SSE A SHARE IDX = 2,211 has threwback to the breakout level.... support 2,200 is very strong here
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Friday, February 27, 2009
Can SSE A share make a come back?
SSE A SHARE IDX = 2,211 has threwback to the breakout level.... support 2,200 is very strong here
Technically Sell OUE, SembCorp Industries, Keppel Corp
Overseas Union Enterprise (OUE SP; S$12.00) – SELL
• The stock tumbled to its strong support at S$8.00 before rebounding sharply to current levels. This rebound shows that the bulls are not ready to give up just yet.
• The RSI hook up from its oversold position prompted the strong rebound from its S$8.00 support. The MACD is however still negative.
• We continue to see weakness in the coming months. However, in the short term there could still be some upside. The gap resistance at S$12.10-12.30 would likely keep a lid on the upside for now. Buyers should only buy near the S$8.00-9.00 strong support. Otherwise, sell on rebound and stay sideline for now.
Overseas Union Enterprise Limited operates hotel and leases commercial offices and shopping centers in Singapore. Through its subsidiaries, the Company also manages and operates food and beverage outlet, advertising, printing, and commercial laundry.
SembCorp Industries (SCI SP; S$2.14) – SELL
• The stock appears to be well supported above the S$2.00 support. It is now forming a descending triangle. A break below the S$2.00 support is bearish.
• Indicators are still negative but improving slightly. The RSI is slowly rising but is still below the neutral mark.
• Again, there could be a minor rebound back up to retest its S$2.18-2.20 (its 30-day SMA). A breakout could see the stock climb to S$2.25 next. Since we do not foresee a strong rebound, maintain a sell on strength strategy for now.
SembCorp Industries Limited provides infrastructure services and integrated industrial site services such as power, gas, steam, water, and other site services. The Company's services include engineering and environment management, integrated logistics, and marine engineering services.
Keppel Corporation (KEP SP; S$4.30) – SELL
• It is now in a long term sideways trend. However, since it is trading above its 30-day SMA, there could be a tad more upside from here. However, we expect resistance to be tough at the S$4.90 and S$5.40 levels.
• Daily MACD is positive but RSI is flat, suggesting that buying momentum is not very strong.
• After this rebound, we expect the stock to retrace lower again. Support is now at S$4.00 and S$3.76.
Keppel Corporation Limited's core businesses are offshore and marine, infrastructure, property investment and development, telecommunications and transportation, energy, and engineering.
• The stock tumbled to its strong support at S$8.00 before rebounding sharply to current levels. This rebound shows that the bulls are not ready to give up just yet.
• The RSI hook up from its oversold position prompted the strong rebound from its S$8.00 support. The MACD is however still negative.
• We continue to see weakness in the coming months. However, in the short term there could still be some upside. The gap resistance at S$12.10-12.30 would likely keep a lid on the upside for now. Buyers should only buy near the S$8.00-9.00 strong support. Otherwise, sell on rebound and stay sideline for now.
Overseas Union Enterprise Limited operates hotel and leases commercial offices and shopping centers in Singapore. Through its subsidiaries, the Company also manages and operates food and beverage outlet, advertising, printing, and commercial laundry.
SembCorp Industries (SCI SP; S$2.14) – SELL
• The stock appears to be well supported above the S$2.00 support. It is now forming a descending triangle. A break below the S$2.00 support is bearish.
• Indicators are still negative but improving slightly. The RSI is slowly rising but is still below the neutral mark.
• Again, there could be a minor rebound back up to retest its S$2.18-2.20 (its 30-day SMA). A breakout could see the stock climb to S$2.25 next. Since we do not foresee a strong rebound, maintain a sell on strength strategy for now.
SembCorp Industries Limited provides infrastructure services and integrated industrial site services such as power, gas, steam, water, and other site services. The Company's services include engineering and environment management, integrated logistics, and marine engineering services.
Keppel Corporation (KEP SP; S$4.30) – SELL
• It is now in a long term sideways trend. However, since it is trading above its 30-day SMA, there could be a tad more upside from here. However, we expect resistance to be tough at the S$4.90 and S$5.40 levels.
• Daily MACD is positive but RSI is flat, suggesting that buying momentum is not very strong.
• After this rebound, we expect the stock to retrace lower again. Support is now at S$4.00 and S$3.76.
Keppel Corporation Limited's core businesses are offshore and marine, infrastructure, property investment and development, telecommunications and transportation, energy, and engineering.
Thursday, February 26, 2009
Sell Celestial, Delong; Buy Venture
Celestial Nutrifoods (CENU SP; S$0.17) – SELL
• The stock broke below its October lows of S$0.275 (now the resistance) and continued to fall to current levels. The stock might see some support around the S$0.15-0.16 levels.
• Indicators are weakening but RSI is now oversold. The oversold RSI could prompt a minor rebound soon with resistance at S$0.225.
• Despite the oversold RSI, we expect the stock to continue to edge lower after the rebound. It could even fall to S$0.12 in the longer term.
Celestial NutriFoods Limited manufactures and sells soybean based food products such as soybean beverages, soy protein isolate and soybean oil. The company sells its products under Sun Moon Star brand name.
Delong Holdings (DLNG SP; S$0.59) – SELL
• The stock has fallen from a high of S$3.65 to current levels. It appears to be forming a base but there are no signs that a rally is forthcoming. Sell for now.
• Both MACD and RSI have turned negative again, suggesting that the selling momentum could be picking up once more.
• Resistance is seen at S$0.64 while support is S$0.56. A break below S$0.56 would signal that more downside is likely.
Delong Holdings Limited manufactures and trades in steel. The Company specializes in the manufacture of hot-rolled mid-width steel coils. Through its subsidiary, the Group also invests in resource and other steel-related businesses.
Venture Corp (VMS SP; S$4.82) – BUY
• After failing to breakout above its 30-day SMA in the last 3 months, we expected the stock to fall further. But the bulls had a final say and managed to give it a strong push. The breakout led to a strong rally to current levels.
• Technical indicators have improved suggesting that more upside is likely. However, with the RSI in an overbought position, a pullback is likely.
• Investors could do well accumulating on weakness. Support is at S$4.76 and S$4.42. Get out if the stock falls back below its 30-day SMA. Resistance is at S$5.46.
Venture Corporation Limited provides contract manufacturing services to electronics companies worldwide. The Company also provides manufacturing, design, engineering, customization, and logistic services. Venture Corporation trades and manufactures electronics and computer-related products, develops and markets colour imaging products for label printing.
• The stock broke below its October lows of S$0.275 (now the resistance) and continued to fall to current levels. The stock might see some support around the S$0.15-0.16 levels.
• Indicators are weakening but RSI is now oversold. The oversold RSI could prompt a minor rebound soon with resistance at S$0.225.
• Despite the oversold RSI, we expect the stock to continue to edge lower after the rebound. It could even fall to S$0.12 in the longer term.
Celestial NutriFoods Limited manufactures and sells soybean based food products such as soybean beverages, soy protein isolate and soybean oil. The company sells its products under Sun Moon Star brand name.
Delong Holdings (DLNG SP; S$0.59) – SELL
• The stock has fallen from a high of S$3.65 to current levels. It appears to be forming a base but there are no signs that a rally is forthcoming. Sell for now.
• Both MACD and RSI have turned negative again, suggesting that the selling momentum could be picking up once more.
• Resistance is seen at S$0.64 while support is S$0.56. A break below S$0.56 would signal that more downside is likely.
