Golden Agriculture: Reversal signal?

Golden Agriculture was sold down yesterday due to negative news regarding Sinar Mas group:

Cargill wants Sinar Mas to address concerns over its agri practices. Cargill has threatened to drop Sinar Mas as a supplier if it fails to address general concerns over alleged illegal logging, a statement on its website said. Top European palm-oil buyers such as Unilever and Nestle have already stopped buying palm oil from Sinar Mas after Greenpeace released a report about forest clearing by Sinar Mas. A statement on the Cargill website said the firm had asked the secretariat of the Roundtable on Sustainable Palm Oil (RSPO) − an industry body of planters and green groups − to investigate the allegations made by Greenpeace "about illegal forest clearance and the Indonesian palm oil company, Sinar Mas.".....

There are two listed plantation companies listed under the Sinar Mas Group: Golden Agri and PT Smart. If Cargill pulls Sinar Mas from its supplier list, Golden Agri’s reputation in the palm-oil products market could be further dented. Furthermore, Cargill would become the third client to remove Sinar Mas from their supplier lists. To recap, Unilever and Nestle have stopped buying from the Sinar Mas Group since Dec 09 and Feb 10, respectively. Unilever accounted for 3% and Nestle for 0.2% of Golden Agri’s sales in 2009. Should Cargill follow suit, the impact could be more material at around 5% of its sales...

Read full report:
http://www.remisiers.org/research//GoldenAgri-260310[1].pdf

Golden Agriculture's price action today formed a doji, closing at 54.5c, seemingly recapturing this support level.  A doji formed after a long black candle in the previous session is a possible two stick reversal pattern which chart watchers call the Bullish Harami Cross pattern.

Although the MFI is down, suggesting a weakening buying momentum, the OBV has turned up suggesting that distribution has stopped for now and, indeed, reversed to see some accumulation.

We will need confirmation in the next session to see if the reversal signal is valid.  In the event of a reversal, the initial resistance is at 56c, a many times tested support turned resistance.  This is followed by 57.5c and 60c, the recent high.

CapitaMalls Asia: White spinning top.

A possible reversal signal is observed in CapitaMalls Asia's chart today: a white spinning top.  This has happened on the back of lower volumes as its price declined, suggesting a classic textbook case of a low volume pullback.  MFI has flattened while the OBV is still showing a gradual rise.  This suggests that the selling momentum has stalled and that accumulation is ongoing.

The 50dMA seems determined to act as the immediate support as its rate of decline slows.  The price action is caught between the 50dMA and the 20dMA which has flattened at $2.31.

Bollinger bands will squeeze as the volatility in price action falls.  The probability of an upward movement in price is higher than a downward movement in this instance.  The target of such an upward movement is the top of the base formation which is also where we find major resistance and that is at $2.55.

Saizen REIT: 1,627 lots bought up.

It is quite obvious that Saizen REIT is rangebound between 16c and 17c since late February.  The gradually rising MAs suggest that the longer term uptrend is intact.

Today, a single buy order at 3pm mopped up the entire sell queue at 16.5c. 1,627 lots bought up.  This caused the MFI and OBV to turn sharply up.  The MFI has been dipping in and out of the oversold region recently.  There is a lot of room for the index to move in the event of an upturn in price before it becomes overbought.

Is the high volume buy up today a one-off event or is it the beginning of more aggressive buy ups? Your guess is as good as mine. My purchase of Saizen REIT units is based on its compelling valuation and a potential upgrade by rating agencies.  I shall wait and see.

Golden Agriculture: Broke supports on higher volume.

Golden Agriculture broke all supports today on higher volume to touch a low of 53c before closing at 54c.  That the OBV and MFI both show obvious decline indicates heightened selling pressure.

The rising 100dMA is at 52c which happens to be the recent low as well.  This should provide some support in the event that the price continues to decline.  This is where I will queue to buy more but I will not break my piggy bank because if this breaks, the rising 200dMA is at 47c.  That is some way to fall.

Is this a whipsaw or the start of a downtrend? It is hard to say at this point in time but it is never wrong to be cautious especially when today's decline happened on the back of much increased volume.

