Charts in brief: 16 Jul 10 (Part 3).

LMIR: Although falling to 48.5c today means that price has fallen below the downtrend resistance drawn from the high of 11 Jan, price has been falling on lowering volume in the last few sessions.  This is comforting as it means a lack of distribution. This is confirmed by the OBV. 48.5c is resistance turned support for now.

NOL: $2 is an important resistance turned support formed by the merged 20d and 100d MAs. If this were to break, price could fall to $1.94 next. What looks like a symmetrical triangle has formed. Breaking to the downside would find initial support at $1.84, the 23.6% Fibo line which coincides with the 200dMA. Breaking to the upside gives an initial target of $2.22.

Raffles Education: Since hitting a high of 34c on 12 July, there has clearly been distribution activity as suggested by the declining OBV. Price is now supported by the 20dMA at 29.5c. The decline in price in the last few sessions has been accompanied by declining volume and this low volume pullback could be a chance for some brave punters. The MFI is still uptrending and if it were to bounce off its support, price could move higher once more.

SPH: OBV rising strongly, suggesting heavy accumulation. MFI bordering on overbought. MACD rising strongly in positive territory. All these as price closed at $4.08, the target I identified not too long ago. Volume is lower which suggests that price moved higher because there were lesser sellers.  People are probably waiting to see how high it can go.

Related posts:
SPH: BUY calls aplenty.
LMIR: Recovering for real?
Raffles Education: A spectacular white candle.
NOL: Downtrend.

Charts in brief: 16 Jul 10 (Part 2).

FSL Trust: 42c seems like a difficult resistance to overcome at this point in time. This is gap resistance and resistance provided by the declining 50dMA at the same time. RSI has also moved higher up into the overbought region while we see a sell signal on the MACD histogram.  Volume has been reducing as price moved higher. Without an expansion in volume as price moves higher, it is unlikely that 42c could be taken out in the next session. Unless there is some positive newsflow soon, chances of a pullback in price are higher. With all the higher lows formed in the MFI and RSI, the momentum oscillators are clearly uptrending and I expect any pullback to find initial support at 40c.

Genting SP: First touched on 29 Jun, $1.20 has proven to be a tough nut to crack. Volume has been reducing since that day as price stayed above the 20dMA. If we look purely at the 20dMA, the short term uptrend seems to be intact. However, if we look at the MACD, we see a bearish crossover with the signal line on 2 Jul and since then the MACD has been declining beneath the signal line. MFI, RSI and OBV have all flatlined.  There is clearly no trend where these indicators are concerned.  Pay attention to the 20dMA which should be at $1.17 in the next session or so.  If this is breached, price could move lower rapidly.

Healthway Medical: Since price touched a high of 21c on 16 Jun, the MFI has been in decline.  This suggests a weakening demand. However, we do not see a similar decline in the OBV.  In fact, the OBV has gone up which suggests that there is more accumulation than distribution. There is some underlying support and even though demand has weakened, there is little selling pressure.  Immediate support is at 18.5c.

K-REIT: A very nice up day with a very nice white candle as volume more than doubled from the previous session.  Price closed at $1.22, the high of 11 and 12 Jan.  if momentum keeps up and price action goes parabolic, I won't be surprised if we see $1.34 (161.8% Fibo line). At this point in time, it is still a fantasy.

Related posts:
FSL Trust: The skies are clearing up.

Charts in brief: 16 Jul 10 (Part 1).

Golden Agriculture: Broke resistance at 55c and powered higher.  Volume almost quadrupled! If the momentum keeps up on Monday, we could see price attempt to go higher.  Beyond 57c, the next resistance is at 58.5c.  Support at 55c.

Palm stocks rally; Demand to rise: Morgan Stanley
Friday, 16 July 2010

© 2010 - The Edge Singapore

AIMS AMP Capital Ind. REIT: It is obvious that this counter is trapped in a range between 21.5c and 22c. I remember saying that if the MFI declines and price remains at 21.5c or higher, it is a good sign.  Good because it shows that there is a lack of sellers even as demand declines. Well, the MFI is now in oversold territory and price has stayed at 21.5c to 22c so far.  Of course, the MFI could stay oversold for a while more but if we look at the shorter term 20dMA and the longer term 100dMA, they have one thing in common.  They are both rising, if gently. When there are no more sellers at this level, we might see price rise to the next bracket.

CapitaMalls Asia: Looking somewhat precarious here. Prices are testing the support provided by the third fan line.  The uptrend has weakened from the initial fan line and it now looks exhausted. OBV shows clear distribution since price peaked on 23 Jun. From Monday to Thursday, volume expanded as price dropped.  Today, volume is lower and this is probably in response to the slightly oversold condition as suggested by the MFI.  Immediate support at $2.04 and immediate resistance at $2.10.  Closing below $2.04 in the next session would break the uptrend support and the price is likely to move lower from there.