Delong Holdings Limited manufactures and trades in steel. The Company specializes in the manufacture of hot-rolled mid-width steel coils. Through its subsidiary, the Group also invests in resource and other steel-related businesses.
Venture Corp (VMS SP; S$4.82) – BUY
• After failing to breakout above its 30-day SMA in the last 3 months, we expected the stock to fall further. But the bulls had a final say and managed to give it a strong push. The breakout led to a strong rally to current levels.
• Technical indicators have improved suggesting that more upside is likely. However, with the RSI in an overbought position, a pullback is likely.
• Investors could do well accumulating on weakness. Support is at S$4.76 and S$4.42. Get out if the stock falls back below its 30-day SMA. Resistance is at S$5.46.
Venture Corporation Limited provides contract manufacturing services to electronics companies worldwide. The Company also provides manufacturing, design, engineering, customization, and logistic services. Venture Corporation trades and manufactures electronics and computer-related products, develops and markets colour imaging products for label printing.
Tuesday, February 24, 2009
Dow all the way to 5800?
DJ INDU AVERAGE Broken 10Oct's low of 7,197.. ..a new low with next target at 5,801
Straits Times Index all the way down
If STI brokedown 1,473 it may well fell to 1,197, low on 28 Sep 2001
Sell City and HK Land Technically
Technically…
City Developments (CIT SP; S$5.09 – SELL): Recent low of S$4.82 may be retested soon. Break below that level could see S$4.70/S$4.46 being tested next.
• The stock broke below its S$5.13 support recently and is still below it. Unless the stock can close back above it, more selling could take place soon. Maintain sell on strength with resistance seen at S$5.15 and S$5.55.
• Indicators are improving but have yet to confirm the turnaround. RSI is still below its neutral mark and MACD is still negative.
• The recent low at S$4.82 could be tested again soon. A break below that level could see the stock fall to S$4.70 and 4.46 next.
Hongkong Land Holdings (HKL SP; US$2.00 – SELL): Selling momentum may pick up as MACD and RSI have turned negative. Close below US$1.88 could see next support at US$1.75/US41.50 being tested.
• Appears to be sitting just above forming its consolidation triangle support at US$2.00. A downside break to close below US$1.88 would likely induce further selling on the stock. The next support is at US$1.78 and US$1.50.
• Both MACD and RSI have turned negative, suggesting that the selling momentum could be picking up.
• Resistance is seen at US$2.20 and US$2.55.
Fundamentally…
Action Asia (ACTA SP; S$0.055 – Not rated): FY08 results are due by end this week. Given its last announced net cash balance of S$40.9m and that the Company has not paid any dividends for the three quarters of FY08, a DPS of 0.2-0.5cts seems a reasonable assumption. This translates into dividend yields of 3.6%-9.1%. Note that its net cash position is 1.9x its market cap of S$22.0m. Not rated.
• The stock has fallen below its long term sideways trend channel. Unless, the stock can regain the S$0.06 resistance soon, the stock could see more downside. Support is at S$0.04.
• Technical indicators continue to show mixed results, suggesting that more sideways movement is likely.
• Until there is a pick up in volume, the stock would likely continue to drift sideways. Investors would likely do well to sell out and look for opportunities elsewhere.
City Developments (CIT SP; S$5.09 – SELL): Recent low of S$4.82 may be retested soon. Break below that level could see S$4.70/S$4.46 being tested next.
• The stock broke below its S$5.13 support recently and is still below it. Unless the stock can close back above it, more selling could take place soon. Maintain sell on strength with resistance seen at S$5.15 and S$5.55.
• Indicators are improving but have yet to confirm the turnaround. RSI is still below its neutral mark and MACD is still negative.
• The recent low at S$4.82 could be tested again soon. A break below that level could see the stock fall to S$4.70 and 4.46 next.
Hongkong Land Holdings (HKL SP; US$2.00 – SELL): Selling momentum may pick up as MACD and RSI have turned negative. Close below US$1.88 could see next support at US$1.75/US41.50 being tested.
• Appears to be sitting just above forming its consolidation triangle support at US$2.00. A downside break to close below US$1.88 would likely induce further selling on the stock. The next support is at US$1.78 and US$1.50.
• Both MACD and RSI have turned negative, suggesting that the selling momentum could be picking up.
• Resistance is seen at US$2.20 and US$2.55.
Fundamentally…
Action Asia (ACTA SP; S$0.055 – Not rated): FY08 results are due by end this week. Given its last announced net cash balance of S$40.9m and that the Company has not paid any dividends for the three quarters of FY08, a DPS of 0.2-0.5cts seems a reasonable assumption. This translates into dividend yields of 3.6%-9.1%. Note that its net cash position is 1.9x its market cap of S$22.0m. Not rated.
• The stock has fallen below its long term sideways trend channel. Unless, the stock can regain the S$0.06 resistance soon, the stock could see more downside. Support is at S$0.04.
• Technical indicators continue to show mixed results, suggesting that more sideways movement is likely.
• Until there is a pick up in volume, the stock would likely continue to drift sideways. Investors would likely do well to sell out and look for opportunities elsewhere.
Monday, February 23, 2009
Global equity technicals - Far from the bottom
The DJIA finally broke below its Nov 08 low last week when it reached as low as 7,249pts. This reaffirms our view that our preferred wave count is taking place. Last week's new low also confirms the Dow Theory of a primary downtrend. While some investors believe the DJIA hit its trough last week, IBM's daily chart alone tells us that the downtrend is far from over. IBM, which has a 9.5% weighting, has just broken below its support trend line and its weekly chart also looks bearish, with the MACD likely to confirm its bearish "dead cross" this week. Although the Nov 08 low for the S&P500 remains intact, we believe it is only a matter of time before this gives way too. As for Asia, the MAxJ slumped 8.3% last week, a sign that the powerful down-leg wave 5(iii) has kicked in.
US indices have been in a downtrend for a month amid concerns over banking stocks, in particular Citigroup and Bank of America, with persistent rumours over their nationalisation by the US Government. Both stock gapped down on Friday but closed off their lows well below opening levels. Both stocks have fallen by more than 50% since February, suggesting the market is heavily betting on nationalisation.
For the Dow Jones Industrial Average (DJIA), we were on record as saying that a wave 5 move would eventually unfold and that the index should decline towards 6,900. This view remains valid. There is a strong likelihood this level would head to that level over the next seven days. We highlight two possible scenarios in this report. One is that the index is tracing out in a normal impulsive wave 5 decline towards 6,900 and the other, that the index traces out in a descending triangle formation or what is known as diagonal fifth in Elliott wave terminology. In both cases, we expect the index to test the 6,900 level. The positive divergence on momentum indicators suggests this is a terminal move and once complete, would give way to a significant rebound.
For Singapore, the minimum downside was the gap at 1,678. The index had declined below that level and the next important support is the November low at 1,570.
Golden Agri-Resources: Downside may be limited
While we have forecasted the bearish trend of Golden Agri-Resources (GGR SP) correctly, the magnitude of its decline was more than what we had expected as it broke below our previous support at 0.285 to hit a low of 0.275 during last week. Nevertheless, we believe that further downside may be limited and we advocate accumulating long positions at our forecasted support levels.
The 14-day ADX is still declining, implying that the current (bearish) trend remains weak. Furthermore, while the MACD chart had recently seen a bearish moving average crossover, it nonetheless still trades in positive territory and above the zero line. Finally, although share price had experienced a decline last week, the bollinger bands had not followed on with an expansion, indicating the lack of selling momentum.
