Saizen REIT: Recent insider purchases.

17 May 2010:

Ms. Yvonne Ho Yuk Yee, spouse of Mr. Raymond Wong Kin Jeon, has purchased 186,000 Units on the open market. Mr. Wong is therefore also deemed to be interested in the 186,000 Units owned by Ms. Yvonne Ho Yuk Yee and held by HSBC as depository agent.  

Amount of consideration (excluding brokerage and stamp duties) per share paid or received: 16.5c.

19 May 2010:

Ms. Yvonne Ho Yuk Yee, spouse of Mr. Raymond Wong Kin Jeon, has purchased 300,000 Units on the open market. Mr. Wong is therefore also deemed to be interested in the 300,000 Units owned by Ms. Yvonne Ho Yuk Yee and held by HSBC as depository agent. 

Amount of consideration (excluding brokerage and stamp duties) per share paid or received: 16.5c.

Mr. Raymond Wong Kin Jeon's deemed interest now stands at 19,073,390  Units or 2.001% of current issued share capital. See announcements here.

This is one thing which helps to convince me that Saizen REIT's fundamentals are sound. Logically, if it is a basket case, insiders would not be buying.

Some people tell me that I should have sold my Saizen REIT units at 17.5c and buy again when it is lower to make more money.  Hindsight is beautiful, isn't it? Well, I could have but my investment in Saizen REIT is not for trading.  Even at 17.5c, I consider it a bargain.  Why would I sell?  Of course, this is informed by FA.

As always, how I treat each investment depends on my motivation for being invested in the first place as well as the prevailing circumstances.  The reasons for investing in Saizen REIT are still valid.  Circumstances have not soured in the present.  If anything, the REIT's fundamentals have improved and are likely to improve further. So, I am staying vested.

Related post:
Saizen REIT: 3Q FY2010 results.

Saizen REIT: Bought more at 16c.

Saizen REIT touched a low of 15.5c today.  As my investment in Saizen REIT is for the long term, I took a look at the weekly chart for clues.

The rising 50wMA is at 15.3c and should be at 15.5c next week. That there is buying interest in this REIT is seen in the higher high formed in the MFI and the upmove in the OBV.  The declining 100wMA should be at 16.5c next week.

Price could remain trapped between the support provided by the 50wMA and the resistance provided by the 100wMA in the near future without affecting the uptrend.

The Bollinger bands are narrowing. A couple of golden crosses seem to be in the works. An impending positive move in price is not an unreasonable expectation and is consistent with the REIT's improving fundamentals. Today, I bought more at 16c.

AIMS AMP Capital Industrial REIT: 20.5c.

Bought more units of AIMS AMP Capital Industrial REIT today at 20.5c.  It has been rangebound between 20.5c to 23c for months now.  So, buying at 20.5c, the support of the trading range seems fairly safe. 

However, the technicals suggest further weakness.  The MACD has plunged further into negative territory as price formed a gravestone doji. MFI has dipped into the oversold region after forming lower highs. OBV is declining slightly. Further weakness could see 19.5c tested, the low in Dec 09.

A quick look at the weekly chart shows a range from 20c to 23c as suggested by the Bollinger bands. So, although further weakness cannot be discounted, the downside seems limited.

Do not fear the selldown.

It is safe to say that there is a lot of fear in the air. Palpable? Almost. What are we to do? Well, I am sure everyone has his or her own opinion as to the best strategy in such a situation.  Maybe, I shouldn't be so sure. So, what do I think? Well, I have been sharing my thoughts in this blog and what I now think is largely the same as before.

For a stock which is clearly in a downtrend, sell into strength at resistance.  It might be a lower high but it is still a high.  We don't want to sell at a low.  Then, wait patiently for it to form a base or to rebound and form a higher low.  It would be safer to take up a long position then.

Not all stocks are in a downtrend.  For stocks of businesses with strong fundamentals with their uptrends still intact, buying at supports is still the way to go. Look to the technicals for possible negative divergence as a warning sign.  Certain stocks might be rangebound and if the businesses have strong fundamentals, buying at the support of the trading range is what I would do.

