FSL Trust: A sinking ship?

The sell down today is very severe and it is due to revelation that two ships are being returned prematurely.  Their leases were supposed to end in 2014. This would mean the removal of two significant income streams for the trust to the tune of US$20,700 per day per vessel, to be exact.  See announcement here.

At midday, FSL Trust was down almost 10% at 54.5c on extremely high volume. Two groups of people are probably wondering how low it could go.  The first group would be unitholders (if they have not sold by now).  The second group would be people who still want to buy into the trust for some reason.

Looking at the chart at midday, all MAs, short and long term, have turned down.  The MACD is plunging into negative territory and pulling away from the signal line. MFI re-enters the oversold region. Look at the OBV, it has jumped off a cliff!  People are discarding FSL Trust! Unless some re-assurance is received from the management that the trust has some contingency plans, this panic selling is likely to continue for a bit more. 

How low could it go? In such a panic situation, it is hard to say but it could go much lower. However, to be fair, in situations of extreme selling, there is always a chance of a rebound. I will do some charting again this evening and perhaps look at the numbers too.

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High yields: Successes, failures and the in betweens.
Charts in brief: 19 Mar 10.

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.