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From Budi Wijana, Vice President Director, PT SMART Tbk, in response to the Indonesia Stock Exchange’s letter dated 18 March 2010:


"Nestle has recently announced that it has discontinued the Company as its supplier for Nestle’s manufacturing in Indonesia arising from a recent Greenpeace’s report based largely on earlier related allegations. We will continue our dialogue with Nestle and seek ways to verify the Greenpeace’s report.


"We would like to reiterate our commitment to the production of sustainable palm oil, our full compliance with the Indonesian Government rules and regulations, and our adherence to the Roundtable on Sustainable Palm Oil’s principles and criteria for sustainability.

"Sales to Nestle represented approximately 0.2% of the Company’s total sales in 2009. The outstanding contracts will be fulfilled by Nestle. Nestle’s decision will not have a material impact on the Company’s financial condition because the size of its purchases is not significant and our products have ready buyers and a strongly established and growing demand base in both the local and export markets."

http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_06519F0A59E673D3482576EB0038E4A9/$file/BEINestlePutuskanKontrakNo007190310EngFinal.pdf?openelement

Healthway Medical: Touched 16c.

A declining MFI shows weakening buying momentum but a flat OBV says that there is no distribution.  So, the overall picture is one where selling is being absorbed quite well.  This is all the more impressive when we realise that the volume is the highest in seven sessions.  However, the volume is still lower than ten sessions ago when price action hit a high of 18.5c.  Therefore, overall, the picture of a low volume pullback is still intact.

Forming a doji at 16c today is meaningful.  I have suggested that 16c is an important support as it is the midpoint of the recent high at 18.5c and the recent low of 13.5c.  If 16c holds up, we would have the formation of a higher low but if 16c breaks, Healthway Medical could see the formation of a double top.  I would keep an eye on 16c.  It is critical that it holds up.

Related post:
Healthway Medical: A beautiful symmetry again.

LMIR: Bought more at 48c.

LMIR's chart looks like it might be in the early stages of a symmetrical triangle.  Since late January, the price action has been trapped between 47.5c and 51c.  Stochastics has turned up and seems ready to emerge from the oversold region.

Using Fibo lines to determine where the supports are, we see clearly that 48c and 47.5c are important supports.  47.5c is the support to watch.  If it breaks, the symmetrical triangle is out the window and we have to see if the rising 200dMA holds up well as the new support then.

As the reason for buying more units in LMIR recently is to lock in a yield of 10% per annum, I am unfazed by any near term weakness in the counter's price.  In fact, I bought more at 48c.

CapitaMalls Asia and AusGroup.

CapitaMalls Asia: Price closed below the trendline support today at $2.29, after touching a low of $2.28 (the 38.2% Fibo line).  Technically, this is supported by the declining 50dMA.  The decline is on the back of low volume with the MFI and OBV more or less unchanged.  These signs suggest that a benign low volume pullback is taking place.  However, this does not mean that price would not continue to drift downwards.  If the $2.28 support is broken, the next support level is at $2.25 which would see me buying more.

AusGroup:  Nice up day with price closing at resistance provided by the 50dMA at 60c after hitting a high of 61.5c on the back of increased volume.  MFI and OBV have both turned up which suggest that buying momentum and accumulation are both moving up a notch. 

We have a buy signal on the MACD as well and it seems poised to cross above zero. Resistance is provided by the merged 100d and 200d MAs at 63c. Initial support is at 58.5c. A negative is the long wick on the white candle which suggests selling later on in the session today.  This adds a cautionary tone in an otherwise positive picture.

Charts in brief: 23 Mar 10.

Golden Agriculture: 56.5c, up 0.5c. The rising 20dMA has been doing a great job of supporting the price so far.  Buying at the initial support of 55.5c yesterday and a bid higher at 56c as a hedge, I am now waiting to buy more if the price corrects to 55c and 54.5c.  No satisfaction as yet.  Lower trading volume since the high formed on 10 March suggests that this is a low volume pullback.  Looking at the OBV, we do not see any obvious distribution.  Looking at the MFI, 50% appears to be functioning as a support.  The underlying support is intact.

Healthway Medical: A low volume black candle day as price closed unchanged at 16.5c.  MFI continues to decline and a lower low is a forgone conclusion, suggesting that the buying momentum is weakening yet again.  OBV has flattened and this suggests a temporary respite from distribution activities.  16c remains the support to watch.

