Friday, August 10, 2012

A Great Commodity Run? - Olam, Noble, Sakari, Wilmar

Corn prices are hitting record highs; China's industrial production has been rocky lately fueling more chances of a stimulus that can restart the commodities consumption phase that led the 2008 rebound. We are seeing these bets on the badly battered commodities counters on the SGX that the next phase of the 2nd half of 2012 will be focused on stimulus measures which will lift the gloom on our current state of things. Counters such as Olam, Noble and Sakari have been leading a 1 week-old rally into strength, with some overcoming their highs set in late June/July. Wilmar has still been seeing strong selling pressure at close on Wednesday, 8 Aug despite the happenings around it.

The question looms - how to ride on this expectations-led rally? Let's take a look at the stock charts of the 4 mentioned stocks - Olam, Noble, Sakari and Wilmar.


Overall outlook
  • It is clear that Olam seems somewhat a stronger stock with good buying pressure (albeit, possibly, artificially created from its recently announced share buy-back programme). 
    • This can be seen from a higher July local low than its low in June. 
    • An uptrend seems to be intact since it was so badly sold down in May.
  • Both Noble and Sakari shown a W rebound to retake their early July highs. 
  • Both Olam and Sakari are showing signs of a break above their July highs and have closed at around those prices.
    • Noble still has some small room to go before hitting its July high.
  • All three stocks Olam, Noble, Sakari are showing healthy RSI (25d) cross above 50% and MACD trending up with positive divergence.
  • Wilmar still has some unrelieved selling pressure that has keep its prices firmly at $3.23 albeit with lower volumes of trading activity.
    • RSI (25d) is around 30% levels which still make Wilmar an attractive proposition for bargain hunters. 
    • MACD seems to be reaching a minimum point and turning upwards. Divergence turning positive soon (MACD cross signal line).
  • In summary
    • Olam
      • Good uptrend observed but helped on by internal share buy-back.
      • Challenging the 100d MA on friday (10 Aug).
    • Noble group
      • has not hit June/July high
      • only 9.7% away from 200d MA.
      • smaller market beta compared to other stocks = lesser volatility and profit.
    • Sakari
      • good upside potential of 25% towards its 200d MA
      • has had a terribly good run so far with good increased volumes.
    • Wilmar
      • good bargain somewhat compared to the other few commodity counters
      • +41.6% upside towards its 200d MA which is the highest among all 4 stocks. Even if its profit variance this time (the last announced quarter) was way off, it should have some risk management and smoothing in place to ensure that at least the 200d (and more) MA gives a good gauge to its future profit levels.
      • note that selling pressure is not over so there is somewhat high risks involved in betting for a rebound

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