Courage Marine:  The BDI's decline seems to be slowing but at 1,700, it is pretty darn low. From the RSI, it seems that the decline in price has some momentum.  However, the MFI has dipped into oversold territory and this might put a lid on selling although demand is obviously weak.  The OBV does not show any sign of strong selling. I did suggest that this counter's resilience stems from the company having a debt free balance sheet. In difficult times, companies with strong balance sheets are more likely to survive. Immediate support at 18.5c.  Strong resistance at 19.5c, which is where we find the confluence of the 20d and 200d MAs.

Related post:
Golden Agriculture: CPO price spiked 2.44%.

Golden Agriculture: CPO price spiked 2.44%.

CPO price spiked 2.44% today to close RM58 higher at RM2,439.  The impressive appreciation aside, what is more significant is that the downtrend resistance established since the double top formation I have talked about before has been broken!  Is this the beginning of a sustained recovery or is the decline simply shifting to a lower gear?  Only time will tell.

Golden Agriculture's share price has yet to react to this bit of news or would it react at all?

From 26 April, we can draw two fan lines.  Price broke out of the first fan line resistance (in orange) and later on broke out of the second fan line resistance (in red). Since then, price seems to have moved into a range with resistance at 55c, provided by the flat 100dMA, and support at 52c, provided by the gently rising 200dMA.

Although the OBV is flattish, the MFI, which accounts for both volume and price, has broken out of its downtrend. So too has the RSI.  The halt in the decline of the MFI suggests that we are seeing a return in demand but this is probably balanced by the presence of sellers which is why the OBV is flattish. The dojis formed in the last two sessions suggest indecision and this reinforces the idea that we are seeing a delicate balance between the buyers and sellers here.

The MACD is gently rising in positive territory which indicates that the momentum is positive. So, although the current situation is still iffy, there is a slight upward bias observed. In the short term, the 100dMA resistance might be hard to break.  Look at the stochastics and we will see that it is entering overbought territory.  Upside could, therefore, be limited at 55c.

Fundamentally, if CPO price continues to recover while the share price of Golden Agriculture trades sideways, we might have an interesting proposition to go long here.  Buy in at 52c? Maybe. I am keeping an eye on this one.

Related post:
Golden Agriculture: Rebounding.

Saizen REIT: An update.

Saizen REIT has seemingly gone into hibernation.  For more than a month, its price has fluctuated between 16c and 16.5c. The daily MAs have all flatlined. Some may wonder if I am still interested in this REIT.  Well, I am still very much interested in this REIT.  It remains one of my top three investments in the stock market.  Regular readers of my blog would know that I believe it to be a very good investment with more than a fair bit of potential to deliver an attractive yield and possibly an even more attractive capital appreciation.

Today, the technicals are rather interesting.  Of course, with volume so thin, it could just be a mirage but let us do this just for fun, if nothing else. The MACD histogram shows a buy signal on a day that saw the formation of a dragonfly doji. The MFI, which has been impeded at 50% for some time, has finally risen above this resistance since falling below in late May. This suggests a strengthening demand, however slowly it took to develop. OBV is flat.  No obvious distribution or accumulation. In a rangebound situation, the stochastics could be telling and, now, we see it rising from the oversold region. 

There is only one word for investors of Saizen REIT: patience.  Those lacking in this virtue should not be vested in this REIT.  For the record, I have been vested since October last year.  I have done my FA and I believe this to be a gem.  I will continue waiting.  Patience, I believe, will be rewarded.

Related post:
Saizen REIT: CEO bought more warrants.

MIIF: Very high volume up day.

MIIF had a very high volume up day, forming an impressive white candle to close at 52.5c. In the last 12 months, the only time volume was higher was in October 2009.  MACD histogram has a buy signal as momentum oscillators turned sharply upwards. Immediate support is a band between 49.5c to 50c.  Drawing an uptrend support from the low of 44.5c hit on 7 Jun approximates the position of the 20dMA which establishes this MA as an important support to watch. Any upside targets? Using Fibo lines, 138.2% approximates a many times tested candlestick resistance at 55c.  So, I expect this to be a strong resistance.  If this is taken out, we could see price go higher to 56.5c, the 161.8% Fibo line.

MIIF +5.1%; Under pressure to return cash: BGC Partners
Tuesday, 13 July 2010

© 2010 - The Edge Singapore

SPH: BUY calls aplenty.

SPH: A slew of BUY calls from brokerages on the back of sterling results for 3Q10 sent the share price of SPH higher today. $3.95 resistance is now support. Up channel resistance has been broken. MFI and RSI continue their upward trends.  OBV shows continuing accumulation. Sell signal on the MACD histogram negated. Volume more than doubled as price touched a high of $4.00 today and closed 5c higher than the previous session at $3.98. Same question: $4.08? Looking more probable now. Punters who are considering a punt could possibly have an ideal entry point at $3.95 if this support is tested again.

Related post:
Charts in brief: 12 Jul 10.

Charts in brief: 12 Jul 10.

SPH: A sterling set of results with a 29.9% rise in 3Q net profit to $164.6 million from $126.7 million for the 3Q ending May. Could this push price to close higher tomorrow? Immediate resistance is at $3.95.  Closing higher than $3.97 would break the channel resistance and price could go much higher then.  With momentum still trending upwards, could we see $4.08? Perhaps.