Generally, our motivations for being in the stock market would determine the strategy that we adopt.  For me, I am primarily in the stock market to secure a passive income stream.  So, I would accumulate stocks with strong fundamentals which provide high yields. Examples are AIMS AMP Capital Industrial REIT, LMIR, Saizen REIT and SPH.

I also invest in growth stocks but these are generally not known for big dividend payouts and I invest in these with a view to trade.  Examples are Golden Agriculure and Healthway Medical.  Recently, I tried my hands at CapitaMalls Asia and lost some money, if you remember.

Do I think we are having a meltdown? Are we going into another recession or even a depression? I don't think so. Informed by Jim Rogers and Marc Faber, I have talked about the next crisis being a currency crisis and we are seeing the precursors of that crisis.  For now, I believe that the stock market will be going higher in time. Fiat currencies are not going to do a disappearing act.  Governments around the world will not allow a collapse.  So, in crises, we find opportunities.

There would be some people who want to sell away all their shares now, fearing a meltdown, keep their cash and wait.  There would also be those who are keeping all their shares, believing them to be good investments, and would be buying more shares at lower prices to average down.  In both instances, I would say, look to the technicals as we want to avoid selling at the lows or buying at resistance. We should not be afraid but we should stay cautious. Good luck to us all.

Related posts:
What are investors to do in downtrend?
A correction? An opportunity.

STI: Falling through the 200dMA.

My last post on the STI scared quite a few people, I imagine. Well, the STI has closed below the 200dMA on relatively high volume.  Failing to recapture the 200dMA support is bearish, of course.

STI decreases 0.8% to 2,753.51 at closing
Thursday, 20 May 2010

© 2010 - The Edge Singapore

The MACD continues to pull away downwards from the signal line, increasing the distance with the signal line when it looked as if it was just closing the distance in the last few sessions. The sell signal in the last session was confirmed.

The MFI continues forming lower highs and being some distance from oversold, it could continue moving downwards with little trouble.  The OBV is steadily declining. The 20dMA seems set to form a dead cross with the 100dMA in due course.

The low achieved today at 2,735 just touched the uptrend line before bouncing to close somewhat higher at 2,753.  Will the trendline support hold up tomorrow?

Looking at the weekly chart, we find the next support provided by the 50wMA at 2,720 points. The previous low was at 2,660 points. To keep a semblance of an uptrend, the next low formed by the STI should be higher than 2,660 points. Well, there is one day left to the week.  How the STI behaves tomorrow could very well determine the tone of the market next week.

Incidentally, the declining 100wMA is no longer at 2,425 points.  It is now at 2,400 points. A declining MA is not a very strong support.  That's for sure.

Related post:
STI at 2425 points?

Golden Agriculture: Testing 200dMA support.

I sold half of my remaining position at 55.5c resistance on 10 May and hoped that the upward momentum could be sustained to hit 58c where I would sell my remaining shares but that did not happen.

Today, its price broke the 200dMA briefly to touch a low of 50.5c but closed at 52c.  This might be due to a little bounce in CPO's price today to close at RM2,470, up RM35 or 1.44%.  Clearly, the downtrends for both Golden Agriculture and CPO are intact.

If the price closes below the 200dMA, the near term supports are at 48c and 46c as suggested by the candlesticks.

Related post:
Golden Agriculture: An inverted cross.

FSL Trust: That sinking feeling.

FSL Trust's price is being battered for losing a big part of a 15% income from a long term charter.  If we think about it, proportionally, its unit price should not lose more than 15% as well. However, from a price of about 60c just before the news was made known, it has plunged to close at 44.5c today. At one point, it reached a low of 42.5c today.

MFI is in oversold territory.  OBV is still declining. However, the price decline in the last 13 sessions show clearly a pattern of low volume pullback.  The fundamentals notwithstanding, I sense an opportunity.  I would be very tempted to buy some at the 138.2% Fibo line which approximates 41.5c.  If the price should go as low as the 150% Fibo line which approximates 39c, I would probably get some.

