Friday, June 29, 2012

End of the Road for Genting SP?

Genting SP used to be such a popular and hot stock with a wonderful tale of its rise from 40-50cents to a $2 stock in its hayday in 2008. Now its daily turnover value is a far cry from the usual top volume placeholder it used to boast. In fact, this is surprising. Tourism in Singapore has been doing so strongly since the inauguration of the controversial twin casinos and in fact despite all the economic downturn, tourism receipts have not seen a decrease. The casinos are definitely raking in big money in this operating period but why has Genting SP price shed so much over the last 3 months? And in particular, has investor confidence been that badly startled by its unannounced stake in Echo that may lead to bloodshed with rival Parker in Australia? Will there be a win win situation?

Outlook - Strong Sell. All technical indicators are pointing to further downside bearish situation in contrary to mere coffeeshop talk that the stock has been battered down so badly that it presents a very good valuation. Valuation-wise, I believe in the proposition that Genting has to offer and with its perpetual bond cash inflow, it definitely will come up with some good investor-attractive ideas to further grow the business - urgently, as OCBC research puts it given the time-importance emanating from the perpetual bonds payback interest. Nonetheless, this proposition is clearly not validated by the market (in JP Morgan's investment principle) at least for this period. 
  • MACD - Just crossed the smoothed 9d signal line and further downwards headed. Downwards momentum is clearly on the increase now, noting that momentum has already firmly been in the negative over the last 4-5 weeks.
  • RSI (25d) - Heading towards the 30% critical value with somemore leeway. More downside to be expected. Do note however, that over a 2 years period, the stock has never traded far below 30% RSI so possible TP price would come when RSI ventures into that area.
  • 20d MA - the 20d MA is firmly headed downwards.
  • Major Support - has been broken today (29 June) with a black candlestick.
  • Volume - A surge in volume occurred today (29 June) that accompanied a clear break in the critical $1.41 support.

Daily chart with a longer time horizon detailing the $1.41 support level and a more macroscopic and time-smoothed stock price pattern.

Tuesday, June 26, 2012

Interesting Correlation Between Earnings Season and S&P Performance

Just a quick update that I found after scrolling through my MarketWatch news stream feed that I am really enjoying since its inauguration weeks back. The concise and live news stream website can be found here at MarketWatch. It is pretty much like the pages of Bloomberg and Reuters that presents a live-updating website that gives you up-to-date news articles but the MarketWatch people really did it artistically and very ergonomically; works like a charm for me.

Anyway, to the crux of my posting today - a fast one. I saw this interesting % comparison of the S&P 500 gain days during earning seasons and in the lull period in between. Let's not forget that Alcoa will kick off the earnings period in 2nd week July which is not a really far away date for many investors to feast themselves on some really good shopping buys.

In fact, I am quite amazed by the startling statistic that the S&P 500 does really well, with an average 3.14% gain during the earnings season as compared to an average decline during any other period. That really sieves out plenty of noise and gives us a better idea that this is when liquidity fueled rallies and hyped up demand starts to reveal. This is really where you will want to be trading given the additional firepower and price momentum that I have always been emphasising. 

Nonetheless, take these data with a pinch of salt since there isn't really real breakdown in the statistical calculations offered by FactSet Research Systems and probably some high gain days actually skewed the data to the benefit of the earning seasons performance. If I do find some time this weekend after work to lay my hands on some S&P 500 data I could do some further analysis and present it right here for more debate and discussion before the earnings period does sneak up on us soon.

Bulls and Bears In a Huge Tug of War

Prices seem to have recovered to a decent post-mid year level but again, some instability and poor news pouring from Europe and US have not helped the turnaround. The key question has to be if the short uptrend will be short-lived or will more bear action be realised?

Clearly the bears are leading the battle today on indices all over the world with the Dow already dropping 100+ points to ~12510 (3am SG time latest). But the bulls did recover from a 12460 position to pull back up to 12510 after a steep market decline right after the open. And this revelation of some bull action then bear tail repetitively have really gotten many traders burnt and hugely frustrated. What exactly is the true trend of the Dow Jones and the economic recovery that is being priced into key markets?

