Rethinking SPH

This is one of my favourite blue chips. Strong balance sheets, generous dividends and it will be a major beneficiary of the improving economy as well as the opening of the two integrated resorts (IRs) this year. However, I'm in no hurry to load up at the current price.

Its price is being supported by the 20wMA at $3.60 and the declining 200wMA provides resistance at $3.80. I would divest partially if its price moves to touch the 200wMA. I would do this as a hedge as I'm not so sure that its price would not revisit $3.40, the 61.8% fibo retracement which coincides with the declining 100wMA. $3.40 also looks like an important candlestick resistance/support level.

Revisiting Keppel Corporation

Keppel Corp is one counter which I bought at under $4 in early 2009 but offloaded too early. I like this counter. The world cannot do without crude oil. Other counters in the same theme which I offloaded too early as well were Ezra and Swiber. With crude oil strengthening in price, it might be time for me to revisit Keppel Corp.

In terms of fundamentals, if one were to seek exposure to offshore counters, Keppel Corp is a better choice as it has a stronger balance sheet. The economy might be recovering but I'm not sure that taking on too much debt is a good idea as is the case with Ezra and Swiber. Keppel Corp also pays out generous dividends which is very attractive to me.

Looking at its weekly charts, the negative divergence between price and volume from May 09 to Dec 09 is quite clear. Buying momentum has been weak as MFI continues its decline, forming lower highs. However, OBV has a gradual slope upwards which indicates longer term accumulation. Price has been hugging support provided by the 20wMA so far. Without any buying momentum, this counter is doing a rather precarious correction using time. Resistance is being provided by the very gradually rising 200wMA at $8.85. The falling 100wMA is unlikely to provide much support in the event the 20wMA breaks. A stronger support would be one provided by the rising 50wMA.

I would wait for a correction before accumulating. I would buy some at the 50% fibo retracement(S$7.55) as a hedge and would buy more if it goes to the 38.2% fibo retracement (S$7.28). If one is already vested, selling some if the price hits the 200wMA would be a nice hedge. Having said this, I am sure that the longer term trend of Keppel Corp is up as the rising 50wMA is on course to form a golden cross with the declining 100wMA in the coming months.