Golden Agriculture: With the price of CPO firmly in a downtrend, the fundamentals are not looking up for Golden Agriculture. Momentum oscillators are downtrending and OBV is somewhat flat. Volume has, generally, been reducing since price recovered from the low formed on 24 May at 50.5c. We might be seeing the formation of a symmetrical triangle and there is a strong probability of price going lower. Immediate support is provided by the 200dMA at 52c.

Golden Agri target cut to $0.59 by Deutsche Bank
Monday, 12 July 2010

© 2010 - The Edge Singapore

LMIR: I think Mr. Market heard me.  Closing at 49.5c means that the downtrend resistance is broken. Momentum oscillators have similarly broken out of their downtrends. We could see the price testing the next resistance at 50.5c eventually if this keeps up.

Raffles Education: It might just turn out to be a short lived rally but a rather impressive one nonetheless. Price broke the downtrend resistance by touching a high of 34c before closing at 32.5c, forming an inverted cross which is bearish. Volume is also lower today as price attempted to move higher.  However, there is no negative divergence with the momentum oscillators yet. Could we see price trying to push higher again tomorrow? Perhaps. Immediate support is now the resistance turned support 50dMA at 32c. Could this hold up? It has to if price were to move higher.

NOL: A bearish engulfing candle. Frightful but the volume is much reduced on such an ominous black candle day. Therefore, is the counter just taking a breather? If the immediate support which is provided by the merged 20d and 100d MAs at $2 holds up, this could possibly be the case. If the support breaks, the next support is at $1.94.

NOL downgraded to Sell by Citi; Cuts target to $1.70
Monday, 12 July 2010

© 2010 - The Edge Singapore

Related posts:
LMIR: Recovering for real?
SPH: Up channel?
Raffles Education: A spectacular white candle.
Golden Agriculture: Rebounding.

FSL Trust: The skies are clearing up.

Price stayed above the 20dMA in the last three sessions. The 20dMA, currently at 38.5c, is now resistance turned support. I decided to look at the 20dEMA as well.  The EMA gives greater weightage to recent prices and could sometime explain why price could not move past a certain point in the short term.  The 20dEMA is at 39.5c and seeing the price closed at 40c in the last two sessions is comforting.  However, the volumes were very low and the durability of the recent appreciation in price is questionable.  In fact, since a spike in volume on 18 Jun when the MACD made a bullish crossover with the signal line, volume has been reducing.

Let us look at some other technical indicators to gain more insights. The MACD is rising and pulling away upwards from the signal line in negative territory. The rising MACD is due to the upturning 20dMA, reversing its decline. Although this seems promising, the MFI has gone below its uptrend support due to the very thin volume in the last session as price stayed at 40c. Immediate demand seems to have reduced and some suspect that market participants are waiting for greater clarity.

Although the technicals are not totally inspiring, Mr. Market might spring a pleasant surprise on us and a further move upwards could see the gap filled at 43.5c which in the next session coincides with the declining 50dMA. Immediate support is a band from 39.5c to 38.5c. For anyone who wishes to buy into FSL Trust, technically, it would seem safer to do so now.

Related post:
FSL Trust: Above the 20dMA.

LMIR: Recovering for real?

In the last session, LMIR touched 48.5c, a lower high formed on 22 Jun. Is LMIR's unit price recovering for real and will it go higher? Can't say for sure but recent technicals are supportive of a more bouyant price as we see the MFI, a momentum oscillator that aggregates volume and price, forming higher lows since hitting a low on 21 May. However, trading volume has declined quite a bit in the last four sessions as price rose. Volume is the fuel of a rally and if it dries up, gravity could do its job.

If we look at the longer term trend, MFI has been forming lower highs and this trend suggests reducing demand.  OBV has been forming lower highs which suggests that there is greater distribution than accumulation.  In fact, the downtrend which started on 11 Jan 10 is still intact.

I blogged about my move to reduce some exposure in LMIR about a month ago at a lower high of 47c, recognising the longer term downtrend. On hindsight, that was a bit too soon and I should have used the long term downtrend resistance as a guide instead.

What is my plan now? Frankly, I do not know why the market dislikes LMIR apart from a suspicion that maybe it is applying an "Indonesian discount" to the REIT. I still like the fundamentals but the technicals are wanting. 47c is resistance turned support but it could become resistance again as the 50dMA is still declining. LMIR is probably on its second fan line (which I have drawn in orange color).  Both fan lines have their source at the low formed on 25 May at 42c. We could possibly see the formation of a third fan line in time which suggests that price could touch a low of 45.5c once more. This is a support shared by both fan lines and history might repeat itself.

I still have a large investment in LMIR despite the reduction in exposure I just mentioned. Although the technicals are pointing towards a higher probability in the continuation of the longer term downtrend, a significant increase in volume together with price moving higher would negate this.  Of course, there is no way we can tell if this would happen but it could.  We can only wait and see.