Looking at the Dow's daily chart, the pullback over the last 2-3 days was not unforseen. It was simply a cause of huge euphoria that got the market whipped up beyond its expectations, charging out of the upper bollinger bands. And so, the correction came in the form of Europe 'bad news' and US 'Fed's inability to act swiftly'. Nonetheless, I am seeing somemore pullback at least for the rest of the week with bulls and bears clearly oscillating control. At least when prices start to correct a further 3.1% from 12510 levels we can be quite sure that some form of extreme buying in will occur again. 

At least this is the only, but yet true, market constant we are beginning to appreciate thus far.

Monday, June 25, 2012

Focus on the Demand & Supply + Momentum

I have been tuned to the podcasts (via iTunes) provided by JP Morgan Asset Management department where they have frequent updates of speakers who share the core and fundamental principles that the investment bank employs to trade this rocky market. The one most important strategy that stands out has to be emphasis on price momentum and high demand for the asset. 

Fundamental analysis works theoretically but it does not matter if the market works, ironically here, inefficiently and not price that extra value that you see. But with a fundamental thesis, stock market demand & supply as well as price action not only will provide vindication but also ascertains a valid period of entry. This is what I find extremely telling and acute to my own investment strategies. Sometimes what I feel works fundamentally is not replicated by the market no matter how long I wait and I get fed up with it after awhile. Whereas there are some high in demand stocks that always end up moving up (high beta) with the overall market when times are good. 

Convinced or not, there is clearly one important sector that stands out to me over the year start rally and the recent 2-week-premature rally - Property

The SGX MyGateway portal has rightly caught up on this trends of activity for the first half of the year and translated it into a nice writeup that you should be able to access via SGX MyGateway pretty soon (the email update for this came 25 June 2012 and my guess is it should be up on the website in a few more days). Meanwhile, check out the article below.

Source: SGX MyGateway

Property is still Singapore's favourite hobby isn't it? Still, they are people thronging to grab these counters at supposedly discounted values especially counters like Capitaland and Keppeland that have done tremendously well YTD. This is where I will put my money obviously where the market fundamentals (overlooking the cooling measures which are supposed to do good than harm to property market) and demand aligns. Clearly, the returns will not lag the market when it rebounds. 

Saturday, June 23, 2012

Brace Up for Rocky Week Ahead - STI

Dow posted its second largest day decline in this year on Thursday and the market has been rocked with Spain, Fed's continued wait-and-see measure and China's weak economic data over the week. A hugely rocky trading ensued in the entire week and what does this spell for the STI in the week ahead?

Outlook - Watch. With the quadruple convergence of the 4 key MA lines, the STI is definitely feeling the heat. Weakly overcoming the 200d MA, it had been trading on its support for the entire week and closed almost on the 200d MA line. Short term trend-wise, the 20d MA is upwards sloping with possible higher spells ahead but fraught with plenty of obstacles namely the 50d (or 55d) MA and 100d MA which also coincides with the 2900 key resistance.
(On a side note, the last time 4 key MA lines joined together and prices crossed it was in Oct/Nov 2011 which sent prices skyrocketing in the next 3-4 months; a really key stage of the picture lies in the weeks ahead)

  • MACD - Has increased tremendously over the last 2 weeks and there are signs of some possible wane in the positive change in investor sentiments. Nonetheless take note that MACD has yet to cross the 0 line so things are still fragile as it is looking.
  • RSI (25d) - Having some difficulties crossing the 50% line.
  • Bollinger Bands - Prices been perched on the upper bollinger band for the last 3-4 trading days.

Wednesday, June 20, 2012

To buy or Not to buy? - ST Eng, Ezra, Kreuz

To buy or not to buy? That is a big conundrum for traders and investors alike this period.

On a positive note, it is definitely clear that key market indicators are turning positive so far. The STI + HSI + Dow has already rallied some 5-10% from May/June's lows over the last 1-2 weeks, giving suggestions that it could be some time for some bargain hunting. After all, valuations were badly hit over the last 2 months. Furthermore, most large cap stocks have been leading the rally, in a fine display of strength from the market. 
Here comes the dampener - Europe is still in deep trouble and Spain is a huge economy that must not fail. Greece is still stuck in a political deadlock that has resumed this persistent trouble that was brewing since 2008. Moving to the US, its economy is still sputtering while the fiscal cliff from Bush's tax cuts looms large by the end of this year with no signs of a political will to persevere with it. But let's not forget that these pieces of news are already out in the vast open and really, it isn't that new after all.