Support is identified at the 0.27 – 0.275 region, courtesy of a series of daily lows, the lower bollinger band and the 50- day moving average. On the other hand, resistance is present at the 0.315 – 0.32 area as implied by the technical gap and a series of daily highs. It has a TRADING BUY recommendation with a target price of S$0.60.
Shorting Opportunities in Olam and Noble
Olam’s main business deals with commodities. The CRB closing below lows (208) will likely take the entire equity market with it. This makes commodity related companies prime candidates for shorting.
Olam has tested 1.48 and declined to current levels. With the CRB trading below lows of 208, we anticipate Olam continuing to slide further. However, Olam is oversold on a stochastic basis as is the CRB and there might be a small move up.
We advise investors to begin shorting Olam, taking half of their intended position. If Olam rallies, it should find mild resistance at 1.35 where investors can get a better price. The recommended stop would be at 1.50. By shorting in this manner, investors would be in a win-win situation. If Olam rallies, they get a better price, if it declines, the initial position is in profit and investors can gradually scale into their winning position with the remaining half.
The reason for shorting Noble is similar to Olam. We anticipate a slide in Noble as well because it is a commodity related company.
Nobel has dropped off after testing highs at 1.25. We advise investors to again, take half their position in Noble first, so that regardless of the move they will be positioned for a decline. Noble should have some resistance at 1.13 and we advise investors to sell the second half of their position if Noble reaches 1.13 again.
In the event Noble does not hit 1.13, investors can add on when Noble closes below successive support levels. The recommended stop is at 1.27.
Straits Times Index: Further declines remains a possibility
The Straits Times Index (FSSTI Index) performed against our forecasts and broke below pertinent support at the 1,640 level to finish 5.3% lower in the previous week. For the current week, we are expecting further downside as we believe that the selling pressure has not eased off.
After contracting for a period of around 10 – 15 days, the bollinger bands have just started widening which implies that more volatility may be forthcoming. Coupled with the 14-day RSI which still remains above the 30 mark and with the 14-day ADX that has recently shown a recovery, we believe that the present bearish trend still has additional room to develop.
Unless resistance at the 1,683 level (as derived from the 14-day moving average and a daily high) is taken out, we remain negative on the STI and expect it to fall to around 1,554 in the near term. This short term support level is derived from the 161.8% fibonacci extension of 1,780 to 1,675. However, in the event that this level is broken, we do not see any major support until the 63-mth low at the 1,473 mark.
Friday, February 20, 2009
SATS underperform; XLX and Venture outperform
China XLX Fertiliser ( CXLX SP, S$0.37)
• China XLX Fertiliser (CXLX) released its FY08 results today. Revenue grew by 35.3% to Rmb2,084.9m yoy however gross margins fell from 27.0% in FY07 to 23.4% in FY08 mainly due to lower margins from urea and methanol sales. Net profit increased by 9.2% to Rmb346.4m in FY08 led by higher average selling prices products such as urea, methanol and compound fertilizer. The company intends to propose a first and final exempt dividend of 1.6 Scts for the financial year ended 31-Dec 2008.
• Share price fell 0.5cts or 1.3% this morning to S$0.37.
• Maintain Outperform with a target price of S$0.47.
Venture Corp (VMS SP, S$4.51)
• Share price surged 9.5% or 39cts to S$4.51 despite a 94% fall in Venture’s quarterly net profit which was mainly attributed to mark-to-market losses. Many brokerages also posted Buy calls for the stock, spurring buying interest. In addition, Venture plans to maintain its dividend of 50cts a share. Due to the volatile nature of the market, we advise investors who are in for the punt to take profit this afternoon.
• Maintain Outperform with a target price of S$6.00.
Singapore Airport Terminal Services (SATS SP, S$1.12)
• SATS announced that it is going to make a mandatory cash offer, to acquire all the issued ordinary shares in the capital of Singapore Food Industries Limited (SFI) other than those already owned, controlled or agreed to be acquired by SATS.
• So far, SATS has reported an 84% acceptance rate.
• Given a rapidly deteriorating aviation industry with airlines continuing to cut capacity, we do not see near-term catalysts for the stock. Exposure to a weakening UK economy through SFI also poses downside risks.
• Maintain Underperform with a target price of S$1.25.
• China XLX Fertiliser (CXLX) released its FY08 results today. Revenue grew by 35.3% to Rmb2,084.9m yoy however gross margins fell from 27.0% in FY07 to 23.4% in FY08 mainly due to lower margins from urea and methanol sales. Net profit increased by 9.2% to Rmb346.4m in FY08 led by higher average selling prices products such as urea, methanol and compound fertilizer. The company intends to propose a first and final exempt dividend of 1.6 Scts for the financial year ended 31-Dec 2008.
• Share price fell 0.5cts or 1.3% this morning to S$0.37.
• Maintain Outperform with a target price of S$0.47.
Venture Corp (VMS SP, S$4.51)
• Share price surged 9.5% or 39cts to S$4.51 despite a 94% fall in Venture’s quarterly net profit which was mainly attributed to mark-to-market losses. Many brokerages also posted Buy calls for the stock, spurring buying interest. In addition, Venture plans to maintain its dividend of 50cts a share. Due to the volatile nature of the market, we advise investors who are in for the punt to take profit this afternoon.
• Maintain Outperform with a target price of S$6.00.
Singapore Airport Terminal Services (SATS SP, S$1.12)
• SATS announced that it is going to make a mandatory cash offer, to acquire all the issued ordinary shares in the capital of Singapore Food Industries Limited (SFI) other than those already owned, controlled or agreed to be acquired by SATS.
• So far, SATS has reported an 84% acceptance rate.
• Given a rapidly deteriorating aviation industry with airlines continuing to cut capacity, we do not see near-term catalysts for the stock. Exposure to a weakening UK economy through SFI also poses downside risks.
• Maintain Underperform with a target price of S$1.25.
Sell Jardine Matheson, Hyflux, F&N - Technically
Fraser & Neave (FNN SP; S$2.50) – SELL
The upside is likely to be capped at S$2.72 and its 30-day SMA at S$2.93.
• The stock gapped lower and followed through selling sent the price lower, forming a negative black candle. More selling is expected to follow suit with the next level of support at S$2.38 and S$2.20 (its low in Oct 08). Breaking below could induce further selling.
• Daily MACD is negative and RSI is heading lower.
• The upside is now likely capped by its gap at S$2.72 and its 30-day SMA at S$2.93.
Hyflux (HYF SP; S$1.77) – SELL
Stock could ease lower to close the gap at S$1.51-1.57 soon. The following support is at S$1.43.
• The stock broke below its consolidation triangle after falling below its support and 30-day SMA at S$1.80.
• Indicators are mixed at the moment. Its MACD is still negative but its RSI has hooked up sharply.
• Until a breakout above the S$1.80-1.88 resistance levels, the stock is still in a bearish phase. The stock could ease lower to close the gap at S$1.51-1.57 soon. The following support is at S$1.43.
Jardine Matheson (JM SP; US$17.50) – SELL
A short term rebound is possible but we expect the stock to head lower again to retest its Oct-lows at US$14.52.
• The stock reversed its downtrend yesterday with a hammer-like candle. This could probably lift the stock to close the gap at US$18.40 and possibly even US$20.00 resistance levels.
• MACD is still negative but improving while RSI is now oversold suggesting that a rebound could take place.
