Raffles Education: White hammer.

Bullish reversal candlesticks in this counter's chart have a notorious reputation of lacking follow throughs. So, the reliability of the white hammer formed this session is suspect. Nonetheless, downtrends are rivers of hope and rebounds are not unusual.

The MFI, a measurement of demand, has risen from the oversold region. It has formed a higher low for the second time in the last fortnight. Volume has expanded as price stabilised or rose. This is a sign of underlying demand. Could we see demand improving to push the price higher?

Immediate resistance at 25.5c. Further upside could be limited as resistance is expected at 26.5c, a many times tested support turned resistance, and 27c, where we find the descending 50dMA and the downtrend resistance line.

First REIT: Dragonfly doji at 71c.

The bulllish harami identified on 14 Dec delivered most sportingly as I said then, "It is my personal belief that the 200dMA support at 67c has been recaptured.  Further upward movement in price would find immediate resistance at 68.5c.  This will be followed by 70c and 71c. In due course, if these resistance levels were cleared, the counter could cover the gap at 73.5c. There are some who are still waiting to see how low the price could fall before buying in. Their hands could be forced in the next two days if price continues to be resilient and this would contribute to a further strengthening in price."

First REIT's trading volume has reduced markedly as price rose higher in recent sessions. Today, price closed at 71c, forming a dragonfly doji, suggesting a lack of selling pressure as price rose on relatively low volume.

The OBV formed a sharp V since the formation of the bullish harami candlestick pattern. It has continued rising but more gently so. Accumulation continues. The MACD is poised to form a bullish crossover with the signal line, although in negative territory. Could this upmove in price be just a rebound?

I am of the opinion that it is more a recovery from a deeply oversold condition. Valuation is now moving towards fairer levels. In the days ahead, we could see a gradual rise in price and it could cover the gap at 73.5c. A retest of 75c, the adjusted historical high would be next in line.

Not so long ago, during the days of mad selling down which saw the rights touched a low of 16c and the mother shares touching a low of 66c, what was presented to us was a window period of a few days to load up on the cheap.

Only with strong confidence that comes from knowing the sound fundamentals of the REIT would we dare to buy more and I said as much when asked what would I do then. Friends sent SMS, readers left comments and sent emails. To all, I said we should recognise the window of opportunity, ignore the noise and buy more which I did.

"Am I not worried whether the price would decline further? No. Why should I worry? I cannot do anything to influence the price movement of the REIT. If the market is willing to sell a good thing to me at a lower price, I would buy. It's simple. So, would I buy again if the price declines further. Yes, I would." 13 Dec 10.

I could be sticking my neck out by saying this but congratulations to all who conquered their fears and held their positions. In my opinion, the fair value for First REIT remains at 80c /unit.

Related posts:
First REIT: Quiet confidence.
First REIT: XR and fair value.