Technically buy SPC

Despite the pullback in the STI, SPC has only consolidated and barely declined. Thus, SPC has strong relative strength vis-à-vis the STI.

We have mentioned that stochastics can remain oversold for prolonged periods of time when the trend is strong and SPC has done just this. In this case, overbought stochastics is actually an indication of strength rather than the typical bearish implications that an overbought reading has.

There is resistance at S$4.78, however, upon clearing S$4.78, the next key resistance is at S$5.82 which is a good amount of upside. Recommended stop is at S$4.00.

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SPC - Likely more near-term correction

- SPC could face more near-term downside pressure following the formation of a bearish engulfing pattern just under the 200-day MA resistance, which could possibly lead to a retest of the resistance-turned-support upper boundary of its 6-month uptrend channel.

- Meanwhile, the RSI and Force Index indicators have displayed bearish divergence to the price action over the last 3 weeks. Coupled with the MACD indicator making bearish crossover yesterday, our view is reinforced that further correction is very likely in the days ahead.

- We expect the correction to find an initial support at around $3.11 (upper boundary of 6-month channel); failure of which could see a test of the subsequent support at $2.92 (minor gap in Oct ’08 and minor trough in early Apr ’09)

- Any immediate resistance is pegged at around $3.49 (2009 high), ahead of $3.81 (minor peak in Oct ’08)

Buy HK Land, United Fiber, Sell SPC

United Fiber System (UFS SP; S$0.025) – BUY

• Appears to be forming a rounded bottom. Now that it is trading above its 30-day SMA, the chances of its climbing further have increased.

• MACD has just moved into positive territory suggesting that the buying momentum is still rising rising. However, its RSI is flat. Mixed indicators indicate that the stock is still in consolidation.

• Aggressive investors should only buy on weakness. Cut losses if the S$0.015 support gives way. Resistance is seen at S$0.04 and S$0.055.

United Fiber System is a group with significant regional presence and with synergistic operations in forestry, pulp production and construction.

Singapore Petroleum Corp (SPC SP; S$3.02) – SELL

• The stock has continued to climb upwards within its uptrend channel that begun since October last year. It has tested this channel’s resistance at S$3.22 recently but could not break it – the first sign of weakness.

• MACD is still marginally positive but RSI has hooked downwards from an overbought level.

• Expect more downside from here as selling accelerates. Any rebound back up to test the channel resistance is a chance to sell. Support is seen at S$2.75 and S$2.63.

SPC’s business activities include oil and gas exploration and production, gas pipelines, refining, terminalling and distribution, marketing, trading and sale of refined products. In the Singapore retail market, SPC continues to strengthen its brand and provide a comprehensive value proposition of quality products and excellent service.

Hongkong Land Holdings (HKL SP; US$2.36) – BUY

• The stock broke out of its short term downtrend resistance and rallied to a high of US$2.55. Since then, it has been under some selling pressure probably due to profit taking. Resistance is seen at US$2.58 and US$2.70.

• Technical indicators are still positive but are showing signs of lethargy. Daily RSI has hooked down.

• However, since the longer term charts are still positive, we think that the stock still warrants a buy. However, it may be better to buy nearer to support levels - US$2.27 and US$2.15 (its 30-day SMA). Investors who bought earlier may want to lock in some profits now.

Hongkong Land Holdings Limited is incorporated in Bermuda. Its primary listing is in London, and its shares are also listed in Bermuda and Singapore. The Group’s assets and investments are managed from Hong Kong by Hongkong Land Limited. Hongkong Land is a member of the Jardine Matheson Group.

SPC and Venture - buy on pull back

SPC has been running up in a strong uptrend. 30 and 50 moving averages have spread out nicely. There is resistance overhead at S$2.85 to S$2.86.

We anticipate price to test S$2.85 and sell off slightly. A subsequent rally from the sell off would be a good place to enter.

We recommend waiting for the next dip in the stochastics and cross over (red line to cross over blue) for entry. SPC has almost no resistance overhead until S$3.10. We highly recommend shifting stops to breakeven after some profit has been made.


Venture is in a similar situation to SPC. It is in an uptrend, and going to encounter overhead resistance in the S$5.02 to S$5.05 region.

The main plus point here is that the next resistance levels are reasonably far away. S$5.30 and S$5.80.

We recommend buying on the next dip/pull back using a stochastic cross over (same as SPC).

We highly recommend shifting stops to breakeven after some profit has been made.

SPC - Likely more near-term upside

- SPC is likely to experience more near-term upside, following a positive retest of the key support provided by the 3-month uptrend line and 50-day moving average.

- The stock had not only formed a bullish engulfing candlestick but the subsequent confirmation saw SPC break above the centre line of the Bollinger Band.

- Besides the positive crossover of the Stochastic indicator just above the oversold region, the OBV indicator continues to remain bullish.

- We peg the immediate resistance at $2.52 (23.6% Fibonacci retracement and also near the upper Bollinger Band) ahead of $2.99 (38.2% Fibonacci retracement).

- We see immediate support around S$2.10 - 2.20, ahead of the Oct’ 08’s low of $1.76.