• As the longer term trend is still bearish, any rebound should be seen as an opportunity to sell. After this rebound, we expect the stock to head lower again to retest its Oct lows at US$14.52.
The upside is likely to be capped at S$2.72 and its 30-day SMA at S$2.93.
• The stock gapped lower and followed through selling sent the price lower, forming a negative black candle. More selling is expected to follow suit with the next level of support at S$2.38 and S$2.20 (its low in Oct 08). Breaking below could induce further selling.
• Daily MACD is negative and RSI is heading lower.
• The upside is now likely capped by its gap at S$2.72 and its 30-day SMA at S$2.93.
Hyflux (HYF SP; S$1.77) – SELL
Stock could ease lower to close the gap at S$1.51-1.57 soon. The following support is at S$1.43.
• The stock broke below its consolidation triangle after falling below its support and 30-day SMA at S$1.80.
• Indicators are mixed at the moment. Its MACD is still negative but its RSI has hooked up sharply.
• Until a breakout above the S$1.80-1.88 resistance levels, the stock is still in a bearish phase. The stock could ease lower to close the gap at S$1.51-1.57 soon. The following support is at S$1.43.
Jardine Matheson (JM SP; US$17.50) – SELL
A short term rebound is possible but we expect the stock to head lower again to retest its Oct-lows at US$14.52.
• The stock reversed its downtrend yesterday with a hammer-like candle. This could probably lift the stock to close the gap at US$18.40 and possibly even US$20.00 resistance levels.
• MACD is still negative but improving while RSI is now oversold suggesting that a rebound could take place.
• As the longer term trend is still bearish, any rebound should be seen as an opportunity to sell. After this rebound, we expect the stock to head lower again to retest its Oct lows at US$14.52.
Thursday, February 19, 2009
Technically sell OCBC, Venture; Buy Meiban
Technically…
Oversea-Chinese Banking Corp (OCBC SP; S$4.89 – SELL): Breaking below the S$4.80 support level is bearing over the immediate term.
• If it breaks below the S$4.80 support level, sentiment may turn bearish over the immediate term. Next support is much weaker at S$4.65, S$4.41 and S$3.90.
• Technical indicators are showing signs of exhaustion. MACD has confirmed its dead cross and stayed negative while RSI is still flat.
• Sell now ahead of the breakdown. Resistance is seen at S$5.15 and S$5.48 levels. Unless it can cut above these resistances to reverse the short-term bearish trend, any intermittent rebound may not be sustainable.
Meiban Group (MEI SP; S$0.145 – BUY): The breakout could lift the stock towards the S$0.165-S$0.17 resistance next.
• The stock broke out of its consolidation triangle after taking out its resistance at S$0.14.
• Both indicators are still showing positive signs.
• Aggressive investors could buy on weakness but put a stop below the S$0.12 level. The breakout could lift the stock towards the S$0.165-S$0.17 resistance next. Other investors should just stand aside for now.
Venture Corp (VMS SP; S$4.00 – SELL): A breakdown below S$4.00 would likely see the continuation of a longer term downtrend towards the S$3.60-3.65 levels next.
• The stock has broken out above its medium term trend line resistance. However, it is currently trading below the 30-day SMA at S$4.16. The next resistance is at S$4.70.
• MACD is still marginally positive but RSI has hooked downwards. Mixed indicators suggest that it is still in consolidation.
• After failing to close above its 30-day SMA after trying 3 times, suggest that the buying momentum is weak. There should have been a rally after the breakout of its medium term trend line but it appears that there is none forthcoming. A breakdown below S$4.00 would likely see the continuation of a longer term downtrend towards the S$3.60-S$3.65 levels next.
Fundamentally…
Asia-Pacific Strategic Investments (APSI SP; S$0.145 - SELL): APSI reflected a net loss of S$1.8m for 2QFY09 as demand for pre-need burial niches continue to falter. Maintain our Sell recommendation but cut target price to S$0.11 (from S$0.14) based on 2x P/BV.
China Essence Group (CESS SP; S$0.215 – BUY): A muted 3Q with unit sales being offset by ASP decline and margin erosion on higher raw material price. Reducing forecasts to factor in higher potato cost and lower margin. TP raised to S$0.34 as peer CY09 P/BV has moved up to 0.5x from 0.4x previously.
Oversea-Chinese Banking Corp (OCBC SP; S$4.89 – SELL): Breaking below the S$4.80 support level is bearing over the immediate term.
• If it breaks below the S$4.80 support level, sentiment may turn bearish over the immediate term. Next support is much weaker at S$4.65, S$4.41 and S$3.90.
• Technical indicators are showing signs of exhaustion. MACD has confirmed its dead cross and stayed negative while RSI is still flat.
• Sell now ahead of the breakdown. Resistance is seen at S$5.15 and S$5.48 levels. Unless it can cut above these resistances to reverse the short-term bearish trend, any intermittent rebound may not be sustainable.
Meiban Group (MEI SP; S$0.145 – BUY): The breakout could lift the stock towards the S$0.165-S$0.17 resistance next.
• The stock broke out of its consolidation triangle after taking out its resistance at S$0.14.
• Both indicators are still showing positive signs.
• Aggressive investors could buy on weakness but put a stop below the S$0.12 level. The breakout could lift the stock towards the S$0.165-S$0.17 resistance next. Other investors should just stand aside for now.
Venture Corp (VMS SP; S$4.00 – SELL): A breakdown below S$4.00 would likely see the continuation of a longer term downtrend towards the S$3.60-3.65 levels next.
• The stock has broken out above its medium term trend line resistance. However, it is currently trading below the 30-day SMA at S$4.16. The next resistance is at S$4.70.
• MACD is still marginally positive but RSI has hooked downwards. Mixed indicators suggest that it is still in consolidation.
• After failing to close above its 30-day SMA after trying 3 times, suggest that the buying momentum is weak. There should have been a rally after the breakout of its medium term trend line but it appears that there is none forthcoming. A breakdown below S$4.00 would likely see the continuation of a longer term downtrend towards the S$3.60-S$3.65 levels next.
Fundamentally…
Asia-Pacific Strategic Investments (APSI SP; S$0.145 - SELL): APSI reflected a net loss of S$1.8m for 2QFY09 as demand for pre-need burial niches continue to falter. Maintain our Sell recommendation but cut target price to S$0.11 (from S$0.14) based on 2x P/BV.
China Essence Group (CESS SP; S$0.215 – BUY): A muted 3Q with unit sales being offset by ASP decline and margin erosion on higher raw material price. Reducing forecasts to factor in higher potato cost and lower margin. TP raised to S$0.34 as peer CY09 P/BV has moved up to 0.5x from 0.4x previously.
Wednesday, February 18, 2009
Olam International – SELL
Still holding above its 30-day SMA. Resistance is at S$1.36 and S$1.50.
MACD is about to confirm its dead cross while RSI has hooked downwards.
The stock could be heading lower to retest the breakout level at S$1.05-1.14next if the S$1.27 support gives way. Aggressive investors should only think ofbuying if this support level holds. Take profit for now.
Technically sell SIA, Golden Agri, Wilmar
Technically…
Singapore Airlines (SIA SP; S$9.97 – SELL): Fallen below its consolidation triangle’s support and its 30-day SMA, suggesting that longer term downtrend has resumed. Could retest its October lows of S$9.05/S$8.83.
• The stock is fallen below its consolidation triangle’s support and also its 30-daySMA. This breakdown suggests that the longer term downtrend would likelyhave resumed.
