Gaining Steam - Biosensors

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Biosensors Gaining Steam

1. Biosensors (Medical equipment)

Biosensors has been posting very steady results for the past 3 years but had fallen out of favour with the investment community in 2012 when its share prices took a tumble to a 2011 low at $1.08. Sell-side research houses still kept their strong rating calls on the stock despite the broader market failing to heed them. Nonetheless, in the start of 2013, Biosensors seem to have gained steam again and could possibly spark the revival of its fortunes to finally match its historical performance and a barometer of the future to come.

• Large white candlestick this week with almost twice the moving average's volume. Prices almost rallied $0.10, representing a 7% gain. The white candlestick has also overcome key moving averages.
• MACD - is trending into the positive region with increased positive divergence.
• RSI (25w) - heading towards 70% levels while just crossing 50%.
• Long with TP - $1.56 (19% from current levels) expected in 6-7 weeks. If buying pressure still persists in the coming week, expect the stock to breakout to the next level above $1.36. With current bullish indications with room for the stock price to come, it will not come as a surprise if stock price ignores $1.36 and heads for $1.55 region. However, do be warned that the coming week is critical for confidence in the stock breaking through a key resistance level at $1.36.

Breakout of the Laggards? - Wilmar, Midas, Tiger

Current Weekly Market Theme:
Market euphoria over partial resolution of the fiscal cliff is on the wane, with laggard and penny stocks in focus this week. 
Anything related to China's growth is still hot and up-and-coming. China's GDP was a tad above analyst estimates with the census department announcing an official 7.8%. While still higher than expectations, the dampener is the reluctant acceptance that China's growth will not be returning to the stunning levels we have seen in the last decade any time soon. 

[Previous post: Singapore Property Cooling Measures - Buy on Dip?]

1. Wilmar (China play; Palm Oil)

• Strong resistance in this week with increasing volume at ~$3.67. 2nd time in 9 months that prices have attempted to cross this level, with the first being unsuccessful in June.
• MACD - high positive divergence and trending into the positive
• RSI (25w) - crossing 50% on a steady upward trend
• Price to watch - $3.67 resistance line. Break out into the huge gap down region in Apr 2012 provides good buying reason that the worst could be finally over for this badly battered palm oil counter. With a successful break, expect TP $4.75 (~28% from breakout level) over the next 3-4 weeks.

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2. Midas (China proxy; rail; aluminium)

• Strong upward trend from 15 weeks ago that resulted in a breakout 3 weeks back. Straddling between the gap down region in Jul 2011, stock prices seem destined for the upper resistance region.
• MACD - increasing positive divergence and trending in the positive
• RSI (25w) - above 50% and seems headed for 70%
• Price Target - $0.61 (~19% from current levels) over the next 5 weeks. Expect the counter to take a short break next week for more accumulation opportunities given how much the stock price has already risen. On the long term (5-6weeks) outlook, the uptrend looks strong and there's no reason for news to drive the stock down given the resumption of railway investment in China.

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3. Tiger Airways (SEA growth; aviation)

• Breakout strongly this week with increased volume and trading attention.
• MACD - small positive divergence and trending into the positive.
• RSI (25w) - crossed 50%.
• Price Target - $0.81 (~5% from current levels) over the next 2-3 weeks. 
• The good thing about Tiger seems to be its slow and steady rise back into prominence after a terrible 2011-12 period that threatened its profits. New CEO with new marketing company does bode well to set the records straight to continue to overhaul the Tiger brand and put it back into the limelight again.

Weekly Update - NOL, Yangzijiang, Swiber

Current Market Theme:
Favour oil & gas counters with solid order books for the current market recovery. Expect more new deals in the pipeline given the lifting outlook with emerging economies such as Latin America where oil exploration has always been key.

Also favour shipping companies given recent China's recovery and improved export data. Reports suggest that China may overtake US in economic leadership by 2014 so good news in China is good news for world trade. Europe and US are in a period of trade stagnation but no major shocks to be expected.

[Previous post: Olam Bonds plus Warrants Offer - To take or not to take for Retail Investors?]

