Marco Polo Marine: Negative divergences.

Although the fundamentals of Marco Polo Marine are sound and its future looks bright, Mr. Market is not known to respect fundamentals. Mr. Market is a creature of sentiments.

Technical analysis provides a window into the collective psyche of market participants and when there are negative divergences aplenty, we should exercise caution when thinking of initiating a long position or adding to a long position.

The presence of negative divergences does not mean that the share price will definitely weaken. It does not mean that the share price will not go higher. It just means that the risk of a retracement is now higher.

So, how do we respond to something like this?

Personally, I have not divested any of my shares of Marco Polo Marine. I am that confident of the company's prospects. In fact, if there should be a pullback to supports, I am likely to add to my long position.

So, is buying on pullbacks at supports a sure win strategy? Not at all. Supports could break and price could go lower! If that disturbs you, you might want to hold on to your money. However, if price should rebound and go higher, would you kick yourself if you had held on to your money?

If the fundamentals are sound, lower prices would present greater value. Why wouldn't we buy? The trick is in buying at supports and pacing ourselves as we do so. Don't throw in everything including the kitchen sink at the first support on retracement.

Some would say to wait for clearer signs of an upturn before adding to long positions. That, I feel, would work better in a downtrend. In an uptrend, buying at supports on pullbacks is what I would do. Go back one blog post and you would know what I mean.

Finally, just to add the confusion, technical analysis shows where the supports and resistance are but there is no guarantee that these would be tested at all. This is where hedging comes in. Something to think about over the weekend, perhaps?

Related post:
Marco Polo Marine: Looking into the future.

CapitaMalls Asia: New 12 month high in the making.

The share price of CapitaMalls Asia has been rising and with strong momentum too. Amidst bullish calls by research houses, I would not be surprised if its share price were to go even higher.

Citigroup adds CapitaMalls Asia (JS8.SG) to its Focus List.

"In the next few years, we expect China to be the key driver of CMA's earnings growth, as the company harvests gains from multi-year investments that have expanded its footprint to 36 cities in the country. The majority of the China portfolio is still in the growth stage, or in the process of stabilisation. India, from a low base, also offers significant upside potential," it says, expecting its Singapore exposure offers a visible stream of recurring income.

CMA's competitive advantages in China can't be easily replicated, including a strong brand equity and solid track record as a first-mover, ability to tie up with other local developers and access to a varied, cheaper pool of financing, Citi says.

"Moreover, CMA has an efficient capital recycling model (via three listed REITs and six private real-estate funds) that enables capital to be freed up for future growth opportunities, which offers upside to our earnings estimates." It tips CMA as its preferred pick among China's retail landlords and within Singapore's developers. It raises its target to $2.58 from $2.08 after increasing RNAV on changed China cap-rate assumptions; it keeps a Buy call.

Dow Jones & Co, Inc

Friday, 01 February 2013

Today's long white candle day formed on the back of heavy volume is a good sign. Overcoming immediate resistance at $2.24 could see price hitting $2.41 next.

Related posts:
1. CapitaMalls Asia: To buy on possible weakness.
2. CapitaMalls Asia: Any correction is a buying oppotunity.
3. CapitaMalls Asia: Buy more at $1.93.