It is queer isn't it? For all the instability that Greece brings and the malaise in Europe and not-so-pretty-picture-after-all from US, all seems to be well with the market. Let's not forget that the market thrives on its very demand and supply principle; the premise is that markets are perfectly efficient, at least for the Singapore case. With that assumption, it is telling that the markets are making a positive stand towards reclaiming Feb 2012 levels, albeit cautiously this time, without much aplomb. 

It has been a really intriguing week with the markets responding on Monday to Greece and the follow-up today and I have been looking at a few counters that have been really catching my eye for this quick weekly update.

ST Engineering has rebounded over the last 3 days with 3 white big candlesticks appearing. Very positive sign indeed as it looks to recapture the April high of $3.16. From present levels, that is about a 5% upside still possible.

  • MACD - Has increased tremendously over the last 3 days.
  • RSI (25d) - Just crossed 50%. Very positive too.
  • Bollinger Bands - Prices have yet to hit the upper bollinger band.
  • 20d MA - Prices have crossed the 20d MA.
  • 50d MA - Prices are now challenging the 50 and 100d MA lines. Any further cross will signal even stronger buying pressure.
  • Volume - Note however that volumes for the last 3 days' white candlesticks has not really hit any resounding highs.

Ezra has been joining in the market-wide rebound in oil & gas counters with really good days of huge surges in its price. After all, it had been a counter that was really battered down after Feb, losing almost 25% of its value in 2 months. 

  • MACD - Has increased tremendously over the last 7 days. MACD is also about to cross the 0 value, signifying even more upside being possible.
  • RSI (25d) - Just crossed 50%. Very positive too.
  • Bollinger Bands - Prices have hit the upper bollinger band and seen pulling the bollinger bands wider. Even more volatility and potential upside for risk-takers to enjoy.
  • 20d MA - Prices have crossed the 20d MA convingingly.
  • 50d MA - Prices are now challenging the 50d MA line with little success today. It will seek to re-challenge it tomorrow.
  • Volume - Nowhere compared to the year-start rally but definitely on an increase across the last 2-3 weeks.

Kreuz share prices have seen a dramatic rebound from favourable news from its clinching of a project and analyst coverage over the last 2 weeks. It has been joining in the market-wide rebound in oil & gas counters.. After all, it had been a counter that was really battered down after Feb, losing almost 35% of its value in 3 months. 

  • MACD - Has increased tremendously over the last 2 weeks. MACD is in the positive region with some slight indication of some possible slowdown after this huge increase. Do keep an eye on the MACD as prices are now high and chasing the boat will require fast fingers to get out.
  • RSI (25d) - Just crossed 50%. Still positive.
  • Bollinger Bands - Prices have been riding on the upper bollinger band and seen pulling the bollinger bands wider. Even more volatility and potential upside for risk-takers to enjoy.
  • 50d MA - Prices have just crossed the 55d MA with some difficulty challenging it over the last 4 trading days. Watch this for more confirmation of further uptrend.
  • Volume - First signal of even stronger buying interest came 5 days ago when its volume surged. Volume are still healthy relative to last few weeks.

Tuesday, June 19, 2012

Weekly Stock Call - Ho Bee Properties

Ho Bee has a strong presence in Singapore largely servicing the higher-end residential market with a strong footprint in Sentosa Cove areas. It also has some 40% of is revenue derived from China, mentioned by a Maybank analyst report 21 March 2012. With the property sector leading the rebound in this jittery but yet upward-trended market over the short term (at least), Capitaland, Kepland, Yanlord, Ying Li have all clocked huge gains over the last week. Even Yanlord and Ying Li with huge presence in China have began to see more market buying pressure despite the cooling measures that the market has perhaps already discounted. In that light, Ho Bee, and OUE as well, is presenting a very solid case for continuation of the property rebound given it being still shy of the limelight and trading at considerable value. Is it time to get into a seemingly undervalued property counter to join in the rebound?