• Indicators are looking negative with the RSI hooking downwards from a neutralposition. MACD has also maintained its negative stance and hence anyrebound would likely be weak.
• Maintain sell as any rebounds towards its resistance at S$11.00 and S$12.20should be seen as a selling opportunity. The stock could fall to retest itsOctober lows of S$9.05 and S$8.83 next.
Golden Agri-Resources (GGR SP; S$0.275 – SELL): Broke below its short term uptrend channel, suggesting that the longer term downtrend has resumed. S$0.26/S$0.21 could be tested soon.
• The stock broke below its short term uptrend channel yesterday and this is asign of weakness. The breakdown also suggests that the longer termdowntrend has resumed. Resistance is at S$0.30.
• Its MACD just confirmed its dead cross while RSI has hooked down afterfailing to climb above its trend line.
• S$0.26 and S$0.21 could be tested soon. Sell.
Wilmar International (WIL SP; S$2.89 – SELL): Tested its support turned resistance at S$3.10-3.14 but failed to close above it. This could cause further selling pressure and the stock could test the S$2.60/2.26 support.
• The stock tested its support turned resistance at S$3.10-3.14 but failed toclose above it. This would likely result in further selling pressure after fallingbelow its 30-day SMA (S$2.93).
• Indicators have just turned negative with the MACD confirming its negativecrossover.
• The stock would likely re-rate downwards to the next support at S$2.60 andS$2.26 respectively.
Fundamentally…
Lion Asiapac Limited (LAP SP; S$0.12 - HOLD): Excluding gains on sales of investments, 1H results were weak. The Company has announced restructuring of its electronics business which could see inventory and receivables write offs. We maintain HOLD with S$0.15 TP.
MAP Technology Hldgs Ltd (MAP SP; S$0.255 - SELL): Reported worse-than-expected 4Q but remains in net cash and has sustained its 1.77 US cts dividend (more than 10% dividend yield. We switch to P/BV valuation with S$0.195 TP. Downgrade from HOLD to SELL.
Singapore Airlines (SIA SP; S$9.97 – SELL): Fallen below its consolidation triangle’s support and its 30-day SMA, suggesting that longer term downtrend has resumed. Could retest its October lows of S$9.05/S$8.83.
• The stock is fallen below its consolidation triangle’s support and also its 30-daySMA. This breakdown suggests that the longer term downtrend would likelyhave resumed.
• Indicators are looking negative with the RSI hooking downwards from a neutralposition. MACD has also maintained its negative stance and hence anyrebound would likely be weak.
• Maintain sell as any rebounds towards its resistance at S$11.00 and S$12.20should be seen as a selling opportunity. The stock could fall to retest itsOctober lows of S$9.05 and S$8.83 next.
Golden Agri-Resources (GGR SP; S$0.275 – SELL): Broke below its short term uptrend channel, suggesting that the longer term downtrend has resumed. S$0.26/S$0.21 could be tested soon.
• The stock broke below its short term uptrend channel yesterday and this is asign of weakness. The breakdown also suggests that the longer termdowntrend has resumed. Resistance is at S$0.30.
• Its MACD just confirmed its dead cross while RSI has hooked down afterfailing to climb above its trend line.
• S$0.26 and S$0.21 could be tested soon. Sell.
Wilmar International (WIL SP; S$2.89 – SELL): Tested its support turned resistance at S$3.10-3.14 but failed to close above it. This could cause further selling pressure and the stock could test the S$2.60/2.26 support.
• The stock tested its support turned resistance at S$3.10-3.14 but failed toclose above it. This would likely result in further selling pressure after fallingbelow its 30-day SMA (S$2.93).
• Indicators have just turned negative with the MACD confirming its negativecrossover.
• The stock would likely re-rate downwards to the next support at S$2.60 andS$2.26 respectively.
Fundamentally…
Lion Asiapac Limited (LAP SP; S$0.12 - HOLD): Excluding gains on sales of investments, 1H results were weak. The Company has announced restructuring of its electronics business which could see inventory and receivables write offs. We maintain HOLD with S$0.15 TP.
MAP Technology Hldgs Ltd (MAP SP; S$0.255 - SELL): Reported worse-than-expected 4Q but remains in net cash and has sustained its 1.77 US cts dividend (more than 10% dividend yield. We switch to P/BV valuation with S$0.195 TP. Downgrade from HOLD to SELL.
SP Ausnet – BUY
The stock broke out of its long term downtrend channel recently and has been climbing to current levels.
Its MACD is losing momentum while RSI has hooked below its support.
The resistance at S$1.07 and S$1.16 would continue to be tough to break now. Aggressive buyers should wait for a pullback, to close to its S$0.99 support before getting in. Cut losses if the price falls below S$0.975.
China Fishery – SELL
It breached its 30-day SMA yesterday. The stock could be heading towards its double resistance at S$0.72-0.735 levels.
MACD is still positive while RSI is still rising. RSI has yet to reach its overbought region, suggesting that there is still some upside left.
The downside break of its triangle was a bearish sign for the medium term. This rebound is not likely to be sustainable. Sell on rebound for now. Support is at S$0.605 and S$0.55.
BDI rose 49 points after falling 3 consecutive days
Good trading opportunity if BDI continues to head north.
Baltic Dry Index (BDI) rose 49 points or 2.7% to 1,895 after falling for three consecutive days.
We might see some upside in share prices of dry bulk shipping stocks if the BDI continue to rally.
Our top trading stocks are STX Pan Ocean (STX SP), China COSCO (1919 HK) and Pacific Basin (2343 HK).
Baltic Dry Index (BDI) rose 49 points or 2.7% to 1,895 after falling for three consecutive days.
We might see some upside in share prices of dry bulk shipping stocks if the BDI continue to rally.
Our top trading stocks are STX Pan Ocean (STX SP), China COSCO (1919 HK) and Pacific Basin (2343 HK).
Tuesday, February 17, 2009
Monday, February 16, 2009
United Overseas Bank (UOB SP; S$11.36) – SELL
The stock has fallen below its Triangle support in January, which is a medium term bearish sign. For now, it appears to be a slight pick up in upside momentum after the trend line breakout last Friday. Nevertheless, it is still bearish as it is also below its 30-day SMA.
Any rebound towards the S$12.05 and S$12.75 resistances is a sell.
Technical indicators are improving slightly. MACD remained negative while RSI is hooking up but still below the 50-point neutral mark.
After this minor rebound, we expect the stock to ease towards S$11.00 and S$10.40 before another major bottom is reached.
Oversea-Chinese Banking Corp. (OCBC SP; S$5.01) – SELL
If it breaks below the S$4.80 support level, sentiment may turn bearish over the immediate term. Next support is much weaker at S$4.80, S$4.65 and S$4.41.
Technical indicators are showing signs of exhaustion. MACD has confirmed its dead cross and stayed negative while RSI is still flat.
Sell into strength towards the S$5.15 and S$5.48 resistance levels. Unless it can cut above these resistances to reverse the short-term bearish trend, any intermittent rebound may not be sustainable.
DBS Group Holdings (DBS SP; S$8.39) – SELL
The stock appears to be trapped in a range between S$7.60 and S$10.30 for the last 3 months. A breakout on either side would give light to where the stock is headed in the next 2 months.
Mixed technical readings suggest volatile pattern ahead. MACD has turned negative again while RSI signal line has hooked up but still below its trend line.