Related post:
FSL Trust: A sinking ship?

Healthway Medical: Price levels to consider.

Selling most of my remaining shares in Healthway Medical at 15.5c resistance on 11 May instead of waiting to collect the 0.12c dividend turned out very well. Heatlhway Medical closed lower at 14c today. This is the support provided by the rising 200dMA which seems in danger of breaking as more than 20m shares were sold down at 14c today.

The MACD is still falling in negative territory.  MFI has been forming lower highs and OBV has been declining.  The technicals suggest continuing weakness. 

If the 200dMA is compromised, the longer term uptrend is in danger.  The previous bottom was at 13.5c.  This should provide some support.  If that gives, the candlestick resistance at 12.5c should become support.  12.5c was the resistance in a trading range which lasted for months and frustrated many. Price finally broke out of that trading range in the new year.  So, to me, 12.5c should be a strong support.  However, if price should fall back into that range, the support in the trading range is at 11c.

Many people remember the round number 10 and it was at 10c that I first started buying shares of Healthway Medical in mid 2009.  Will the price of Healthway Medical reach 10c again sometime this year? Personally, I rather doubt it but one never knows.  We can only wait and see.

Good luck to all who are still vested and good luck to those who would like to accumulate at lower prices.  Obviously, I am sitting on the fence.

Related posts:
Healthway Medical: A weak first quarter.
Charts in brief: 11 May 10.
Charts in brief: 10 May 10.

Charts in brief: 19 May 10.

The STI declined to test and break 2,780 today. We will have to see if it bounces back to close above 2,780 tomorrow or if it would continue its downward path.  If it continues to decline, there is potentially much room to fall.  I am still staying cautious and waiting to see some signs of a stronger support holding before adding to my positions.

STI declines 2.5% to 2,774.54 at closing
Wednesday, 19 May 2010

© 2010 - The Edge Singapore

CapitaMalls Asia: Closing at $2.10 after gapping down today confirmed a lower high for this counter.  The downtrend is intact.  I am 100% divested. See how the volume expanded on a down day? Sell signal seen on the MACD. MFI and OBV have both turned down. More likely than not, this counter is continuing its downtrend.

SPH: Price continues moving downwards towards the 200dMA at $3.70.  If tested, will it hold? We can only wait and see.

Given the current bearish atmosphere in the global stock markets, it pays to take a longer term view in our investments.  To this end, take a look at the weekly charts.  A stronger support for SPH is actually at $3.60, where we find the rising 50wMA.

LMIR: 47c support has been taken out.  With price closing at 45c today, I drew Fibo lines to find the next supports.  It appears that 44c is only a minor support as suggested by candlesticks.  If the decline continues, next major support is at 42c. As seen in the weekly chart drawn yesterday, 41c is support provided by the 100wMA but as this MA is still declining, if conditions are bearish enough, we might see 40c tested.

I am staying sidelined and will wait for the dust to settle.

Related post:
Charts in brief: 18 May 10.

Charts in brief: 18 May 10.

Nice little up day for the STI. I am staying defensive and waiting to see if the support at 2,780 holds. Global stock markets' almost relentless climb upwards is experiencing a few much overdue stumbles and falls. Before the markets go higher, they could go lower.

Earnings upcycle not enough to lift STI, says CIMB
Tuesday, 18 May 2010

© 2010 - The Edge Singapore

CapitaMalls Asia: Another up day as price closed at $2.16.  MACD continues rising in negative territory.  MFI is rising towards 50%.  OBV is rising.  However, the negative divergence between volume and price movement is glaring.  As price rises, volume decreases.  The volume should ideally increase in order to have a sustainable move up in price.

$2.19, the bottom of the base formation in February is likely to be a strong resistance. If we use the exponential 50dMA, we see something very interesting. It is at $2.19.

