Capitaland: Time to buy more?

I do not have any vested interest in Capitaland but going by the number of emails I have received on whether it is time to buy more to average down, it seems that many are vested in this counter and are still optimistic about its prospects. So, I am doing a TA on this counter out of curiosity.

The negative divergence between higher price and lowering MACD is quite obvious for the period of June 09 to Oct 09 and perhaps even Jan 10. No more higher highs since Jan 10. That was, perhaps, an early warning signal.

A reader asked me if it was time for her to buy more Capitaland shares last evening. I told her I expect more downside today. In confirmation, the low of May 10 at $3.46 was taken out today without any hesitation by Mr. Market. The formation of three black crows now suggests that price could go lower. Some would say that it is more accurately described as two and a half black crows but I am sure the distinction is just academic.

The next low to look at is $3.28 of July 09 and another reader today asked if it is time now to buy some especially if that low were tested. It would take someone very brave to buy in the current conditions, I feel. Could we see $3.28 taken out without hesitation by Mr. Market just like $3.46 was taken out today? Why not?

Isn't there any silver lining? Well, the MFI and RSI have declined into oversold territories. What does this tell us? That the counter is becoming oversold. Nothing more. Doesn't it tell us that the counter could see a rebound soon? No, it tells us that the counter could see a rebound in time but not when. Remember that in very bearish conditions, these indices could stay in oversold regions for a long time.

For people who are dead set on buying some Capitaland shares now, selling if the price rebounds would be a sound strategy. When to sell? At resistance, of course. Each time price rises to test resistance, sellers would come in to sell down the stock. Unless there is a dramatic change in sentiment, this fact is unlikely to change. Connecting the highs of 14 Oct 10 and 6 Jan 11 yields a trendline resistance. This shows a downtrend and where the resistance levels could be if there should be a rebound in time.

What would I do? I would wait for the fire to go out. I don't enjoy the prospect of being burnt. Three black crows (or two and a half) are nothing to fool around with for long holders. So, what am I waiting for? A sign. If the MACD forms a higher low soon, we could be seeing a positive divergence in the making and that is when I might tiptoe into the stock.

Good luck to all who are vested.

Genting SP: Is the uptrend still intact?

I have heard so many accounts of people who went into Genting SP as it was forming new highs in the last three months of 2010 because they did not want to miss out on the action. Here, in my blog, a reader mentioned that he went into Genting SP as well as he saw his friends making so much money from the stock. I hope that most of these people were nimble enough to make some money and close their positions. I said "most" and not "all". This is being optimistic, I am sure.

On 18 November 2010, I sounded an alarm, "The negative divergence between price and the MACD is playing out. With the MACD approaching zero, momentum could quickly turn negative as the lower highs on the RSI suggest weakening buying momentum. If price does not recapture the 50dMA as support, immediate support is at $2 with the next support after that at $1.85."

Also, in my various blog posts regarding Genting SP in the last few months, I kept hinting of further downward movement and I kept mentioning $1.85 as a likely downside target. Is this really going to happen? No one can say for sure but the downward bias is quite obvious.

For anyone who has long position using leverage of some form, this could be a worrisome scenario. A fall from the current $2.07 to $1.85 is a 10% decline. Quite substantial. For those who are vested at higher prices, it could be doubly worse.

These are the support levels to watch:
$2.04 - Short term candlestick support.
$2.00 - Low of 31 January 2011.
$1.92 - Low of 24 November 2010.
$1.85 - Likely downside target.

Remember that these are the supports which I have identified. It does not mean that they would definitely be tested. The question to ask is what would you do if these supports held up or if they were breached?

If you believe the analysis by AmFraser (appended at the end of this blog post) that the uptrend is intact, buying at supports in an uptrend is the way to go. If we look at where the 200dEMA is, the uptrend is intact. However, the 200dEMA is a long term MA. So, we should say that the longer term uptrend is intact but the fall to that long term MA is quite a distance.


Related post:
Genting SP: Bearish engulfing candle.

AmFraser analyst Najeeb Jarhom says recent downward pressure on Genting Singapore (G13.SG) “should not endanger” the stock’s recent uptrend so long as the price holds above the key $1.84-$1.92 breakout points. 
Tuesday, 08 February 2011

© 2011 - The Edge Singapore

CapitaMalls Asia: Pushing it higher.

The counter's share price briefly went above resistance identified at $2.04 to touch $2.05. Closing at $2.01 shows that resistance at $2.00 has been overcome and could turn support. This needs confirmation although volume expanded further too as price moved a tad higher.

Note that the very long upper wick of the candle shows intense selling pressure higher up. If there is follow through in the next two sessions, we could very well see $2.08 or even $2.10 tested although things are looking somewhat stretched. Note also that the MFI is now testing 50% which functions as resistance in such an instance sometimes. I would divest again if price should rise to test $2.08 and $2.10.

Related post:
CapitaMalls Asia: Partial divestment at resistance.

Daiwa Capital Markets keeps its Outperform rating on CapitaMalls Asia (JS8.SG) with an unchanged $2.65 target, as the company builds new properties, and as the house believes the markets have priced in China’s recent curbs on property speculation. The house expects the mall developer to report a net profit of $567 million on Feb. 17.

 
Wednesday, 09 February 2011

© 2011 - The Edge Singapore

Raffles Education: Testing support at 30c.

On 31 January, I mentioned "For anyone who wants to go long on this counter, being patient and waiting to buy some at supports in an uptrend is a good idea. I never like chasing. I rather like waiting for things to come to me."

On 7 Feb, Kim Eng upgraded Raffles Education to a BUY with a target price of 40c as the management affirms its plan to venture into property development in China. Raffles Education is leveraging on its low land cost when it acquired OUC back in October 2007. Raffles Education has obtained approval from relevant authorities to convert about 280,000 sqm of land area in OUC for residential development. It is currently in talks with different interested parties to form a joint venture to co‐develop the site. Based on current achievable selling price, management is confident of generating substantial returns.

Read article here.

The upgrade by Kim Eng might have given the share price of the counter a shot in the arm as a white candle was formed that very day. However, price action has turned bearish since, especially with China's move to up interest rates which could lead to a lower investment demand for real estate in the country.
Read blog post on China's interest rate hike here.

Technically, the massive black candlesticks in the last two sessions were on the back of heavier volumes. The MACD has formed a lower high and is declining under the signal line. A correction is clearly underway. OBV shows that distribution is ongoing while the MFI shows a decline in demand with a lower high.

Looking at the weekly chart, it becomes clearer why Raffles Education's share price is having a hard time clearing 32c. That is where we find the 50wEMA. If we connect the lows from the week of 20 Dec, we get a trendline support which intersects the 20wMA at 28c. This is where strong support could be found if support at 30c should break.

The OBV shows that distribution has been going on since the week of 17 Jan while the MFI continues rising, indicating positive momentum in demand. While there is distribution, longer term demand is still positive.  Buying at supports instead of chasing a rising share price is sound advice.

Related post:
Raffles Education: Correction?