Sell on strength, if possibly near its S$8.66-9.20 resistance. It is also crucial for the stock to hold above S$7.60 now that it is below the 30-day SMA. Failure to do so could see the stock tumbling towards the next support at S$7.06 and S$6.62 next.
Friday, February 13, 2009
Bulk declines ahead
We held a conference call with Peter Kerr-Dineen, chairman of leading ship broker, Howe Robinson, and former chairman of the Baltic Exchange. KerrDineen’s outlook for the dry-bulk market reinforced our view that the sector retains substantial oversupply risk and that freight rates will remain under pressure in both short and medium term. As such, the industry continues to face a deflationary asset-valuation prospect and we maintain our Underweight recommendation on the sector.
Demand remains benign. On demand, Kerr-Dineen is above consensus, forecasting flat to a 20m tonnes decline for iron ore, and small falls for both coal and grain, while China coastal shipping should grow at 5%. We broadly agree with these estimates, with the exception of China coastal shipping, which we expect to contract as coal shipped from northern ports to southern power plants suffers with weak power generation. The risk to our view remains that there is little import substitution if iron-ore prices remain high, permitting Chinese mines higher on the cost curve to remain viable.
Oversupply still a key concern. The Baltic Dry Index (BDI) traded in a normal range of 1,000-2,000 band from 1985 until 2003, when the supercycle took off. At the bottom of the range, vessels cover cash operating costs as utilisation rates fall to 80-82%, and then fully cover buildup costs (including depreciation and interest) as utilisation hits 95%. Kerr-Dineen flagged that the massive supply/demand disjoint will take a long time to balance, resulting in the market reverting to the long-term trading range of 1,000-2,000 in 2009 (we forecast 1,650), but without major cancellations/delays in deliveries and scrapping the market is likely to head down to below 1,000 in 2010 (we expect an 1,120 average for 2010).
Short-term squeeze to end. The short-term BDI bounce is driven by Chinese ore traders restocking and with idle vessels hitting 130 at year end it created a shortage of available tonnage in February. However, we believe the actual underlying demand in China remains subdued given the gloomy outlook for property projects, which account for 40% of steel usage. KerrDineen expects capacity to become available in March easing supply constraints allowing freight rates to decline again.
We could head back to 1986 asset-price levels. Asset price deflation for ship values will be dramatic if the market is going to head back down to below 1,000, with vessels then being valued at scrap. At the other extreme, a premium to new-build value and in a normal cycle, values should reflect the mean cost of building a new vessel less straight-line depreciation of 4% per annum. So, we could be potentially heading back to 1986 levels if 2010 results in a sub-1,000 level again and cash costs struggle to be covered.
Japan shippers remain a conviction SELL because earnings will collapse from FY3/09 onwards, as 45-60% of their recurring profits came from the dry-bulk spot market in FY3/08 during the super commodity cycle in 2003-08. The commodity super cycle is petering out as supply increases to meet past demand expectations of high perpetual growth. Meanwhile, performance of Japan’s container-shipping businesses (second-largest segment in sales terms) will remain weak with no recovery until 2010, given slowing global demand and excessive capacity in the market. We have a SELL rating on Mitsui OSK (9104 JP - ¥577 - SELL) (30% downside, 0.8x FY3/10CL PB), and Underperforms on Nippon Yusen (9101 JP - ¥457 - U-PF) (23% downside, 0.7x FY3/10CL PB) and Kawasaki Kisen (9107 JP - ¥362 - U-PF) (12% downside, 0.5x FY3/10CL PB).
Regional - SELL China Cosco and U-Ming. Regional shippers’ share prices will also come under pressure as spot freight rates decline and with the realisation that asset prices will continue to plummet. With 80% exposure to the spot market, 43% of capacity in capesize vessels, high charter costs and an expensive new build programme, China Cosco (1919 HK - HK$5.11 - SELL) sees 35% downside potential to our target price of HK$3.34. Elsewhere in Taiwan, we remain bearish on U-Ming Marine (2606 TT - NT$44.0 - SELL), which carries 40-50% spot-market exposure and sees 34% downside to our price target.
Demand remains benign. On demand, Kerr-Dineen is above consensus, forecasting flat to a 20m tonnes decline for iron ore, and small falls for both coal and grain, while China coastal shipping should grow at 5%. We broadly agree with these estimates, with the exception of China coastal shipping, which we expect to contract as coal shipped from northern ports to southern power plants suffers with weak power generation. The risk to our view remains that there is little import substitution if iron-ore prices remain high, permitting Chinese mines higher on the cost curve to remain viable.
Oversupply still a key concern. The Baltic Dry Index (BDI) traded in a normal range of 1,000-2,000 band from 1985 until 2003, when the supercycle took off. At the bottom of the range, vessels cover cash operating costs as utilisation rates fall to 80-82%, and then fully cover buildup costs (including depreciation and interest) as utilisation hits 95%. Kerr-Dineen flagged that the massive supply/demand disjoint will take a long time to balance, resulting in the market reverting to the long-term trading range of 1,000-2,000 in 2009 (we forecast 1,650), but without major cancellations/delays in deliveries and scrapping the market is likely to head down to below 1,000 in 2010 (we expect an 1,120 average for 2010).
Short-term squeeze to end. The short-term BDI bounce is driven by Chinese ore traders restocking and with idle vessels hitting 130 at year end it created a shortage of available tonnage in February. However, we believe the actual underlying demand in China remains subdued given the gloomy outlook for property projects, which account for 40% of steel usage. KerrDineen expects capacity to become available in March easing supply constraints allowing freight rates to decline again.
We could head back to 1986 asset-price levels. Asset price deflation for ship values will be dramatic if the market is going to head back down to below 1,000, with vessels then being valued at scrap. At the other extreme, a premium to new-build value and in a normal cycle, values should reflect the mean cost of building a new vessel less straight-line depreciation of 4% per annum. So, we could be potentially heading back to 1986 levels if 2010 results in a sub-1,000 level again and cash costs struggle to be covered.
Japan shippers remain a conviction SELL because earnings will collapse from FY3/09 onwards, as 45-60% of their recurring profits came from the dry-bulk spot market in FY3/08 during the super commodity cycle in 2003-08. The commodity super cycle is petering out as supply increases to meet past demand expectations of high perpetual growth. Meanwhile, performance of Japan’s container-shipping businesses (second-largest segment in sales terms) will remain weak with no recovery until 2010, given slowing global demand and excessive capacity in the market. We have a SELL rating on Mitsui OSK (9104 JP - ¥577 - SELL) (30% downside, 0.8x FY3/10CL PB), and Underperforms on Nippon Yusen (9101 JP - ¥457 - U-PF) (23% downside, 0.7x FY3/10CL PB) and Kawasaki Kisen (9107 JP - ¥362 - U-PF) (12% downside, 0.5x FY3/10CL PB).
Regional - SELL China Cosco and U-Ming. Regional shippers’ share prices will also come under pressure as spot freight rates decline and with the realisation that asset prices will continue to plummet. With 80% exposure to the spot market, 43% of capacity in capesize vessels, high charter costs and an expensive new build programme, China Cosco (1919 HK - HK$5.11 - SELL) sees 35% downside potential to our target price of HK$3.34. Elsewhere in Taiwan, we remain bearish on U-Ming Marine (2606 TT - NT$44.0 - SELL), which carries 40-50% spot-market exposure and sees 34% downside to our price target.
Thursday, February 12, 2009
Wheelock Properties (WP SP; S$0.94) – SELL
The stock has fallen below its bearish wedge pattern and also its 30-day SMA (S$1.01). Both are bearish signs for the stock.
