Thursday, August 2, 2012

Midweek Stocks in Focus - NOL, Cosco, Rotary

It's been a really volatile week with the US, HK and UK markets surging to local highs while the STI maintained steady at 3020. Alas, it broke 3020 today with good strength exhibited throughout the day to close at 3051. This is the highest level since 1 year back and it seems like the 3020 psychological barrier is finally broken. Expect more upside to come (and also some retest of the 3020 resistance-turned support).

In the meantime, the usual market rally components are my favourite picks - Oil & Gas, Commodities and Shipping. In this first part of the article, I will focus on NOL, Cosco and Rotary while the 2nd part of my article will focus on Wilmar, Noble Group and Sakari.

NOL is a Government-linked-Company (GLC) with a strong presence in the shipping industry through its APL shipping and logistics networks. It has been in malaise for the last year with its stock price firmly in the ~$1 region. 
Outlook - Watch for break above $1.17 then buy for high stock beta in preparation for more market upside. Stock has seen 3 consecutive days of white candlesticks with accompanying good volume. Over the last 2-3 months stock prices have stabilised at a possible low suggesting that the worst is over and this is really the bottom of its malaise. Perhaps time for better fortune with easing European outlook and that prices are overdone on the downside.
  • MACD - MACD crossed over signal line today and in the positive momentum region. First good sign.
  • RSI (25d) - Crossed 50% and heading up.
  • Bollinger Bands - Price is surging towards the upper bollinger band with some uncertainty to increased volatility/upwards price movement surge beyond $1.17.
  • 20d MA - Prices have crossed the 20d MA yesterday
  • 200d MA - Prices are still below the 200d MA with some more room to conquer.
  • $1.17 resistance - An important note is the $1.17 resistance line that acted as a strong resistance in the short rally NOL experienced between May and June. Prices are now close to it and challenging it in the next few days. 
  • Volume - Steady volume.

Cosco is one of the biggest companies in the world dealing with the shipping industry. It operates liner services, ship repair, building and offshore marine engineering. 
Outlook Buy. With recently reported quarter earnings dipping 13.3% largely due to continued capacity surplus and weak demand in the shipping sector but a stabilisation in stock price, there seems to be a consensus in the market this is really the worst shipping can get. 
  • MACD - MACD is about to cross over its signal line in the next few days.
  • RSI (25d) - Still facing some resistance at 50% and possibly challenging it over the next few days with more upward movement.
  • Bollinger Bands - Bands seem to be widening somewhat and prices have just rebounded off the lower bollinger band.
  • 20d MA - Prices are still under the 20d MA with some intention of crossing it soon.
  • 200d MA - Prices are still below the 200d MA with some room to conquer.
  • Support diagonal - Most importantly, the risk-to-reward ratio is fairly tempting for this counter right now. Prices are close to the major support diagonal.
  • Volume - Steady volume.

Rotary engineering is an Oil & Gas company involved mainly in Asia and Australia. 
Outlook Buy. After a huge selldown since its peak in March, its prices have already risen by 5% from June lows. Though less attractive apparently compared to its counterparts in the Oil & Gas business, Rotary has a strong history of good management and that this selldown presents a good valuation to grab this stock on a cheap. Technically, there was a gap up on open today from the previous day in a rare situation. Good buying pressure is coming back together with the STI breaking through 3020. 
  • MACD - MACD is about to cross over its signal line in the next few days.
  • RSI (25d) - Challenging the 50% level tomorrow and headed upwards.
  • Bollinger Bands - Bands are wide and can still accomodate a 5.2% upside on current prices to the upper bollinger band.
  • 20d MA - Prices are justl under the 20d MA with intention of crossing it soon.
  • 200d MA - Prices are still below the 200d MA with good room to conquer.
  • Volume - Small volume today with the gap up.

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