STI: 2,980 next?

How different things look after just one week. The much talked about head and shoulders pattern seems to be turning elusive. 2,400 points on the STI seems to have become just a horror story told to scare the uninitiated.  These are things which even experienced chartists thought quite likely, not just some amateur TA practitioners.  This is another example of how everything works on probabilities, never absolutes.

The MACD averted a bearish crossover with the signal line on 1 July.  On 6 July, a bullish engulfing candle was formed and the MACD started pulling away upwards from the signal line, another bullish sign. Now, a white candle is pushing the upper Bollinger band and the bullishness could continue to test 2,947 next or thereabouts as indicated by the 123.6% Fibo line and, possibly, 2,982, the 138.2% Fibo line. Could it go higher to retest the high of 3,037 achieved on 15 Apr? Who can say for sure?

2,890 is now immediate support as the 20dMA seems set to form a golden cross with the 100dMA next.

Related post:
STI: 2400 is still a real possibility.

SPH: Up channel?

Although it formed a black candle, SPH is still trading above the eventual target price of $3.88 I set for the mini double bottom formed in May/June earlier. It is also trading above a cluster of MAs which should now provide some support instead of resistance. The next target is $4.08 if the mini double bottom is a valid pattern.

MFI is in an uptrend and this suggests strengthening demand. So, although there is a sell signal on the MACD histogram, we could be seeing the beginning of an up channel. If this pans out, then, buying at channel support and selling at channel resistance could yield some nice gains. The channel support is now at $3.80 or so.

Of course, if price goes parabolic next week, SPH could hit $4.08 very quickly.  Then, I would sell more of my shares.  A parabolic move in price is mostly unsustainable.

My plan? If price drops to the cluster of MAs, approximating the trendline support, buy some.  If price goes higher and hits the $4.08 target, sell some.

SPH off 0.5%; Eyes on 3Q10 results, 2Q10 GDP. Investors pausing for breather while awaiting media group’s fiscal 3Q10 results, guidance for coming quarters due Monday. Some analysts expect more upside for stock pending Singapore’s advance 2Q10 GDP data due July 14.
Friday, 09 July 2010

© 2010 - The Edge Singapore

Related post:
Charts in brief: 5 Jul 10.

Charts in brief: 9 Jul 10.

NOL: This counter touched a high of $2.07 which is the initial resistance identified earlier. Volume is much lower today as it closed at $2.06, 5c higher than the previous session. The MACD has crossed the signal line and returned to positive territory at the same time. OBV continues to climb, suggesting further accumulation is taking place.

What has formed could be a symmetrical triangle. With the negative divergence between price and volume largely corrected, we could see a breakout in the next session which could eventually see price testing the high of $2.35 touched on 15 April.  Before that happens, expect multiple resistance along the way.  In case price fails to move higher, immediate support is at $2.00.

Genting SP: Continues to be resisted at $1.20. Volume is declining. MFI which accounts for price and volume is declining and forming lower highs.  Demand is falling.  OBV is tired looking. The Bollinger bands seem to be in the early stage of narrowing.  Could the price move higher? With the 20dMA still rising, the shorter term uptrend is intact. It remains to be seen if the 20dMA could push the price higher. This is not for the faint hearted.

Genting Singapore target raised by UOB-KH to $0.97. Still, UOB KayHian is keeping its Sell call on view valuations pricey. Broker says non-gaming operations like Universal Studios Singapore theme park will continue to lose money in near term.
Friday, 09 July 2010

© 2010 - The Edge Singapore

Related post:
Charts in brief: 8 Jul 10.

Raffles Education: A spectacular white candle.

Volume expanded nicely as a wickless white candle was formed. Price broke resistance at 29c as provided by the 20dMA and closed at 32c resistance, provided by the 50dMA. Is this the extent of the upmove or would the price move higher? The RSI has been forming higher lows of late.  The MFI too.  Momentum and demand are positive in the short term but it could be a reaction to the oversold situation.  

If this is just a rebound, we could see the downtrend resistance at 33.5c capping further gains.  The MACD is rising but still in negative territory.  So, the possibility that this could be a short lived rebound cannot be discounted.

This counter has been in a downtrend since it peaked in Jun 09. Every single rally attempt was capped by downtrend resistance. Looking at the MFI over a longer period, we would realise that it has been forming lower highs since early this year. This affirms a longer term weakness in demand.  So, for people considering a punt, be careful.

We want to see volume expand more significantly, taking out 33.5c resistance, if a reversal should take place.  This would break out of the shorter term downtrend resistance.  Next resistance level would be at 35c then.

Tea with AK71: Hope.

I coined a phrase "Hope Analysis" aka "HA" a few years ago amongst my investor friends. This is a word play on FA and TA. In those days, I was a FA guy and not a very good one too. Did not know anything about TA yet.  Then, there were people who would buy stocks based on gut feel and hope for the best.  These were the people whom I called HA practitioners. Cheeky of me, I know.