Indicators have yet to turn positive. A close above the 30-day SMA could kick start a new short term run. For now, the stock remains a sell.
Upside resistance is now at S$1.01 and S$1.10 while support is at S$0.92. Breaking below S$0.92 could send the stock lower towards S$0.81 next.
Synear Food Holdings (SYNF SP; S$0.255) – SELL
Has fallen below its support trend line and also its 30-day SMA. A pick up in selling pressure is likely since it has been staying below the moving average for the past month.
MACD is still in negative territory while RSI is flat. Any rebound would likely be weak.
Sell on strength may be a good strategy to adopt here. Any rebound to S$0.285 and S$0.325 is a chance to sell. Support is at S$0.25 and S$0.215.
Chartered Semiconductor (CSM SP; S$0.305) – BUY
The stock has rallied and breached its S$0.30 resistance after building a base above its 30-day SMA for a couple of weeks.
Its MACD has reconfirmed its bullish crossover while its RSI is still rising.
There should be a tad more upside for the stock with the next resistance at S$0.34 and S$0.375. We think this rebound could peak somewhere between these two resistances as the RSI is very close to its overbought region. Maintain buy for now but take profits on rally towards the said resistances or a break below S$0.26, which is a sign that the momentum is weakening.
Wednesday, February 11, 2009
Bank of America Tells Clients to Buy Shares of Seven Semiconductor. This explains why Chartered was up as one of them
Taiwan Semiconductor Manufacturing Co. and United Microelectronics Corp. were among the seven semiconductor makers raised to “buy” by Bank of America Corp. on the prospect the stocks will rally in 2010 on stronger demand for electronics.
The shares are cheap after tumbling last year and are poised to gain in the next 12 months as the recession ends and sales rebound, wrote analyst Daniel Heyler in a research report. Revenue at chip producers will likely grow more than 40 percent in 2010, he said.
“The industry is far healthier due to far fewer players and lower capital spending,” Heyler said. “This should enable the sector to recover as demand recovers.”
The Philadelphia Semiconductor Index plunged 48 percent in 2008, its worst year on record, as the economy shrank and the biggest financial crisis since the Great Depression forced investors to raise cash. In five months, the economy will start growing as government policies spur spending, according to the median economist estimate from a Bloomberg poll.
Taiwan Semiconductor, the world’s largest custom-chip maker, was raised to “buy” from “neutral,” while United Microelectronics, the second biggest, was lifted to “buy” from “underperform.”
The Hong Kong-based analyst also boosted his rating on Chipbond Technology Corp., ASM Pacific Technology Ltd. and Kinsus Interconnect Technology Corp., to “buy” from “underperform.”
He also lifted Chartered Semiconductor Manufacturing Ltd. and Advanced Semiconductor Engineering Inc. to “buy” from “neutral” and increased his recommendation on Semiconductor Manufacturing International Corp. to “neutral” from “underperform.”
The shares are cheap after tumbling last year and are poised to gain in the next 12 months as the recession ends and sales rebound, wrote analyst Daniel Heyler in a research report. Revenue at chip producers will likely grow more than 40 percent in 2010, he said.
“The industry is far healthier due to far fewer players and lower capital spending,” Heyler said. “This should enable the sector to recover as demand recovers.”
The Philadelphia Semiconductor Index plunged 48 percent in 2008, its worst year on record, as the economy shrank and the biggest financial crisis since the Great Depression forced investors to raise cash. In five months, the economy will start growing as government policies spur spending, according to the median economist estimate from a Bloomberg poll.
Taiwan Semiconductor, the world’s largest custom-chip maker, was raised to “buy” from “neutral,” while United Microelectronics, the second biggest, was lifted to “buy” from “underperform.”
The Hong Kong-based analyst also boosted his rating on Chipbond Technology Corp., ASM Pacific Technology Ltd. and Kinsus Interconnect Technology Corp., to “buy” from “underperform.”
He also lifted Chartered Semiconductor Manufacturing Ltd. and Advanced Semiconductor Engineering Inc. to “buy” from “neutral” and increased his recommendation on Semiconductor Manufacturing International Corp. to “neutral” from “underperform.”
Tuesday, February 10, 2009
Technically Sell Gallant Venture, Sell China Hongxing Sports, Buy Yanlord Land
Gallant Venture (GALV SP; S$0.10) – SELL
• Yesterday sharp break below its 30-day SMA is bearish for the stock in the immediate term. The long black candle adds to the bearishness.
• Undoubtedly, indicators would be negative with the MACD confirming its dead cross while RSI hooked down sharply.
• Expect a retest of its recent low of S$0.06 soon. The support at S$0.08 is weak. Resistance is seen at S$0.11 and S$0.14. Sell.
China Hongxing Sports (CHHS SP; S$0.19) – SELL
• The stock has stayed below its 30-day SMA for a long while now. Resistance is at S$0.20 and S$0.23.
• Technical indicators mixed right now with the MACD being negative but RSI is flat.
• The stock is likely to test its S$0.175 support now that it is below the S$0.195 level. A break below the S$0.175 is very bearish for the stock. The stock remains a sell for now.
Yanlord Land (YLLG SP; S$0.935) – BUY
• Breakout of its long term resistance trend line is bullish for the stock. As we mentioned earlier, a pullback was likely after the RSI rises above the 70pts mark.
• Positive daily indicators are still supportive of further gains. As long as the stock stays above the trend line from the October lows (at S$0.91), there is a good chance that it can still rally.
• Upside resistance is now at S$1.11 and S$1.29 while support is at S$0.91 and S$0.76. Buy now with a stop below the S$0.91 support because a break below that level is bearish for the stock. Maintain buy for now.
• Yesterday sharp break below its 30-day SMA is bearish for the stock in the immediate term. The long black candle adds to the bearishness.
• Undoubtedly, indicators would be negative with the MACD confirming its dead cross while RSI hooked down sharply.
• Expect a retest of its recent low of S$0.06 soon. The support at S$0.08 is weak. Resistance is seen at S$0.11 and S$0.14. Sell.
China Hongxing Sports (CHHS SP; S$0.19) – SELL
• The stock has stayed below its 30-day SMA for a long while now. Resistance is at S$0.20 and S$0.23.
• Technical indicators mixed right now with the MACD being negative but RSI is flat.
• The stock is likely to test its S$0.175 support now that it is below the S$0.195 level. A break below the S$0.175 is very bearish for the stock. The stock remains a sell for now.
Yanlord Land (YLLG SP; S$0.935) – BUY
• Breakout of its long term resistance trend line is bullish for the stock. As we mentioned earlier, a pullback was likely after the RSI rises above the 70pts mark.
• Positive daily indicators are still supportive of further gains. As long as the stock stays above the trend line from the October lows (at S$0.91), there is a good chance that it can still rally.
• Upside resistance is now at S$1.11 and S$1.29 while support is at S$0.91 and S$0.76. Buy now with a stop below the S$0.91 support because a break below that level is bearish for the stock. Maintain buy for now.
DOW - Not ready to give up 8,000
8,000 support still intact. The DJIA breached the 8,000pt psychological level last week, hitting a low of 7,845pts on Thursday before rebounding 5.5% to close the week at 8,280pts. This surprised us as we had expected the 8,000 support to succumb and minor wave (iii) to start.
Wave (ii) still in progress. The bounceback means that the minor wave (ii) rebound is still in progress. We are looking at a target of 8,500-8,800 before the next wave (iii) down leg begins.