Outlook - Buy with a longer time horizon; laggard play. Technical indicators are aligning to put this stock on a upward trajectory at least for the next 1-2 weeks. Good risk to profit ratio observed that makes the plan more attractive. Finally, Ho Bee has been lagging in this property rebound and begins to present a cheaper valuation alternative to the already more expensive peers of Yanlord and even the big guys such as Capitaland and Keppel Land. But do not expect fireworks from this stock as it is still pretty quiet from the public eye; prepare to hold for lasting effect.
  • MACD - Is trending upwards for last trading week for both daily and weekly charts.
  • RSI (25d) - Just rebounded off the 30% levels and steadily trending upwards to the 50% level.
  • Bollinger Bands - Prices have rebounded off the lower bollinger band on 8 June. From today's close to the lower bollinger band is a -4.7% downside. Risk is well managed.
  • 20d MA - the 20d MA has clearly stabilised in the downward direction and there is some good suggestion of a local minimum.
  • 200d MA - Prices are still 5.7-6% away from the 200d MA as compared to most property stocks that have prices already crossing the 200d MA. In this jittery market, anything can happen and it will be more attractive to pay attention to undervalued peers.
  • Major Support - Prices seem to be resisted by a diagonal support line that provides an even better risk management framework to go into the trade with clear stop loss at around -5-6% trade value.
  • Volume - A huge surge in volume occured today (18 June) indicating a possible bigger move in time to come.

Monday, June 18, 2012

Pro-Bailout Groups Give Hope to the EU and Markets

As of 3am Singapore time, exit polls have shown that pro-bailout groups of the New Democracy and Pasok political groups will be able to form a majority coalition ruling government, sending waves of stabilisation, possibly, ahead of further renegotiation of talks.

There are several possible scenarios by tomorrow morning with the Japanese market first to open. Note that the Japanese finance ministry had adopted a wait-and-see policy before tweaking fiscal or monetary policy to further tackle the global slowdown emanating from Europe.

  1. Pro-bailout parties win and agree to form the majority
  2. Pro-bailout parties win but fail to agree on forming a coalition party.
  3. Similar to the above, failure to form a majority.
  4. Syriza gains control and Greece reneges on their obligations over the last 2 bailouts.
The first 2 are looking most possible at current time and whatever the case, the short term impact would most likely be to send markets around the world on another bull day. Bull week/rally ahead, it is still questionable given the need for real structural improvements that are really needed as a catalyst for another strong market rally. Let's not forget that Spain has yet to report their audited liquidity required. Several other nations such as Italy are also not out of the woods yet. They are merely obscured in news dedicated to Spain and Greece lately.

Nonetheless once the haze over the political situation in Greece lessens up over the next few days, there will definitely be a clearer market picture and confidence. With central banks showing readiness to act decisively this time to avoid a repeat of any financial crisis, the world is definitely in a much better situation to react. And as it really seems, it is not that bad after all.

Monday, June 11, 2012

Weekly Stock Picks - CapitaMalls Asia and Ezion Holdings

CapitaMalls Asia is a particular counter that caught my attention over the last 2-3 weeks. It is also one of the stronger counters that have outperformed the STI by almost 20 basis points and turned in around a 23% YTD gain. Pretty impressive counter that has a solid balance sheet of increasing assets/long term investments over the last 4 years. High stockpile of cash that was recently (in 2011) used to acquire more investments which is pretty shrewd given the low valuations during that period. Stockpile of cash still remains pretty high at $930m as of 31 Mar 2011. Earnings, though, have been hit recently due to the sluggishly economy that has finally found its way eating a still solid track record of equity investments. Expect more decrease to come in this bulk contributing segment that is also pulled down by lowered operating income (though almost negligble compared to equities investment income).

Outlook Short Term Rebound observed. Stars are aligning to put this stock on a upward trajectory. Nonetheless, pay attention to possible downside risks of price lowering to 1.3-1.35 (lower bollinger bands of both daily and weekly charts as well as major support horizontal at ~$1.35). Risk reward favourable and a good long opportunity is suggested. 
  • MACD - Is trending upwards for last 2 trading weeks with suggestion of clearing the negative levels in the coming week.
  • RSI (25d) - Is also steadily trending upwards to cross the 50% level.
  • Bollinger Bands - Bollinger bands are narrowed with some possible big price movements to come.
  • 20d MA - the 20d MA has clearly stabilised in the downward direction and there is some good suggestion of a local minimum. Another suggestion that upward momentum is building and this is a good opportunity to enter with low risk of selling pressure.
  • 200d MA - Prices are now supported by 200d MA prevailing at support levels of $1.35. Very clear support.
  • Volume - Buyer participation for the last 4 weeks has been dwindling but this has been stemming/flooring the prices at ~$1.35 levels.