Actually, there is nothing seriously wrong with HA.  We are human beings after all and there must always be hope or else life would be bleak indeed.  I remember receiving pamphlets in my letterbox when I was much younger with words in big bold letters: "There is Hope!".  Ok, ok, I am being cheeky again.

When we use FA, we can only hope that we have done a good, thorough job of it. We can only hope that things would turn out the way we think they should.  When we use TA, we might also hope that things would go the way we think they should.  Of course, some hard core FA or TA practitioners would say that hope should not be in the picture.  Some would say that FA is about skills and foresight and TA is emotionless and we should just let the charts talk.

More enlightened practitioners would realise that, whether FA or TA, there are no absolutes.  Everything is about probabilities.  The closest we can get to being absolute is therefore 99.9999%.  Ok, you might want to add more 9s if you like to infinity but you get the point.  99.9999% is as fine a gold bullion as we can get as well.  I doubt we can find 100% pure gold in this world.  Impurities? You bet. They are part and parcel of life.  We can reduce impurities but it is near impossible to eliminate them.

What about FA plus TA? Well, it is just another approach.  I dare say that HA has a place too. Good luck.

A movie: "The Sorcerer's Apprentice"

Cool! I must try to catch this one:

Charts in brief: 8 Jul 10.

CapitaMalls Asia:  Is this counter just rebounding from oversold levels or is this the beginning of an uptrend? The recent low of 6 Jul at $2.02 helped to establish the third fan line.  This is a gentler uptrend compared to the earlier two fan lines.  All three fan lines originate from the same low of $1.91 achieved on 7 May. Distribution reached a peak on 2 Jul as volume expanded on two consecutive black candle days. The lower volume on the two black candle days compared to higher volume on up days after that suggests that we have reached a floor and price is turning up. Volume expanded today as price moved higher to close at $2.07.  Forming a doji, however, suggests that the buying lacks conviction. Immediate resistance at $2.10 and if momentum stays positive, we might see $2.13 tested too.

CapitaMalls prices Malaysia Trust at bottom of range. CapitaMalls Malaysia Trust’s units were offered to institutions at 1 ringgit apiece, while shares were sold to individual investors at 98 sen each, it said. The 852 million ringgit ($369 million) initial public offering, the second- biggest in Malaysia this year, was earlier priced at between 1 ringgit and 1.10 ringgit a share for large investors.
Thursday, 08 July 2010

© 2010 - The Edge Singapore

Golden Agriculture: Negative divergence between price and volume is quite obvious to me. Today's white candle has closed above the downtrend resistance. However, this was achieved on much lower volume. Is this sustainable? Theoretically, no. Next resistance at 55c. CPO continues its downtrend and is at RM2,290 today. The double top achieved earlier this year at about RM2,700 could see price of CPO correcting to about RM2,100 in time.  This is not good for Golden Agriculture's bottom line.

Genting SP: Continuing its levitation act despite an obvious negative divergence between price and volume. MFI, which accounts for price and volume, is in a downtrend.  Demand has fallen but price remains quite bouyant. Unless volume expands significantly and the resistance at $1.20 is taken out convincingly soon, this is a sign of churning and perilous for anyone who chooses to go long now. A retracement would find initial support at $1.12.

Genting Singapore gains as Merrill Lynch raises price estimate
Thursday, 08 July 2010

© 2010 - The Edge Singapore

NOL: Volume expanded tremendously as price gapped up and formed an impressive white candle. Breaking resistance formed by a confluence of MAs is likely to see price moving higher.  I see initial resistance provided by the downtrend resistance at $2.07 in the next session.

NOL +4.2% on Maersk’s revised 2010 outlook. NOL has already flagged losses for 1H10 after staying in the red for whole of 2009, but improving operating conditions suggest company may return to profitability in 2Q10.
Thursday, 08 July 2010

© 2010 - The Edge Singapore

LMIR: Technically, I still see a negative divergence between price and the MFI. The doji formed today could even be the set up of an evening star pattern. Having said this, if the uptrend support holds up if next tested, it could be a sign of firm underlying support and the rising OBV since price touched a low of 42c on 25 May does suggest that there is more accumulation than distribution going on.

LMIR: Gravestone doji.

After a valiant attempt to break out of resistance in late June as price hit a high of 48.5c, LMIR has retreated to close at 46.5c today, forming a gravestone doji in the process.  This took place after a session of high volume buy ups yesterday when a white candle was formed but ultimately, the price was resisted by a combination of the 20d and 50d MAs at 47c.

It is clear from the OBV that since hitting a high of 48.5c on 22 Jun, there has been greater distribution than accumulation of units of LMIR.  The RSI has been forming lower highs which suggests a sustained momentum in the price decline. The MFI enjoyed a brief bump upwards yesterday as volume rose on a white candle day. It has, however, turned down again today. The MACD is below the signal line and looks set to cross into negative territory. The technicals are, undoubtedly, bearish.

FSL Trust: Above the 20dMA.

FSL Trust, for the first time since 23 April, closed above the 20dMA which is currently at 38.5c. Bollinger bands are squeezing which indicates the possibility of a big move in either direction.  In this case, chances are the move would be positive.