1. Neptune Orient Lines (Shipping)

• Breakout in this week with high volume sending stock to a price of $1.31.
• MACD - positive divergence and trending into the positive
• RSI (25w) - crossed 50% and headed for 70%
• Price Target - $1.44 (~11% from current levels) over the next 3-4 weeks.

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2. Yangzijiang (Shipping and Oil & Gas)
The market has been viewing company's decision to enter into the Oil & Gas competition favourably. Bagging its first deal at a much lower revenue (and possibly profit margin) than a similar rig done by Keppel Corp, this is a significant milestone for the company and yet it speaks volumes about the intense competition and journey ahead. Kudos nonetheless to the management for diverting underutilised resources away from ship building to rig building.

• Breakout in this week with high volume sending stock to a price of $1.115.
• MACD - positive divergence and trending into the positive
• RSI (25w) - crossed 50% and headed for 70%
• Price Target - $1.32 (~19% from current levels) over the next 4 weeks.

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3. Swiber (Oil & Gas)

• Continuation of upward trend with increased trading volume this week.
• MACD - positive divergence and trending in the positive
• RSI (25w) - crossed 50% and headed for 70%
• Price Target - $0.71 (~8% from current levels) over the next 2 weeks.

Upcoming Dates that may Move Your Money - Weekly Update

Last week recap

The market seemed to have fully digested the impact of QE3 on the economy. After continued euphoria from the week before, stock prices staged a short-lived Monday-to-Tuesday rally before retracing lower for the rest of the week.

• STI surged to 3075 in early week before tumbling to 3040 in mid week. Closed at 3060 by friday.
• Hang Seng index continued its strong rebound with QE3 funds expected to give boost to its property prices and financial sector, touching 20850 on Friday.
• Dow opened the week strongly to hit 13610 by Tuesday before turning down on Wednesday and remaining flat until Friday at around 13440.

US stock exchanges suffered on Friday, closing much lower on the back of fears that the US economy is stalling despite a slightly better than expected Spain capital requirement stress test of banks.

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Week ahead

• Monday
• China, Italy, France, Germany, UK - Sept Manufacturing PMI
• Euro-zone - Sept Unemployment Rate
• Ben Bernanke speech at the Economic Club of Indiana in Indianapolis
• Tuesday
• SG - Sept PMI
• South Korea - Sept Manufacturing PMI
• Wednesday
• Nil
• Thursday
• US - Aug Factory Orders
• US - Sept Initial Jobless Claims
• US - Sept Continuing Claims
• UK, Europe - Interest Rates Announcements
• Friday
• US - Minutes of FOMC Meeting
• US - Sept Change in Nonfarm Payrolls
• US - Sept Unemployment Rate
• Germany - Aug Factory Orders

Source: SGX MyGateway Economic Calendar

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Are We Setting Up for A Fall? - Weekly Update

Exuberance aside, the market seems to have fully digested the QE3 impact and traders have already began looking for other news sources to fuel their trading activities. In Singapore, the STI has done fabulously well over the last 3-4 weeks, outperforming the Dow and HS indices. 

Market participants that I have generally been speaking with these days seem to have a changed perspective of the upcoming 4th quarter of the year of one being optimistic and rally-like. Reason being: QE3 money will finally find its way into the money system globally and start to push up prices of commodities. Growing tensions in the Middle East and a looming war between Israel and Iran are threatening oil prices to levels past 100$US per barrel. This is still slightly good news for the badly battered commodity stocks and oil counters in Singapore and a rally in these pillars of Singapore economy looks imminent. 

Prices do not lie, don't they? And the fact that they are at their highest levels since the year start rally for most stock markets surely must tell us that people are predicting further upside. 

But wait, things are never as simple as they are usually. Traders know with ample information that the fiscal cliff is around the corner and it may be a rocky road ahead. Very rocky indeed should US politics fail to achieve a sort of consensus and delay action, as we have seen from their polarized political scene over the last decade. 

