the following should cause some concern:

1. Reduction in net cash from operations which reduced year on year by 19.6% and quarter on quarter by 7.8%.

2. A full year net loss of US$5.67million whereas it registered a profit of US$8.42million the year before.

3. A loan tranche maturing in April 2012.

See Press Release here.

Technically, volume has been rising as price stayed in a tight trading range between 47c and 47.5c mostly. 48c was only tested in three sessions. Today, volume was very thin as a BUY signal appeared on the MACD histogram. The 20dMA has been rising and is now at 47c while the 50d and 100d MAs are rising to meet the declining 200dMA. Golden crosses in the making? Perhaps. The MFI, however, has turned down after hitting 50% which acted as resistance. The overall picture is one which suggests further upside in the current time frame could be limited.

FSL Trust released its results after 8pm tonight. So, it remains to be seen how the market would react tomorrow. If the support provided by the 20dMA at 47c should break, stronger support could be found at 45c which is where the 50d, 100d and 200d MAs are approximating. I would sell into strength and 48c is the resistance to watch.

Related post:
FSL Trust: Sold some at 48c.

Raffles Education: Broke resistance.

A spectacular breakout today with a 3c or 10% gain for Raffles Education! A wickless white candle was formed on this up day although it was preceded in the previous two sessions by a spinning top and a doji, both potential reversal signals. So, the resistance at 30c so decisively taken out today was as surprising as it was spectacular.

Buy signal is spotted on the MACD histogram while the MFI and RSI remain in overbought territories. OBV shows a spike in accumulation. Question: Could the price go much higher? I see the next resistance at 34c which was the high of 12 July 2010. The current price of 33c is also a strong resistance as provided by the 150% Fibo line and if 33c were taken out, 34c is most likely attainable.

Raffles Education: Acquisition of Merchant Square. Fair value estimate decreases marginally from S$0.285 to S$0.28 (still based on 18x FY11F EPS). Maintain HOLD. Read research article here.

Related post:
Raffles Education: 200dMA resistance again.

Courage Marine: Retreating to support.

Yesterday, I mentioned that "Looking at the chart, immediate support is currently at 21c although it seems precarious as MFI and RSI spiked into overbought regions. Any weakness could see the counter pulling back to 20c which offers a stronger support and would correct the overbought condition."

The excitement that came with the prospect of dual listing by the counter petered out quickly as price formed a wickless black candle and closed at 20.5c today, just 1 bid shy of the 20c support I mentioned. Looking at the buy queue which formed at 20c, it does look like it would be a strong support.

With both the MFI and RSI exiting their overbought regions, we could see the overbought condition corrected very soon. We could see the MFI retest its uptrend support which means that volume and price could fall further in the meantime.

20c support could indeed be tested sooner than later while 19c is where we find a clustering of the MAs and that is where we would find the strongest support in case of severe weakness.

CIMB downgrades bulk shipping to "underweight". Read article here.

Source:
Bloomberg, CIMB Research.

Related post:
Courage Marine: Dual listing.

Saizen REIT: Attracting some big money?

Some big player seems to have taken an interest in Saizen REIT today. In a single transaction, 1.5m units were bought up at 17.5c per unit while 2.418m warrants were bought up at 8.5c each, setting the tone for the rest of the session.

I have some friends and readers who asked me if it is too late to go long on this REIT. Well, I might not be the best person to ask because I have been vested in this REIT for more than a year and at unit prices 16.5c and lower that I do not feel inclined to add to my long position at the current prices. However, I will try to be objective here.

The 100dMA continues to rise towards the 200dMA and seems on track to forming a true golden cross in time. The MACD continues to rise above the signal line in positive territory. OBV shows continual accumulation. The RSI is overbought but the MFI is not. This suggests that price has moved up too quickly but overall demand is still moderate. The upmove in price has not been accompanied by any crazy expansion in volume which suggests that a sharp pullback is unlikely.

The uptrend that started on 17 Dec is still strong. The rising 20dMA, in fact, approximates the trendline support. So, it is my opinion that this trendline support should be a strong one. As accumulating at supports in an uptrend is the thing to do, for anyone who wants to go long here, such a support is to be found at 17c in the near term.

For anyone who is thinking of selling into strength, the high of 14 Jan 2010 should be the resistance to watch. Selling at resistance is conventional wisdom. Of course, if resistance should break, more upside is likely and resistance could become support. When in doubt, hedge. Sell a portion, big or small is up to you and keep the rest, just in case.

Fundamentally, I believe the fair value of this REIT is closer to 19c and, if YK Shintoku's CMBS were to be successfully refinanced, the fair value would be closer to 20c.  These values assume that the warrants are fully exercised and they are what I think the REIT is worth. What Mr. Market thinks could be quite different.

Related post:
Saizen REIT: Golden crosses.
Saizen REIT: Steady.
Email exchange with a reader on some REITs.