Momentum oscillators continue to rise.  The MFI has formed another higher low as it rises above 50%.  Demand is back. RSI too formed a higher low which suggests that price is rising at a good pace. OBV is flattish which suggests a lack of heavy distribution.  Perhaps, the sellers are done selling.  MACD continues to rise above the signal line but is still in negative territory.  This could just be a rebound.  Although volume increased today, it is rather modest compared to the volumes on the black candle days which sent the price down to where it is today. Volume will have to expand more meaningfully in future sessions to try and push the price higher.

The low of 11 Jun at 36c could indeed have been the bottom.  However, we need confirmation in the next session that the 20dMA at 38.5c is indeed resistance turned support. Once confirmed, price could possibly rise to close the gap at 43.5c which approximates the declining 50dMA if momentum remains positive.

Related post:
FSL Trust: Land ahoy?

Golden Agriculture: Rebounding.

Golden Agriculture dipped briefly below the 200dMA before moving higher to close at resistance provided by the 50dMA at 53.5c.  This coincides with the trendline resistance which connects the high of 26 April at 62c and the lower high of 21 Jun at 55.5c.  This is the second downtrend. The first one connects the high of 26 April and the lower high of 13 May at 56.5c.  The second downtrend is gentler than the first and less dramatic.

Although trading volume increased today, it is not very heavy.  This might just be a rebound but if we believe in fan lines, price could move higher to break the trendline resistance to retest 55c as resistance.  This resistance level is quite obvious from past candlesticks and it is also where we find the flattish 100dMA. If the rebound is strong, price could even go up to 56c to retest resistance established earlier in May when the lower high of 56.5c was formed.  That, I believe, might be the extent of the current upmove.

MFI, a momentum oscillator which accounts for both price and volume has been in decline and this suggests a weakening demand. Price is probably moving up due to a lack of sellers and not because of an abundance of buyers. OBV is up which suggests that some accumulation is happening and there is some support. Downside could thus be limited.

Price of CPO is still entrenched in a downtrend and it does not look like the situation would be improving anytime soon.  The fundamentals are not strong but the share price is enjoying a bounce.  Immediate support at 52c and immediate resistance is at 53.5c.  If resistance is taken out, next resistance is a band from 55c to 56c.

Charts in brief: 5 Jul 10.

NOL: MFI did not manage to recapture 50% as support and its continuing decline suggests a lack of demand.  RSI similarly did not manage to recapture 50% as support and this suggests the speed of decline in price is relentless. Downtrend in price is intact. Since forming an inverted hammer on 21 Jun, volume has increased as price declined.  In the last two sessions, trading volume has fallen somewhat. This might or might not be a temporary respite.  I see support at the flat 200dMA, $1.83, and resistance at a confluence of MAs, $1.98.

SPH: Price touched a high of $3.88 again. MFI is rising sharply.  Demand is strong.  OBV is rising.  Accumulation is ongoing. Volume is, however, a tad lower today.  Breaking $3.88 could possibly see a target at $4.08 reached. Resistance at $3.95, the lower high formed on 10 May, would have to be taken out first, in such a case.

Metro: This counter has been in a downtrend since it peaked on 7 Jan, touching a high of 90.5c. Since May, indicators are showing some strength returning.  MFI has been climbing since late May.  OBV has been rising since late May.  RSI has been rising since early May.  The peak in distribution happened on 25 May as an ugly black candle was accompanied by a huge spike in trading volume.  A low of 73.5c was touched in two separate sessions on 21 May and 7 Jun.  That likely is the immediate support for now.  With momentum oscillators bouyant, it is unlikely that 73.5c would be taken out anytime soon.  In fact, the 20dMA has been rising gently since middle of June. The trend is still down but the worst might just be over, for now.

Related posts:
NOL: Downtrend.
Charts in brief: 2 Jul 10.

K-Green Trust: A stable source of passive income.

I spent some time recently looking into the latest trust to list in the stock market here: K-Green Trust (KGT). This is an infrastructure business trust listed by Keppel Corporation recently. Initially, it only has three assets:

1. Senoko Waste-to-Energy Plant

(Concession period: 15 years from 1 Sep 09)

2. Keppel Seghers Tuas Waste-to-Energy Plant

(Concession period: 25 years from 30 Oct 09)

3. Keppel Seghers Ulu Pandan NEWater Plant

(Concession period: 20 years from 28 March 07)

The Waste-to-Energy plants treat close to half of Singapore's incinerable waste while the NEWater plant is one of Singapore's largest.

The main attraction of this trust is the stability of its non-cyclical cash flows and a lack of counter-party risks as its customers are NEA and PUB.

Using the usual metrics for analysing trusts, we find that KGT has zero gearing, has an estimated dpu of 7.82c (which translates into a yield of 7.38% based on the last traded price of $1.06) and is currently trading at a 5.5% discount to its NAV of $1.12. Although the small discount to NAV is unattractive, the zero gearing is.  There is room for KGT to gear up to, say, 40% and improve its dpu in time.