CapitaMalls Asia:  $2.32.  I did a FA for this counter recently when a reader asked me about it.  This is the first time I am doing a TA for this counter as I think it is beginning to look interesting technically.  The counter is fundamentally strong and, technically, I see a fairly good entry price at $2.30.

Looking at the OBV, it is fairly obvious that distribution peaked on 11 Feb 10.  There has been a slow but gradual accumulation since then.  Despite a sharp decline in the MFI since 12 Mar 10, the OBV has been rising gradually.  This suggests that even as the buying momentum declines, the weakness is being seized to accumulate more shares here as weak holders sell out.

Price action went momentarily below the trendline support today which is almost where the 50dMA is at $2.30.  $2.30 is also the 50% Fibo support.  There is a good chance that the price will move higher from here as the 20dMA is rising and there is an uptrend channel since the price bottomed in February at $2.19.  The target of the next move up could be estimated by looking at the trendline resistance which I have drawn by connecting the two recent highs.  In time, we could expect the top of a larger base formation at $2.55 to be tested.

Downside seems limited.  In the event that the price moves lower, supports are at $2.28 and $2.25, the 38.2% and 23.6% Fibo lines.

Charts in brief: 22 Mar 10.

Healthway Medical: Decline continues as the MACD makes a bearish crossover with the signal line.  MFI's decline is accompanied by a decline in OBV.  This accentuates the bearish picture.  The 50dMA might be tested next at 16c.  Technically, 16c should be a support to watch.  Please see: Healthway Medical: A beautiful symmetry again.


Golden Agriculture: Price hits first support level at 55.5c today.  Even as the MACD makes a bearish crossover with the signal line, the MFI and OBV remain more or less unchanged.  The technicals suggest that there is weakness but no strong selling pressure.  I would continue to accumulate at supports as we might see 55c and 54.5c tested. Please see: Golden Agriculture: Approaching supports.

AIMS AMP Capital Industrial REIT: We have a buy signal on the MACD today as price rose 0.5c to close at 22c.  It remains to be seen if the flat 50dMA at 21.5c is resistance turned support.  Top of the base formation is at 23c.

Saizen REIT: A friend mentioned to me that it is very hard to get units of Saizen REIT at 16c these days.  Today, some lucky fellow queueing to buy at 16c got 3 lots.  Saizen REIT's daily MAs continue rising gently.  MFI is in the oversold region.  In the weekly chart, the Bollinger bands are beginning to squeeze and this bears watching.  Technically, the uptrend is intact and suggestion is that the picture might not remain placid for too long.

LMIR: Although the price stayed at and above the 49c support throughout the day, MFI and OBV declined sharply with the price moving down to 48.5c minutes before closing and then 48c in a post closing trade.  That the decline was on the back of increased volume suggests that the price might go on to test the previous low at 47c and the rising 200dMA 46c.  I would accumulate more then.  Please see: LMIR: Weakness is an opportunity.

Genting SP: Obvious downtrend.

Genting SP is in an obvious downtrend.  On 5 March, I said: "If the 50wMA (93.5c) is taken out in the next session, we might see the price rising to the 20dMA, which is descending sharply and should be at 97c then. All eyes would be on whether the price action would be able to break through the 20dMA to close higher, failing which, a resumption of the downtrend is more likely. I still see strong supports provided by the 100wMA (74c) and the 200wMA (70c) then."

Genting SP's price rose past the 20dMA and reached a high of 97.5c on 17 March, forming a white spinning top in the process.  The higher high formed on the MFI shows that buying momentum has strengthened recently.  However the OBV's rise does not mirror the steep fall weeks ago which suggests that the recent accumulation is weak.

On 15 Mar, I said:"This counter has been enjoying a revival lately but on decreasing volume. Daily volume has been lower with the price moving higher since 5 March, the day when price and volume spiked up. This suggests that the buyers are, probably, mostly shortists covering their positions. This is not to say that the price cannot move higher but without a significant number of new participants coming in on the long side, any move upwards would lack sustainability."  The negative divergence in price action and volume is still quite obvious and my earlier observations are still valid.

In the event that price does move up higher, immediate resistance is provided by the 200dMA at 99.5c.  Declining 50dMA is at $1.05.  Lady Luck could be quite generous on occasions.



Related post:
Genting SP: Stale bulls' second chance.
Charts in brief:15 Mar 10.