Technically, the STI (see chart below) seems to be redo-ing a pattern it was familiar with in the year start rally. With prices hanging at high levels and the MACD decreasing, it soon found itself in a huge slide back down to 2700 by June. Chances are people are jumping fervently onto the bandwagon today with smarter traders winding down positions in hordes lately. That explains the relatively unchanged levels since 3-4 weeks ago as well as the high volumes. MACD has been sliding downwards despite being provided a short respite by QE3. In the short run and near term, I am definitely not betting against the downtrend. Just so that I am on the safe side.

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The Rally is Finally Here? - STI

Finally the long overdue, investor-centric, QE3 was launched by Ben Bernanke for the USA in tandem with monetary easing policies adopted in key economies around the world such as China (last weekend, on restarting rail and infrastructure projects) and Europe (unlimited bond buying programme to stabilise debt markets). Markets have been in rally mood over the last 2 days clearly appreciative of the actions taken by these economies to restart sluggish growth in the world that has been badly plagued by political inefficiency and inability.

Key market movers on Thursday and Friday on the STI included commodity counters such as Wilmar, Noble Group and Olam as well as property stocks such as Capitaland, Ho Bee and Yanlord. Interestingly, it has been mentioned on Reuters that QE3 may 'spur China's central bank' into more action' albeit with a smaller probability of happening. However, that has clearly not stopped investors from punting bets in favour of a China's recovery, hence such attention on key commodities and property counters that will be huge beneficiaries to any further Chinese bank actions. 

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STI Outlook - Buy. Singapore will be a key beneficiary when money from US, Europe and China trickles down into the economy, restarting trade activities. Extra cash on hand also spurs investment into Singapore, something at which has already been at a high this year with the Sing Dollar strengthening tremendously due to demand. The STI will also be buoyed by any further Chinese Central bank actions in the coming weeks, if any.

• MACD - MACD trending upwards and positive divergence is back.
• RSI (25d) - RSI just rebounded from 50% and headed to 70%. Still room for play.
• Bollinger Bands - Prices are already closing in on the upper bollinger and possibly pulling the bollinger bands further wide apart for more upside volatility.
• 20d MA - Prices have just crossed the 20d MA on the back of a huge gap up on Friday.
• Volume - High volume accompanying the gap up in the STI on Friday, further signalling strong upwards buying pressure from market participants and more potential upside bets being placed.

Weekly Update - Golden Agri, Swiber

Golden Agri is the world's second-largest palm oil company by plantation area. It recently announced its 2Q earnings on Friday where profit fell 39.9% y-o-y. The operating environment has clearly seen continued effect from the European demise as well as slowing growth in US and China, impacting revenues and palm oil prices. Nonetheless with recent droughts also causing crop shortages such as soybean, sunflower, it seems like there may be a bottoming out of palm oil prices. There has been a recent run in stock prices of many commodity counters such as Olam and Noble Group and there was a blog post on them on Friday. Check out the post here.

Outlook - Watch then Buy. Golden Agri share prices have already taken a beating on 8th Aug before National Day seemingly in preparation for its slightly dismal earnings report released on Friday. Prices have touched the lower bollinger even before the earnings report. Expect some more selling pressure to around $0.675 levels before expected support. Would be buyers at that level or if it breaks down into the 0.60-0.67 region as palm oil prices are still expected to show some support into the 2nd half of the year. 

• MACD - MACD trending downwards with negative divergence increasing.
• RSI (25d) - RSI just crossed below 50%.
• Bollinger Bands - Bollinger bands are widening and prices are riding the lower bollinger band already.
• 200d MA - Prices have just crossed below the 200d MA.
• Volume - High volume on 8 Aug in anticipation of earnings report. Clear winner for the selling side given a large black candlestick with unusually high volume traded.

Swiber is a Singapore-based Offshore Oil & Gas player providing construction, marine and subsea services.  With an order book of more than $1.8 billion in waiting, it is definitely a company with secure earnings up to 2013 at least. Most recently in June, it clinched contracts worth US$830 million for work in Asia Pacific region with work that has already began. Nonetheless, it faces strong headwinds from the economic downturn as well as strong competition from local and global oil & gas players in this very competitive landscape.