Stable cash flow, low risk and room to grow.  This sounds like a good addition to my passive income portfolio. It diversifies my income stream and injects a higher level of stability at the same time. The lower yield is acceptable because of its debt free balance sheet.  When a balance sheet is heavy in debt, the risk is higher and, consequently, I would demand a higher yield.

I would like to buy some units of KGT but how much would I pay? On its first day of trading, KGT started off at $1.17 and hit a high of $1.33 and closed at $1.11. Usually, I would depend on TA here but being so new in its listing, four days old, to be exact, TA is impossible. However, we can see that it reached a low of $1.00 on 1 Jul and formed a white candle with a long upper wick on 2 Jul as it closed at $1.06.  This suggests some selling pressure.

Why the selling pressure? If we remember that KGT units were actually given to existing shareholders of Keppel Corporation as a special dividend, the reason becomes apparent. Some shareholders are monetising their "dividends".  If this continues to play out and if the buying interest does not strengthen to counter balance the selling pressure, KGT unit price could go lower.

I would be quite happy to collect some units at $1.00 which would give a yield of 7.82% to begin with.

K-Green Trust rated hold
Monday, 28 June 2010

© 2010 - The Edge Singapore

China Hongxing: Bottoming?

In an earlier analysis on 14 March, I mentioned that "A broader head and shoulders pattern which stretched over a duration of about nine months is now quite obvious.  This, coupled with the obvious downtrend of all the moving averages suggest that more downside is on the cards.  Accumulating at supports in an uptrend is a good idea.  Accumulating at supports in a downtrend is a different story as supports could quickly become resistance.

"Using Fibo lines, we see that 14.5c is a 123.6% support.  Unless there is an upmove with meaningful volume in the near future, a test of the 138.2% Fibo support is most likely and that is at 13c.  Thereafter, the 150% Fibo support is at 12c. Further downside cannot be discounted as a valid head and shoulders pattern would see the ultimate downside target somewhere at 10c."

Although 11.5c is now a many times tested support since 24 May, is it the bottom or just a floor?  On 15 Jun, volume expanded as the 20dMA resistance at 12c was taken out. The following session saw a follow through that tested the resistance provided by the 50dMA at 13.5c. The euphoria was short lived as the 50dMA proved too strong to be taken out and price has been pushed down since.  The 20dMA is once again resistance at 12c and, in the last session, a gravestone doji was formed as price closed once more at 11.5c.

A very interesting fact is found in the OBV.  Although the price is clearly in a downtrend, OBV is flattish. This suggests a lack of heavy distribution. Also, as price fell, volume has generally declined with the exception of one or two sessions. These observations suggest that most of the sellers are probably done selling by now.

The 20dMA has flattened which suggests that the short term downtrend has halted. However the longer term MAs are still declining. So, the trend is still down. However, if we look at the MACD, it has formed a higher low and has recently flattened.  Despite being in negative territory, this positive divergence between price and MACD is an indicator that the downtrend is losing strength.

Should we jump back in and go long here?  Looking at the momentum oscillators, we see that the MFI is down both over the shorter term as well as the longer term. This suggests a lack of demand.  The RSI shows the same picture which suggests a sustained momentum in the decline in price. These indicators are not spotting any positive divergence with price.

So, the conclusion is that although the speed of decline has slowed and the counter seems to have found a stronger support at 11.5c, the trend is still down and the momentum is negative. The price action of this counter has proven treacherous before and unless there is a clear sign of bottoming, I would avoid going long.  Any long position taken here should be a smallish hedge and nothing more.

Related post:
China Hongxing: Downside target?

Charts in brief: 2 Jul 10.

AIMS AMP Cap Ind REIT: Volume rose today as more shares changed hands at the 21.5c support.  MFI declined sharply as short term demand seems to have disappeared. In spite of this, there is no sharp decline in the OBV.  Instead, it is flattish which suggests a lack of heavy distribution activity. From the high achieved on 3 Jun, price seems to be doing a low volume pullback to support.  If 21.5c support should break, I would be happy to buy more at the long term support of 20.5c.  Based on FA, I think that is a very attractive price. TA is more mutable and needs to be looked at again at that point in time.

According to DTZ Research, the improving Singapore economy has caused industrial rents in Singapore to rise for the first time after quarters of decline since Q3 2008.

DTZ’s latest report on industrial property stated, “Average monthly gross rents of first-storey private industrial space edged up 2.6% quarter-on-quarter (QOQ) to $2.00 per sq ft and 3.2% QOQ to $1.60 per sq ft for upper-storey space per month. Since the height in Q3 2008, average monthly gross rents of first-storey and upper-storey private industrial space have fallen 14.9% and 22.0% respectively.”

However, the research consultancy reported that “rents for hi-tech industrial properties, which include business park and science park space, were unchanged at $3.15 per sq per month in Q2 2010.”Article here.

