Golden Agriculture: Black spinning top.

Golden Agriculture started the day bullishly enough but ended the day at 72.5c after touching immediate support at 72c. A black spinning top was formed, suggesting market indecision. This could be a reversal signal as indecision in an uptrend is not good news for bulls.

Support is currently provided by the flat 100dMA. With the momentum oscillators in their overbought territories, a pull back is not unlikely. Breaking support at 72c could bring out the sellers. However, the steeper uptrend which started on 15 March would still be intact if its trendline support holds up and this would be at 70c or so in the next two sessions. If this were to fail, the next supports are at 68.5c (50dMA) and 66c (200dMA).


Related post:
Golden Agriculture: Overcame resistance at 72c.

CapitaMalls Asia: $2.17 target price?

I remember that someone told me that DBS Vickers had a target price of $2.51 for CapitaMalls Asia and wondered why the share price of this company has been so weak. Well, valuation is a subjective exercise.

For example, OCBC Investment Research published a report with a target price of $2.17 for CapitaMalls Asia on 7 April 2011. Yes, this was just a few days ago. Does it mean that the share price is going to hit $2.17 in the next few days? It could happen, of course, but I won't bet my bottom dollar on it.

Having said this, it is always good to see what others have to say and OCBC Investment Research did raise some good points:

For CMA, China is the key growth market. CMA has three key operational advantages in China: Firstly, it has the ability to leverage on its extensive tenant network. Second, it has demonstrated diligence and success in using asset enhancement initiatives (AEIs) to grow its net property income (NPI). Thirdly, there would be a trend of decreasing dependence on anchor tenants as malls mature and this would further boost NPI.

CMA’s business model in China is a resilient one due to its focus on mid-high income segment instead of the volatile high growth-high margin luxury segment. While its downside is sheltered, CMA is poised to benefit from the expected steady growth in China’s retail consumption and middle class population.

Read full report here.

Related post:
CapitaMalls Asia: Strong uptrend emerging.

Golden Agriculture: Overcame resistance at 72c.

Golden Agriculture overcame resistance at 72c. This is a many times tested resistance and it is also where the 100dMA is approximating. Volume was not exceptionally high which makes the breakout somewhat less convincing but a breakout is a breakout and should be treated as such.

In the next session, we could see breakout chasers buying up the shares of  this counter. This could initially push price higher to close the gap formed on 20 January 2011 and this would be the immediate target of 76c. In time, we could see price overcoming gap resistance with an eventual target of 80c.

For anyone who might want to take a chance that the counter would go higher in price, a smallish hedge is wise since momentum oscillators are all in their overbought regions. With trading volume unimpressive, a pull back to retest supports cannot be ruled out.  Resistance turned support at 72c, unbroken if retested, would be a more ideal entry price than buying at a high.

If a long position were to be initiated at or closer to 72c successfully and if price were to move higher, this would probably be more of a short term trade. Why? Look at the weekly chart for an idea of the longer term picture. From the week of 21 February 2011 to the week of 4 April 2011, weekly volume has been reducing as price moved higher. A negative divergence? You got it.

If we scrutinise the MFI and the RSI, we see lower highs and lower lows as well. So? Price has been rising on weaker momentum. It does not mean that price cannot move higher, it just means that the chances of a breakdown is higher since the breakout is weaker. Being nimble is important here and less greed could be a good thing too.

CDL: A target of $14.31?

In the weekly email from The EDGE, "CLSA has upgraded City Developments to a buy in a 100-page property report dated Apr 7.... has a target of $14.31 for the stock against ... RNAV (Revised Net Asset Value) estimate of $16.84."

The stock closed at $11.76 in the last session. So, $14.31 is some 22% higher! That is some upside! What did I do? I decided to look at the charts.

It is quite clear that the rebound from 17 March has come to an end and price had been moving sideways the whole week. Resistance is at $11.78 or so and immediate support is around $11.57. Although price is sideway moving, OBV has been creeping higher which is a sign of accumulation. ADX with both +DI and -DI are flat. There isn't any trend per se. However, with +DI above -DI and with the MACD rising in positive territory, there is more reason to be optimistic than not.

Any chance of a pull back? Well, price moved quickly up from a low of $10.18 on 17 March for a gain of 15.5%. This is quite impressive but the MFI and RSI are both bordering on overbought while the stochastics is high in overbought territory.

Price is currently facing resistance provided by the declining 100dMA. Unless this resistance is overcome convincingly, chances are there will be a pull back. A pull back to $11.20 would be more of an ideal price to initiate a long position although I also see a possibility of $11.00 being tested for support in more volatile conditions.