The Exponential MA, or EMA for short, has more weight given to more recent data. This is useful when we want to gain some insight into shorter term psyche of market participants as more recent price movements are fresher in their collective memories. Will CapitaMalls Asia test $2.19? That, I do not know but I know I would be 100% divested if it does as the technicals favour further weakness.  I believe that short sellers would find $2.19 almost irresistable.

SPH: On Monday, it closed for first time in a long time below the 100dMA. Today, the attempt to recapture the 100dMA support failed. I would wait to see if the 200dMA is tested and if it holds in such an instance. The 200dMA is currently at $3.70.  If the 200dMA holds, I might buy some.

LMIR: I am taking a longer term view with this counter. I continue to like its high yield and low gearing. In the shorter term, there is no question that it is bearish even though the weakness is on relatively low volume. I am looking at its weekly chart to gain insights into its longer term technicals.

It would seem that 47c is an important support provided by candlesticks and the rising 50wMA. OBV is more or less static which, to me, suggests that most unit holders are long term investors. The MFI has been forming lower highs and is currently at 50% which could act as support. Would I buy at 47c? As a hedge, perhaps.  I won't throw in the kitchen sink because the lower highs in price since 11 January this year give me a feeling of unease. 44c, anyone?

Saizen REIT: The recent report by Saizen REIT's manager seems to have reassured investors and although we are not seeing any enthusiastic buying up, we are not seeing any desperate selling either. Fundamentally, there is increasing recognition that this REIT is heavily undervalued.

I mentioned before that the descending 100wMA is exerting some downward force on the price of this REIT and it was at 17c last week.  This week, it is lower and approaching 16.5c.  If we look at the weekly chart, we see that the resistance provided by the100wMA has been challenged.  This happened yesterday. 

The rising 20dMA and 50dMA should inevitably form golden crosses with the descending 100wMA. Fibo line projections show 150% at 20.5c and 161.8% at 21c.  These would be my immediate targets in a breakout scenario.

Related posts:
SPH: Another black candle day.
LMIR: 1Q 2010 results.
Saizen REIT: 3Q FY2010 results.

Tea with AK71: Life.

I like the Bukit Merah and Telok Blangah area for all the gigantic trees.  They provide shade and soften the surroundings of the neighbourhoods with all their concrete structures.  These trees must be very old.  One of them fell today across several lanes in Jalan Bukit Merah just across from Jalan Membina and obstructed traffic in both directions, crushing a van in the process.  Traffic came to a standstill.

More than ten SBS buses lined up on the extreme left lane as they could not move on. Hundreds of passengers must have been affected. Cars had to back up, reversing all the way to the T-junction with Kim Tian Road.  Alternative routes were jammed up as well as it was the morning rush hour.  Imagine the chaos and I was caught in it!

As this took place close to my home, I turned back and came home, calling the office to take a day's leave from work. A frightening thought came to mind that it could have been me. What if the tree had fallen on my car and crushed me in the process?  Scary thought.  Life is so very fragile.

At home, I drew the curtains which I rarely do and let in the sunlight. I did some gardening, something I've not done for a while. I washed the balcony and cleaned the French windows. I boiled some barley water for my very bad throat and put some dirty laundry to wash, using a new washing powder my mom got for me which supposedly allows indoor drying without any odour.  I might go see a doctor for my throat later too.

All these generated a thought: I used to always fight for what is right and what should be. As I age, I understand more and more that, sometimes, it is futile to fight especially if the situation is beyond our control. Life can be uncomplicated which can only be a good thing.

OK, the washing machine is beeping which means the laundry is done. Have a good day, everyone!

STI at 2,425 points?

What we have is a sea of red.  Sentiments have not been so bearish in a long time as the HSI sank below 20,000 points.  I continue to believe that any rebound that comes along in the near future should be an opportunity to reduce exposure in the stock market. This is more so for stocks which are clearly in a downtrend. Having said that, the STI is holding up rather well under all the selling pressure.