Wrong if DJIA smashes 9,100pts. We would only be wrong about the wave (ii) rebound continuing if the DJIA topped 9,100 in the coming weeks as that would mean that the more bullish alternative wave count is in play. At the current juncture, we consider the alternative wave count to be a low-probability scenario.
Price-based index headed by IBM. Unlike most equity indices which are market cap weighted, the DJIA is a price-based index made up of 30 stocks. The top 10 account for 60% of the DJIA’s weighting or 4,770pts and the largest stock is currently IBM with a 9.3% weighting. Three financials, i.e. JP Morgan, Citigroup and Bank of America only chip in a combined 256pts or just 3.2%. Each US$1 decline in any of the DJIA stocks would shave 7.96pts from the DJIA.
Leaders show signs of breakout. The three largest DJIA stocks, IBM, Exxon and Chevron are showing signs of taking out their resistance trend lines. The next seven largest stocks, i.e. Johnson & Johnson, McDonalds, Procter & Gamble, 3M, United Technologies, Wal-Mart and Coca-Cola are currently trading below their respective 50-day SMA and resistance trend lines.
CapitaLand +8.0%; Players Covering Shorts
CapitaLand +8.0% at S$2.55 in strong volume, top percentage gainer among STI stocks, as short-sellers rush to cover positions following developer''s confirmation of rights issue, say dealers "The stock is a short-term buy as people who short-sold previously based on recent speculation of a rights issue are now covering their positions since the exercise is now official," says local brokerage dealer. Stock down 35.9% from early January peak of S$3.68 after Dow Jones Newswires first reported company mulling rights issue. "We think this forces existing shareholders to take up the issue to ensure they are not diluted," says Macquarie; reckons most investors will give management "the benefit of the doubt" with regard to ability to ride through current difficult market conditions. Resistance eyed at 20-day moving average of around S$2.78.
Monday, February 9, 2009
CapitaLand Posts 88% Drop in Quarterly Net, Sells Rights Shares
CapitaLand halt trading since this morning. And now the news is out.
CapitaLand Ltd., Southeast Asia's largest property developer, will raise S$1.84 billion ($1.2
billion) after reporting an 88 percent slump in its fourth quarter profit.
Net income for the three months ended Dec. 31 fell 88 percent to S$78 million ($52 million) from S$674.7 million a year earlier, the company said in a statement to the Singapore exchange.
Revenue declined to S$703.7 million from S$1.32 billion a year earlier, the statement said.
So what is the theorectical share price?
Last done: $2.36
Terms of Right issur: 1 right for 2 shares
Conversion price: $1.30
Implied price during opening: ((2 x $2.36) + $1.30) / 3 = $2.006
CapitaLand Ltd., Southeast Asia's largest property developer, will raise S$1.84 billion ($1.2
billion) after reporting an 88 percent slump in its fourth quarter profit.
Net income for the three months ended Dec. 31 fell 88 percent to S$78 million ($52 million) from S$674.7 million a year earlier, the company said in a statement to the Singapore exchange.
Revenue declined to S$703.7 million from S$1.32 billion a year earlier, the statement said.
So what is the theorectical share price?
Last done: $2.36
Terms of Right issur: 1 right for 2 shares
Conversion price: $1.30
Implied price during opening: ((2 x $2.36) + $1.30) / 3 = $2.006
SGX: Looking flat
Price action of Singapore Exchange (SGX SP) has been muted of late and we do not expect to see any changes in the short-term. The 14-day RSI stands at around 45 which indicates neutrality while the moving averages within the MACD chart is also looking flat. Coupled with the decrease in trading volume that reflects the lack of interest, we do not foresee a breakout move forthcoming in any direction.
Share price should be confined to the 4.74 – 5.35 range. Resistance at the 5.28 – 5.35 area is identified by the 100-day moving average and a series of daily highs while support at the 4.74 – 4.93 zone is attributed to the technical gap that occurred in Dec 08.
For our fundamental outlook on SGX, we have a SELL recommendation with a target price of S$3.95 based on 13x FY10F P/E.
Golden Agri-Resources: Still some room for further upside
Share price of Golden Agri-Resources (GGR SP) has seen its bollinger bands starting to widen which implies that more volatility is on the cards. Taken with the bullish moving average crossover within the MACD chart and with the 14-day RSI yet to hit the 70 mark, we believe that price action may be poised for further gains. We also do not view the upper bollinger band being violated by share price (which under certain circumstances may mean that the underlying security is overbought) as a major concern, as the bands are just in the initial stages of expansion.
Resistance is seen at the 0.335 mark, courtesy of the daily high on 07 Jan 09 and the 61.8% fibo retracement move from 22 Sep 08 to 28 Oct 08. In the event that price action turns bearish, however, support at the 0.285 – 0.29 region as identified by a series of moving averages and trading lows should serve to cap any additional downside.
For our fundamental outlook on Golden Agri-Resources, we have a TRADING BUY recommendation with a target price of S$0.60.
Straits Times Index: Narrow trading range may persist
Price action for the Straits Times Index (FSSTI Index) during the previous week was lacklustre as trading was kept in a considerably tight 49-point range from 1,697 to 1,746. The bollinger bands have also contracted sharply during the past four trading days, indicating that volatility may shrink even further. Coupled with the continued descent within the 14-day ADX, it is therefore highly probable that this narrow trading range seen in the STI could remain.
Furthermore, the 14-day RSI which is currently slightly below the 50 mark, has stood in an almost horizontal line for the last five trading sessions that signifies the lack of any trading momentum. Taken in all, we believe that the STI would trade and bounce around the 1,700 – 1,800 region for the week.
Nevertheless, in the event that price action were to trade beyond this range, we also note that the break of the 1700 / 1800 level is expected to translate into further downside / upside going forward. Should immediate support at around the 1,700 mark were to give way, further support would not be available until the 1,640 level. On the other hand, if initial resistance at the 1,806 – 1,812 area were to be broken, the ensuing momentum may push the index up to the 2 resistance level at the 1,850 – 1,880 region.
Friday, February 6, 2009
SSE A SHARE IDX (weekly chart for 1st week of Feb 2009)
This confirms that China very likely to be the first to recover from this Crisis.
Thursday, February 5, 2009
The Baltic Dry Index (BDI) continues to rally.
BALTIC DRY Index +14.6% at 1,316 Wednesday, or up 51.6% over past 12 sessions. Use the following link to track the BDI. http://www.dryships.com/pages/report.asp
OCBC Alert - wait it comes below 5
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Financials have been one of the weaker sectors dragging down the US markets recently. Locally, our 3 banks have not been able to outperform the STI either. With the reporting of FY084Q results kicking off next week, expect more weaknesses as more provisions are made for bad debts by banks in this detoriating economic environment.
OCBC is sitting precariously above a support channel and looks unlikely to stay above for much longer. A failure to rally strongly after breaking out of a downtrend channel last December reflects weakness in the counter. A below expectation results may just be the catalyst to jump-start another round of selling, eventually pushing it to as low as $4.
For those with SBL accounts, you may position yourself by shorting OCBC at about $5 and await the breakdown. Only a rally above $5.50 negates the bearish view but this appears to be an unlikely scenario now. You can also buy some put warrants to ride the bear. My recommendation is OCBCBk RBePW090403. Although $1++ appears expensive for a warrant, this is in fact the cheapest put on OCBC as it is trading at its intrinsic value. Thus, there's ZERO time decay for holding this warrant for the next 2 months.
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