CapitaMalls Asia: Closed at $1.89.

Price closed below the trendline support today at $1.89. I would not advise buying more at this price since the uptrend is compromised. I have turned cautious. However, notice that the trading volume is, once again, very thin on a black candle day. It looks to me to be a continuation of a low volume pull back pattern.

Does low volume mean that price could not weaken further? Definitely not but if we look at the OBV, it is obvious that there isn't any distribution activity. In fact, if you ask me, the OBV has gone up slightly in the last 4 sessions which suggests mild accumulation. This is consistent with what I said in my last blog post that there are bargain hunters out there who are waiting to buy at lower prices.

So, what am I looking out for now? The previous low was at $1.87. This was formed earlier this month. Will price form a higher low at $1.89 and recapture the uptrend later on? Of course, we might have to draw a gentler trendline support too. Or will the price go down further to test $1.83? No one has the answer but with the very low volumes as price pulled back, I do not think there would be any drastic sell downs in the near future. I would wait for the situation to become clearer before making my next move.

Related post:
CapitaMalls Asia: Doji at $1.91.

SoundGlobal: The former E-pure.

I was vested in E-pure when it was 20c a share thereabouts. This was back in early 2009. 

I was convinced that China's drive to keep its economy humming in the wake of the Lehman Brothers crisis would benefit the water infrastructure businesses. 





I was also heavily vested in Hyflux Water Trust at that time from 30c for the same reason.  

Read related blog post here.

E-pure was a Chinese company and was likely to be favored over Hyflux in China while Hyflux Water Trust was a business trust with zero gearing treating water for Chinese industrial estates and had a yield of about 17% at a unit price of 30c. 





I divested E-pure completely by the time it neared 60c a share and watched dumbfounded as the share price went on to form new highs, almost doubling from my sell price of close to 60c. 

Hyflux Water Trust was, of course, privatised a few months ago. 

Read related blog post here.





I have been wondering if I should re-invest in E-pure which has been renamed SoundGlobal for some time now. 

It remained on my watchlist but I simply refused to buy any of its shares at prices higher than 60c. 

That's just the memory effect working and, in this case, it seems to have paid off. Related post here.





I just told myself that if the price did not come down to more reasonable levels, there are always other investments out there.

Since hitting a high of $1.04 on 7 April 2010, this counter has not formed a higher high. It is currently hugging the lower Bollinger band as it fast approaches the lows of early September 2010 at 70c a share. 

The obvious difference is that the low of early September 2010 was part of a bottoming process and the MACD was getting ready for a bullish crossover with the signal line. 





The MACD is now declining rapidly in negative territory as its distance with the signal line widens. This is very bearish.

Having said this, both the MFI and RSI are in oversold territories and 70c, being a low that was the price of a successful bottoming process could provide some support. 

Whether it would hold up is another question. I would not speculate on the strength of the support here.





When to accumulate? 

We want to look out for possible positive divergence between price and the momentum oscillators or volume. 

We want to look out for the downtrend halting and clearer signs that price is breaking out of downtrend. 

I like to use Fibo lines in such an instance to see how low price could go in case support breaks. Support is, of course, at 70c. 





Looking at the chart, the three golden ratios are at 62c, 59.5c and 57c. Buy some at those levels? 

I might if the other signs are encouraging.

CapitaMalls Asia: Doji at $1.91.

CapitaMalls Asia broke the trendline support today with price reaching $1.89 at one point before pushing back up above the trendline at $1.91 where it closed. For those who have been following my analyses so far, the question is how are things looking now?

Well, the weakness in price today brought out the bargain hunters as they pushed price back up to $1.91 and volume expanded modestly in the process. This suggests to me that at lower prices, buyers are waiting. However, it is quite obvious that the descending 50dMA is a strong resistance and people are probably just waiting to see if it could be overcome convincingly in future sessions. Breakout traders are waiting, I am sure. The 50dMA is currently at $1.94. Expect a wave of buying if resistance is taken out.

Volume has remained thin as trendline support is tested. Although I remain optimistic that price could move higher in the near future, that's just me. We really have to wait and see. I am no longer accumulating at the current support as I already have a sizeable position. We could very well see the counter trading sideways too.

Related post:
CapitaMalls Asia: Closed at $1.90 support.

Suntec REIT: Broke resistance.

I was just having a chat with Nick in LP's cbox not so long ago regarding REITs and their fair values. Nick mentioned that REITs with high gearing have little growth prospects and therefore will not see their unit price go up (i.e. yield will not compress). I think he mentioned that the stock market is rather efficient when it comes to REITs.

In theory, I agree with Nick. However, I mentioned that it is hard to be sure since how much a REIT should trade at is very often a matter of sentiments, this is the same with stocks. Certain REITs are small and are not covered by analysts. They could also be too small to interest institutional investors. Their unit prices could continue to languish even if they provide decent yields with relatively safe gearing. Certain REITs are obviously overvalued and give very low yields with relatively high gearing but they continue to enjoy much attention. For example, I would not bother buying into CMT. The yield is so unattractive.

Nick used Suntec REIT as an example of a REIT with high gearing and therefore it did not see its yield compress much. However, the last session saw Suntec REIT's unit price close at a high of $1.61, forming a wickless white candle, on the back of heavy volume. Yield is compressing and quite significantly too. The last time this REIT was at $1.61 was in Jun 2008!

Could we see this REIT's unit price move higher? A wickless white candle coupled with heavy volume is bullish. So, expectation is for price to move higher. However, the MFI is nearing overbought territory. In case of a pull back, it would be interesting to see if $1.58 could be resistance turned support.

Mr. Market is always right and he enjoys his hat tricks.