Outlook - Buy. Its stock prices have stabilised around the $0.5-0.7 region that represents an attractive valuation of the company at 6x PE (taking 1Q 2012 earnings of US$12million and projecting it for the year as US$48million) current price of S$0.59. Note that its historical PE stands at around 8.5x (as obtained from its website/share investor).

• MACD - is trending upwards slightly over the last week and has crossed over its signal line for positive divergence.
• RSI (25d) - RSI just crossed below 50%.
• Bollinger Bands - Bollinger bands are constricted very narrowly at the moment. Prices are on the upper bollinger region with a possible break coming up.
• 200d MA - Prices are still slightly below the 200d MA and resisted by it.
• Volume - is increasing slightly over the last 3 days.

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.

Weakness Lingers - Sakari, CapMallsAsia

Sakari Resources is a coal mining company based in Singapore with 2 mine operations in Indonesia. Since July last year, its stock price has been on a heavy downwards trend due to market weakness coupled with China's slowdown that has caused an even greater drop in prices lately. The raw materials FTSE index has been the worst performer YTD compared to other sub-indices and the STI index. 

Outlook - Go on short, break below 1.16 possible. Sakari prices broke through a major resistance diagonal drawn from June 2012 recently. It also just crossed the 20d MA line and headed for further downside. Stars are aligning for this stock to go further down together with even more market instability in the week ahead. Note that Sakari reports their earnings on 27 July Friday so perhaps the market is signalling/betting on poor results given the bad 2nd Quarter showing from China. Sell. 

• MACD - Has crossed the signal line and trended downwards with accelerating momentum.
• RSI (25d) - Is also steadily trending upwards towards 30% danger level.
• Bollinger Bands - Bollinger bands are widening again especially along the lower band signalling even further accommodation for volatility on the downwards side. Highly likely that prices ride the lower band down further.
• 20d MA - Prices have crossed the 20d MA strongly, further fueling the downside selling pressure. 
• Volume - The day price crossed the 20d MA, volume was particularly strong. 18 and 20 July had particularly strong volumes accompanying large black candlesticks = even more strong selling from the market.

CapitaMalls Asia had a fabulous run of late, increasing almost 18% from its May lows to close at ~$1.63 levels as with previous highs in Feb and Mar. 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 - Sell. Stock has overrun its fundamentals and although it did a good job in the recent rally, its still-sluggish earnings will become apparent as it becomes more expensive. 

• MACD - Crossed signal line 3 trading days back and is headed downwards in accelerating fashion. Note though that MACD is still in the positive region so in a sense there is still some upward momentum that's lingering but fast disappearing.
• RSI (25d) - Is heading down to challenge the 50% level.
• Bollinger Bands - are closing up and prices are seen heading for the lower band
• 20d MA - a large black candlestick appeared last Friday (20 July) that crossed the 20d MA signalling further downside.
• 200d MA - Prices are around 15% above the 200d MA.
• Volume - Volume trade have generally increased at its peak price of ~$1.6-1.65 over the last 2 trading weeks. Possible sign of lacking impulse to continue further with many traders placing short bets or closing out of positions this time. 

More Green for STI In Week Ahead?

News have been less seldom so rosy lately especially over weekends when more depressing Europe revelations come about. But this weekend has been really quite a turn around isn't it?

• Ending-week Friday rally to close a really roller-coaster-like ride since year start with most, if not all, indices up YTD.
• Europe is finally showing some urgency and collective will to do something about their mess. 
• Chicago PMI up to 52.9 from 52.7 outperforming estimates of 52.5. Data was released on 29 June Friday.
• China June PMI data, released on 1 July Sunday, stands at an official 50.2, higher than an estimated 49.8, though lower than 50.4 in May. 
• South Korean trade surplus surprised all analysts coming in at $4.96billion for June, the highest surplus since 21 months ago.
• Crude oil prices are up a whopping 9.2% on Friday, rallying back to $84.84 on the NY Mercantile Exchange.

Outlook - Accumulate. All technical indicators are pointing further upside in the coming week(s). After 1 week of slugfest between the bears and the bulls, it is clear who won this week around. However, before getting too euphoric, pay attention to one key resistance that still lies with the 2920 level. It is provided by a major resistance line and validated by the 100d MA line. Expect some rocky days as the STI challenges that level. Once cleared, it could spell another buying spree that we had seen in year start.