Ezion Holdings is a counter that I have been seeking to own but prices have been sky rocketing since end 2011. There has been strong analyst coverage on this company and many are very bullish about its prospects with some brokerages even placing a TP $1.4 on it. Well, it is not too unexpected given that the company has been growing its income steadily since the downturn of post financial crisis in 2010. Cash reserves are being built up with some difficulty in the last year with this economic malaise. Nonetheless, the company has shown good vision in growing its business, securing more deals and income margin quite convincingly over the last 4 years. 

Outlook Track for uptrend. The 20d MA is still showing a downtrend but other leading indicators are turning in favour of a rebound. In this jittery market, it is still better to wait for real confirmation of upward momentum to reflect in the 20d MA before deciding on the long position.
  • MACD - Is trending upwards for last 2 trading weeks. Still far from the 0 level and momentum is still in the negative territory. 
  • RSI (25d) - Is also steadily trending upwards to the 50% level.
  • Bollinger Bands - Bollinger bands are narrowing.
  • 20d MA - 20d MA is still downtrended with some suggestion of a minimum point to come but not totally indicative yet. Prices are suspended above the 20d MA precariously. More strength validation still required.
  • 200d MA - Prices are seen bouncing off the 200d MA on Tuesday last week. Pretty much indicative of a strong stock in this market. 
  • Horizontal Price line (red line in weekly chart) - Price is trading near the red line which is almost an average price of the stock since 2010. An almost well-valued stock right now. Considering also that earnings have been increasing, it is even more sufficient to say that the stock is slightly undervalued now. 

Monday, June 4, 2012

Danger Signs Telling in STI and Dow

 No, there has been no change in my view of the STI and Dow since 2 weeks ago when I first posted on the Dow. There is further information on MarketWatch that cautioned Dow going below its 200d MA, triggering a slew of sell orders that will bring the market terribly lower in the week and following.

The STI has already been trading below its 200d MA for quite awhile so that does not apply right now. However more sinister is an observation that the STI has broken through its resistance line and is swiftly headed downwards.

Outlook - Track closely. Too late to participate in the selling unless you can be terribly sure of the Greek election results. Market has been swinging up and down lately to have a decent direction path. US QE3 and China stimulus are still on the lips of traders - do not omit that in your trading decision. Possible return to green when prices tumble to the lower bollinger/RSI goes below 30%.
  • MACD - trending downwards as with many regional and international bourses. Not at its 1-2 years historical lows yet so more downside still possible.
  • RSI(25d) - persisting around 35% but still highly possible to be dragged down below 30% which is where to watch for.

Weekly Stock Picks - STXOSV, NOL

Hot oil & gas play STXOSV has a $2 fair value suggested by OCBC research. It is currently trading downbeat though at $1.4, possibly presenting a 42% upside. Still fresh from takeover bid news that has been linking them with several key players in the market since end 2011, the stock had seen a doubling of its share price since October low last year to $1.8 in April before falling to $1.4. 

Outlook Track closely for direction in the first trading day of the week. A cross below the 200d MA will fit in nicely with MACD and RSI suggestions of further downside. A rebound will suggest some strength in the stock reaching a local low. Chances of further downside however is definitely more likely in this supposed bear week to come.
  • MACD - Is trending downwards quite heavily.
  • RSI (25d) - Is also heading downwards but with some resistance at around 38% level. 
  • Bollinger Bands - Prices are now falling along the lower bollinger bands with some suggestion of a rebound. However, it is noted that the prices have been walking along the lower bollinger band for the last 5 days without a rebound in sight.
  • 200d MA - Prices are now supported by 200d MA. A further downside cross will spell greater possible selling pressure that will drive prices even lower.

Similar to the Yangzijiang post discussed 1 week earlier on this blog, shipping companies such as NOL, YZJ, Cosco have been in malaise ever since 2008. Baltic dry index has been oscillating around 1000 levels which is a really low level given supply glut and poor demand on economic concerns. The good news here is that shipping companies are trading at very very low prices already factored into account right now. 

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. Very well  defined major resistance floor for NOL prices.
  • MACD - Still trending downwards but with some glimpses that there might be an increase in investors sentiments to come.
  • RSI (25w) - RSI still at lower half of the territory.
  • Bollinger bands - Prices are at the lower bollinger band giving rise to a greater likelihood of a rebound off the $1 resistance floor.
  • $1 resistance floor - Very well defined resistance floor observed in NOL prices. 

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