As the index retreats, the OBV declines. This is an obvious sign of distribution. The MFI has been forming lower highs and lower lows.  Positive buying momentum is lacking.  In the near term, the 2,780 level or so should be an important support.  This is confirmed by Fibo lines, the rising 200dMA as well as candlesticks.

Looking at weekly charts is sometimes very revealing. If we look at STI's weekly chart, we understand why it is more resilient than some other indices. We understand why the 2,780 level is an important support. 2,780 is also where we find the uptrend line and the flat 200wMA. If the longer term uptrend is to stay intact, 2,780 must not break. Will it break?  I cannot say for sure, of course, but the technicals are rather weak.

1. Volume has been rising as the index retreated in the past few weeks.

2. The high achieved in the week of 12 April was accompanied by a lower high on the OBV compared to the high achieved in the week of 4 January, telling us that there was less accumulation taking place in April. Similarly, the MFI was lacklustre on 12 April compared to where it was on 4 January.

Not all weekly MAs are uptrending.  The 100wMA is still declining and is currently at 2,425. The chances of the STI retreating further exist.  Much depends on whether 2,780 holds up. Could we see the STI at 2,425 in the coming weeks? Perhaps.

Healthway Medical: A weak first quarter.

Earlier this year on 24 Feb, I said that Healthway Medical's share price did not provide value for money anymore. By then, I was 80% divested. Primarily, I was concerned about the heavy dilution which took place due to the rights issue and a following share placement which increased the number of shares from 1.384b shares to 1.841b shares.  I explained that I would not buy more Healthway Medical's shares unless I feel it provides value for money once more.

Even earlier on 16 Jan, I explained the rationale for partial divestment based purely on technical analysis. Healthway Medical's share price gained almost 40% in a matter of days.  "The fundamentals and prospects are still good over the longer term. I just feel that the market became a little too enthusiastic and sent prices up too high and too quickly. I liken it to a sprinter who is able to run very quickly over short distances but the speed is unsustainable over longer distances."

Thus, in the recent months, informed by a combination of TA and FA, I sold down my stake in Healthway Medical and at the moment, I am almost 100% divested, retaining only the rights shares and shares from the scrip dividend exercises.

Technically, now, Healthway Medical is testing resistance at 15.5c after it went CD. Fundamentally, I am still waiting to see if Healthway Medical could utilise the funds raised from its rights issue and share placements well enough to increase earnings at least proportionally to restore EPS to pre-dilution levels. With this in mind, I looked at the 1Q 2010 report released on 14 May.

Compared to the same period last year:
1. Revenue reduced 6.3%.
2. Staff cost increased 20.1%.
3. Profit before income tax reduced 68.5% to S$1.409m.
4. Total liabilities remain more or less the same.
5. Cash and cash equivalents increased from $28.4m to $39.4m.
6. Cash flow from operations became a negative $4.946m compared to a positive $3.974m.
7. Due to its rights issue, cash flow from financing activities is a positive $19.2m.
8. EPS is 0.09c, down from 0.28c.

I would draw attention to points 3, 6 and 8 in bold. The results are disappointing. Given the increase in the number of shares by 33% or so, in the short term, I was expecting the EPS to reduce proportionally by 25% or so.  EPS has instead reduced by 70%!

To be fair, Healthway Medical is going through an expansionary phase and would have more costs and greater expenses. As an investor, to be prudent, I would continue to wait for greater clarity on whether higher earnings would follow, maintaining that the share price at current level does not offer good value.

The technicals suggest that the longer term uptrend is still intact and the rising 200dMA should provide initial support at 14c. The declining 20dMA has formed a dead cross with the rising 100dMA.  Two gravestone dojis were formed in succession in the last two trading days. MFI is flat and OBV has been declining. Ominous signs.  The only consolation I see is the reducing volume as price declined.

There is also a possibility that a double top was formed by the highs in January and March respectively. If the pattern is valid, there is a long way to fall.

Related posts:
Healthway Medical: An updated valuation.
Rationale for partial divestment.