Monday, May 28, 2012

Weekly Stock Picks - Yangzijiang, Capitaland

The property sector has been rebounding strongly this week, led by counters such as OUE, Keppeland and even s-chips like Yanlord. However, one stock stands out in this property rebound - Capitaland. Instead of following the wide sector consensus, the stock has instead diverged and went against the flow. 

Outlook - Track closely for rebound in the week. Enter and follow market up to around $2.6 and take profit.
  • MACD - Dipped to the lowest levels seen in 2 years. Some suggestions that MACD is about to turn upwards (green histogram bars) but still needs more confirmation in the coming week.
  • RSI (25d) - Touched 30% firmly. Over the last 6 occasions in the last 2 years, whenever RSI did hit 30%, a rebound in stock price usually followed. 
  • Bollinger Bands - Very wide bollinger bands and volatility for profit play. Price of around 2.45 is very close to lower bollinger band providing a greater chance of a near term rebound.

Yangzijiang had been battered badly since March when it reached a high of $1.4. Together with Cosco and NOL, they paint a picture of the malaise that the shipping industry has been facing ever since 2008 without a credible answer to the oversupply situation and more recently, the battering ram of Europe. It is however not difficult to believe that the Baltic Dry, at its current ~1000 levels, as providing one of the lowest support levels of current time. Over 4 years, news have been battering ships - how worse can it get?

Outlook - Buy on the consensus that it is in for a long investment period. Right now there is nothing to suggest that the stock may go any lower than 2011 lows unless incredible mayhem strikes Europe. Risk-defined and just be prepared to hold for a while at current levels. The time where shipping returns again is a guess as good as yours and mine.
  • MACD - Well at 2 years low and crossing over the signal line in the week seemingly.
  • RSI (25d) - Touched 30% 2 weeks back.
  • Bollinger bands - A technical rebound was observed after the stock went below the lower bollinger band to close at around $1 on last Friday.

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