Healthway Medical: Clinging on to support at 19c while forming a gravestone doji is ominous. The rising 20dMA is exactly at 19c now.  Will it push the price higher in the next session or will it fail as support? The MFI, which accounts for price and volume and is a measure of demand is clearly in decline.  The OBV shows the sharpest drop in three weeks, suggesting that distribution is heightening. MACD continues to decline below the signal line. It is obvious that upward momentum and demand have both weakened. If 19c breaks as support, next support is not far away at 18.5c which was a resistance formed in March as price tried to advance higher then.

SPH: A friend asked me if he should sell his SPH shares today. Let's look at the chart.  With today's expansion in volume on a white candle day as price hit a high of $3.88 before closing at $3.85, SPH looks like it might be able to go higher. MFI has been forming higher lows, suggesting rising demand. RSI has been rising as well.  The MACD is still in positive territory.  In short, SPH is seeing some underlying strength. $3.88 is the resistance to watch.  If it breaks convincingly, I see an eventual target price of $4.08. I would be happy to sell more of my remaining shares in SPH then.

Related post:

SPH: Reading the lines.

CapitaMalls Asia: Downtrend continues.

CapitaMalls Asia: I warned that the retest of trendline support on 25 Jun could turn treacherous. On 27 Jun, we looked "at the MFI which accounts for both price and volume. Here, we have a less optimistic picture as the MFI has clearly broken its uptrend. This suggests that demand has dropped and that more selling is underway.  This is a major difference from when the trendline support in question was tested twice before. In those earlier tests, the MFI was still uptrending strongly. Technically, the picture is weaker now."

Anyone who heeded the warning delivered by the MFI would have been spared some losses. Has the picture changed? Well, if anything, it has deteriorated. As price declined from the high of 23 Jun, volume has expanded. MACD has dipped into negative territory while all the momentum oscillators continue to decline. Momentum has turned negative. MFI suggests that demand is much reduced.  RSI suggests that the speed of decline has accelerated. OBV suggests ongoing distribution. Immediate resistance at $2.07 and the next support is at $2.00.

Related post:
CapitaMalls Asia: Weakening technicals.

STI: 2400 is still a real possibility.

It has been a while since I looked at the STI. Looking at it again today did not reveal anything alarming. Well, not alarming as in I did not see anything I did not expect to see.  The picture is still more negative than positive.

The MACD has been closing in on the signal line and is now set to do a bearish crossover. MFI, a measure of demand, has been in decline. RSI has also been in decline which suggests that the attempt to continue the longer term uptrend is sputtering.

Using the high of 15 April and the low of 25 May, if we draw some Fibo lines, it is interesting to see that the move up in the STI in recent sessions has met with resistance at the 38.2% line which is at 2,890.  This same resistance capped gains earlier in May.

If the STI is unable to break resistance at 2,890 this week, we would probably see the formation of a lower high on the weekly chart.  Two more sessions to go.  This has implications where chart patterns are concerned.  We might see the formation of a head and shoulders pattern which would be very bearish.

The rising 200dMA at 2,800 approximates the 61.8% Fibo line. This might give the STI some bounce but the bias is for a move downwards if resistance at 2,890 is not taken out convincingly. 

Breaking the previous low at 2,648 would probably see the STI sinking to the eventual target of 2,400 which, incidentally, is not a number plucked from the air but is provided by the 161.8% Fibo line.

Related post:
STI: Falling through the 200dMA.

NOL: Downtrend.

After hitting a high of $2.35 on 15 April, NOL was in a downtrend which was broken on 16 Jun on relatively high volume. Price hit a high of $2.13 on 21 Jun while forming an inverted white hammer, a reversal signal. This reversal signal was promptly confirmed in the next session. Forming a high of $2.13 on 21 Jun created a bearish picture because it was a lower high compared to the high of 13 May at $2.18.  This was a warning sign.

The MACD histogram turned red on 22 Jun while the RSI and OBV turned down the same day. Price has broken through various supports since then.  Price is currently resisted by the merged 20d and 100d MAs at $1.97.  With the 50dMA declining just above these merged MAs, it would be a difficult resistance to overcome without a buy up on massive volume.  Any upside could be resisted by the 50dMA just a few cents higher at $2.00. It seems that there are more sellers too if we notice how volume has increased as price declined since 21 Jun.  This is confirmed by the lower highs on the OBV which suggests that distribution activity has increased.

The MACD has formed a bearish crossover with the signal line and a retest of the flattening 200dMA which is currently at $1.83 seems likely.  As a support, the 200dMA was breached on three consecutive days in late May. So, this makes it somewhat unreliable and it is, therefore, a very important support to watch now.  If it manages to hold up, we would have a higher low formed.  A symmetrical triangle could then be in the works.  If the 200dMA support breaks, we could see the previous low of $1.75 tested.

Given the bearish technicals, I would sell at resistance at $1.97 if I have the chance to do so. If luck is on my side, I might even be able to sell at $2.00 on a possible whipsaw. Prices do not go down in a straight line and there could be little bumps up along the way.  So, a retest of the 100dMA as resistance again is possible. Of course, it might not be at $1.97 then. We want to sell at resistance and buy at supports.  Use the prevailing trend as a guide. Good luck.