Portfolio strategy: Undervalued high yield counters.

As the stock market seems set on moving sideways with thinning volume, a downward bias is definitely stronger.  Over time, even the most optimistic bulls will turn cautious and every rally attempt will see stale bulls reducing their exposure.  

This is likely to continue until only the really longer term holders remain or when institutional buying interest returns in a meaningful way (read upward price movement with higher trading volume) or both.

As the high beta stocks turn quiet, the more boring high yielding counters might start to look more interesting.  After all, achieving 10% yield per annum is not too shabby.  

I am now looking to increase my investments in AIMS AMP Capital REIT (AA REIT) and Lippo Mapletree Indonesian Retail Trust (LMIR).  It is no secret that I like these REITs.  Their fundamentals are sound and they have attractive yields.

Using TA to look for entry points, it is obvious that the upward momentum in LMIR is over for now.  The 20dMA seems poised to form a dead cross with the 100dMA soon.  MFI has formed a higher low but with volume thinning, it is unlikely that LMIR is about to form a new high in price.  Chances are higher that the price will continue declining and the rising 200dMA (at 44c today) should provide a stronger support.  I would accumulate if price falls to 46c and lower.

For AA REIT, MFI has been going in and out of oversold territory since late January.  Like LMIR, it lacks upward momentum.  However, its low was formed at 19.5c in early December. 

Psychologically, this is very fresh in the minds of investors.  20.5c is a many times tested support and resistance level and I expect this to be a strong support in the absence of selling pressure.  If this support breaks, 20c is likely to be a much stronger support and would be a great price to accumulate more units of AA REIT at.

Saizen REIT tried to rally today as it reached a high of 17c, only to fall back to close at 16c, forming a gravestone doji in the process.  The fact that this attempt to move higher took place on the back of higher volume and failed is not positive.  Nonetheless, with the longer term moving averages still moving up and being in close proximity to each other, together with the absence of selling pressure, the downside is likely to be limited.  As I have a sizeable investment in Saizen REIT already, I would only accumulate further on dips.

Related posts:
Aims Amp Capital Industrial Reit.
Lippo Mapletree Indonesia Retail Trust.
Saizen REIT: Long-term buy.