Charts in brief: 3 May 10.

A brand new trading day in a brand new month.  It's May! Are you going to sell in May and go away?

STI drops 1% to 2,944.22 at closing
Monday, 03 May 2010

© 2010 - The Edge Singapore

CapitaMalls Asia: Black candle day on reduced volume. Price closed at gap support: $2.16. MFI is still in the oversold region. MACD is still below zero.  Momentum is negative but the distance between the MACD and signal line has narrowed. Reversal is looking dicey, again. See what happens tomorrow.  As usual, I would sell on the way up.  If price continues to decline, look to the next supports and see if they hold.  Would buy on weakness if supports hold as I still like the fundamentals of this counter.

Golden Agriculture: MFI and OBV flattened.  This counter is looking directionless. Having been trading beneath the 20dMA ,which has turned downwards, for four sessions in a row does suggest that a slow drift downwards is probable. 60c is the immediate resistance now.  If the support at 58c is taken out, the next support could be found at 55.5c as provided by the rising 100dMA.

Healthway Medical: Traded the whole day at one price only, 15.5c. The trading volume has been in decline as the price drifted lower.  This is a positive. The rising 100dMA should provide a relatively strong support at 15.5c.  The MFI is in oversold territory and I do not expect the price to crash.

The current price level is good to enter as a hedge for anyone who has been waiting to get in.  However, looking the MACD's behaviour of staying closely to the signal line in a parallel fashion as it goes deeper into negative territory suggests that this malaise might continue for some time. In case of further weakness, support would strengthen with every 0.5c decline in price.

Courage Marine: Price plunged after XD today. I like the fundamentals of the company and I see 20.5c as a strong support provided by the rising 50dMA and I would buy more at that level.  Price might continue to weaken to 20c and I would accumulate if it happens.  If price continues to lower towards 18c which is the price where the counter made a double bottom, I would load up more.  A triple bottom?  Maybe.  So, buy on weakness but I would not break the piggy bank.

Especially, I would like to draw attention to the declining volume as price weakens.  It is a low volume pullback.  This gives me greater confidence in my decision to accumulate on weakness.  The FA is good.  The TA lets us know entry prices which are considered fair.  It doesn't get any better than this for me.

Saizen REIT: Ongoing weakness seen here. 16c might be called upon as the support next and this, in my opinion, would be a strong support as we see three Fibo lines approximate 16c. They are the 138.2%, 150% and 161.8% Fibos. I am in the buy queue at 16c.

MFI is in the oversold region but the down trending OBV suggests some distribution activity.  So, it might be oversold but there are unitholders who are still willing to sell down.  Looking at the numbers, the suggestion is that smaller unitholders are the ones selling.  I do not see any high volume sell downs. For a REIT with almost a billion units currently in the market, a daily trading volume of 1m to 2m units is almost nothing.  If people are willing to sell cheaper, I am willing to buy cheaper.  At 16c, this would be almost a steal at a 60% discount to the last reported NAV!

Related post:
Charts in brief: 30 April 10.

Tea with AK71: Feeling nostalgic.

Suddenly feeling nostalgic and I kind of remember that I lent the CDs to a friend. Not sure. The internet is a wonderful thing.  I found the songs on YouTube. Well, they are probably not everyone's cup of tea.  It's just like I don't really like Earl Grey.  Hahaha... For those who share the same taste as me, take a break and enjoy the songs.

A close friend:


Breaking up:


True love is like this:


On that steadfast note, have a great week ahead!

A correction? An opportunity!

With the significant selldown of the US markets last friday, what will happen to the STI? There are proponents of the decoupling theory and that the STI now takes its lead from the HSI and the SSE instead of the Dow.  So, maybe, the STI will be spared? Let's take a look at the STI's chart.

The STI closed at 2974.61 last, forming a spinning top. This indicates indecision. Indecision as the index is trying to move higher?  No good.  To be sure, the STI is in a down channel and has been so since mid April. The MACD has been declining and is pulling away from the signal line. The MFI has been forming lower highs. All looking very bearish.

The 20dMA which served as support until three sessions ago is now at 2,980. To resume the uptrend, the STI has to re-capture this support.  However, seeing how it failed in its attempt in the last session, this is looking less likely. Instead, a continuing move downwards is more probable.  The Bollinger bands are squeezing and this suggests an impending increase in volatility of the index.

One bright spot, the OBV turned up sharply in the last session. This suggests that there is strong accumulation activity even as the buying momentum declined.  In other words, there is some underlying support.  So, any decline in the STI should meet with some support as people who have missed out on the rally earlier buy on weakness.

In the event of a continuing move downwards, the rising 50dMA provides support at 2,900 while the rising 100dMA provides support at 2,860. I see a strong support at the 2,790 level (previously a strong resistance).  Yes, there is a chance that the STI might go that low.  Never say never, right?

I would refrain from purchasing any stocks for now, especially index linked stocks. Wait and see.

Related post:
Markets are going higher in time.

Looking for value.

After learning TA, I tried applying it and I have made and lost money. I think I am not very good as a trader since I must have lost more than I made. My roots are in FA but it was only during this recent crisis that I beefed it up. I believe that my current style of combining FA and TA is most suitable for me.

The thing about FA is that we are looking for value. We want to buy something valued at $1 for 50c, for example, but that, to anyone who has been practising FA for sometime, is too simplistic. Let us not dwell on that for now in order to push this post forward.

When we buy something based on FA, the chances of us being disciplined and to hold on, riding through rough patches, are higher. This is because our knowledge of the fundamentals of the stock anchors us down.  We are less likely to be flighty. Personally, I need that kind of anchor. That was how I had the mental strength to hold on to Healthway Medical when some gave up.  The story is here.

I am not a good trader because I don't like to cut loss and if I do cut loss, I hurt.  I am not without emotions and I don't like feeling hurt.

I am not a good trader because I feel half clothed not knowing the fundamentals of a company.  I feel like I am looking through lens with cataracts.

A clear picture of a company's fundamentals is important for me.  I would buy into a company that is undervalued or even fairly valued as long as I see potential given the circumstances in the present and what is foreseeable in the future.

For anyone who wants to look for value in companies, start by reading up on financial statements. As good a place to start as any is here. Economics and the industry the company is found in are important considerations too. Not everyone enjoys FA just like how not everyone is a good trader.  We have to find our own niche. Whatever our choice, remember that there is no free lunch in this world.

Related posts:
Portfolio strategy: Undervalued high yield counters.
High yields: Successes, failures and the in betweens.
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The "Woodstock of Capitalism": An Insiders' View
Posted Apr 30, 2010 07:30am EDT by Heesun Wee



A 'powerful' sermon. Matthews says the Q&A session is a highlight for him -- watching both Buffett and Munger apply their guiding principles to each, individual question...."Do the right thing. Look for value. And buy and hold" is their message, Matthews says. But, "it's the difference between reading a sermon on paper and actually hearing it in person. It's very powerful....