Capitaland: To sell or to buy?

I read an article in The EDGE with interest as JP Morgan "upgraded the Singapore property sector from underweight to overweight largely because it believes the market is discounting physical market price declines of 12-40% which are too bearish." At the top of its buy list are Capitaland and CDL.

When I first commented on Capitaland on 10 Feb this year, I said that "A reader asked me if it was time for her to buy more Capitaland shares last evening. I told her I expect more downside today. In confirmation, the low of May 10 at $3.46 was taken out today without any hesitation by Mr. Market. The formation of three black crows now suggests that price could go lower. Some would say that it is more accurately described as two and a half black crows but I am sure the distinction is just academic.

"The next low to look at is $3.28 of July 09 and another reader today asked if it is time now to buy some especially if that low were tested. It would take someone very brave to buy in the current conditions, I feel. Could we see $3.28 taken out without hesitation by Mr. Market just like $3.46 was taken out today? Why not?" Read blog post here.

Price went on to touch a low of $3.08 on 17 March. However, anyone who bought some at the low of 17 March or thereabouts would be in the money now. The positive divergence on the MACD and share price is quite obvious: higher lows on the MACD and lower lows in share price. The ADX is also declining as the +DI crossed over the -DI on the upside: the downtrend is weakening.

For anyone still holding and for those who are thinking of entering, the question might be: "Would the price go higher?" I don't have the answer. I will say that the upward momentum seems to be weakening as long legged dojis were formed in the last two sessions. So, the downside risk is higher. The MACD, although rising, is still in negative territory and, so, we could just be seeing a rebound. Momentum is still negative.

If price should go higher, I see resistance at $3.40, a neckline. If that should break, I see a resistance band between $3.46 to $3.48. Beyond that? $3.56. If price should weaken? I see immediate support at $3.27, followed by $3.24.

I have only an academic interest in this counter (for now) but if I were to go long on this counter, I would do so on weakness as it retests supports. If I owned some shares bought at $3.08 thereabouts recently, I would sell some as it tests resistance at $3.40, if it should happen. If price goes higher, I would have more to sell. If price goes lower, I have the funds to buy more.

Cambridge Industrial Trust: Going for excess rights.

My entry into Cambridge Industrial Trust could not have been better timed. I became a unitholder again in the morning of 11 March at the price of 51c/unit. Of course, we know what happened in Japan on that day.

In my blog post that day, I said that "If the nil-paid rights should trade at 4c to 5c, it would be quite attractive ... Any price less than 4c would be a steal!" Well, the nil-paid rights are not trading below 4c and I didn't manage to "steal" any. Read blog post here.

I also missed the opportunity to accumulate at 47c/unit when the REIT was still trading CR. You might remember me saying this "What are my plans now? Buy more if its price weakens further? Looking at the daily chart, CIT is trading below the 200dMA. So, I look at the weekly chart for hints of the next support. The rising 100wMA is at 46.5c now and should provide relatively strong support. 46.5c? That is some way to fall from here! Yes, it is but remember that TA shows us where the supports are and not necessarily that they would be tested. If it should be tested while the counter is still CR, I would buy more.

"Buying 16 lots more at 46.5c would mean an average price of 46.11c... Of course, owning more units could possibly entitle me to more excess rights as well." Read blog post here. It never hit 46.5c where I was waiting and the lowest it went to was 47c. Tough luck.

So, since I got 17 lots at 51c, I would get 2,125 rights. I would, of course, round it up to 3,000 rights by applying for excess 875 rights. I will also apply for more excess rights in the hope of lowering my average price. With its unit price closing at 48.5c and hitting a high of 49c in the last session. This rights issue would be the first one I might not be making any money from in quite a while.

Would I stay invested? Well, the REIT's numbers have improved and should be a reliable passive income generator although I discovered something in small print and I replied to a reader on 19 March saying: "I looked at the announcement by CIT's manager again. We have to read the fine print. Tricky. 5.07c DPU would only kick in end of 2012 once the Extension Development Works are completed. Otherwise the DPU is 4.84c, post rights. So, to secure a 10% yield, buying at 48.5c per unit or lower would do it." See comments here. Yes, this was in fine print. Nothing wrong but it would have been better if the numbers were included in the table proper. I almost said something scathing when I read the announcement again.

So, although I am disappointed in more ways than one, I would probably stay vested unless I have a good reason to divest. Worst case scenario? A distribution yield of 9.7% for my investment.