• MACD - Trending upwards and crossed 0. Increasing upward momentum is still building up.
• RSI (25d) - Just crossed the 50% level giving more validation of the strength of this run and the potential for more upside.
• 20d MA - the 20d MA is heading upwards.
• 55d MA - the 55d MA was a short-lived resistance where prices retreated in 18-19 June coming close to that level. Broke it on Friday's close. Possible turn of role into a support line.
• Volume - trending up in the last 3 trading days signifying very good buyer (prices are increasing so buyers>sellers) sentiments and participation.

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.

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. 

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. 

Euro's Plunge is Recovering.

So is the world and its economic sentiments.

Chart obtained from Euro/SGD Rates on Yahoo Finance.

First, the news of payroll, employment and other economic data coming out of US have been positive and suggesting recovery. It has been suggested that the US will grow slightly in this year and lead Europe out of its recession.

Second, the Greek issue has been slowly resolved and expect Greece to have a second bailout by the end of this week after all the hard work from members of the EU.

Thirdly, the Euro has been gradually strengthening over the month. Looking at the chart above, it seems like a double bottom has played out and the Euro is on a recovery against the Sing dollar as has been the case against the greenback too. This is ideal as well as it shows the appetite and the confidence slowly building back into the Euro after the crash last December after reports of a suggested Greek default being on the cards.

Headwinds lie ahead of course but for those of us trading, I believe there are money making opportunities that are surfacing today. The confidence and conviction to trade given these sensible news and real data being presented are telling. But as the nag goes, do take note of your time horizon of trade and do not anticipate too long a trade. Given we are not totally out of the malaise climate yet, do not take too high a risk. High risk high returns. High risk high losses. Trade, profit and enjoy yourself. Stay sustainable this week.

Weekly Market Review and Perspectives

Week 7 of 2012.

1. STI Performance Review

This week, the STI raced to recapture the 3000 mark. Convincing? Not quite yet. We only saw a short breakout on Wednesday before a fall back below 3000 levels occured with a pretty big dark candlestick. On Friday, STI had closed 3000. 

From both TA and FA point of view, this coming week is crucial. 

First, for proponents of TA, STI's failure to breakout from 3000 is not helping many to make a decision in this seemingly overbought market. Talk to anyone and people will say that they are treading cautiously now since everything 'seems too high'. Too high is relative, at least to me - so it suggests nothing. But translate this to overall market action, it is significant as we want retail and institutional investors to come in and continue the buying pressure. So, this coming week will finally throw more light on the value investors are putting on the STI and if it can breakout successfully, the next target I am putting is 3206, using the height of difference between the low in Dec and breakout in Feb (past 2920). 

Not thinking too far, the uptrend is strongly intact on a weekly chart (I do support a breakout but at least in the next next week since STI should be taking a break this coming week) and the latest week candlestick is still suggesting strong buying pressure with sustainable volumes. RSI and MACD are trending upwards with the MACD crossing 0 for the first time since August. Another bullish indication. MACD histogram is all green for the past few weeks and this suggests momentum is still firmly with the bulls. 

Second, Greece is still on the cards for everyone. So long as its default potential is not put to bed, this market will not ease on cautiousness. We saw how a little indecision in providing the full aid to Greece on Wednesday night caused a market turmoil on Thursday so anything may happen.

2. STI Performance vs other Key Indices

Below are 2 graphs with difference starting dates (used in the computation of the % relative gain/loss). I have chosen 1 Oct and 1 Dec as reference points due to their local lows.

It is interesting to note that the Hang Seng index is a clear outperformer compared to the rest in the basket. Its rise has been nicely sloped and has on every single day after 1 Oct and 1 Dec (except 12-13Dec) reference points outperformed the STI index. This meant that if you went long on HSI and STI on 1 Oct and reviewed your portfolio any day after til date, you would have a better result with the HSI.

However, if we delved into the rise of the STI since 1 Dec, it was not a bad performer. Assuming we went long on the STI on 1 Dec and looked at it today, only doing so with the HSI and Nikkei(slightly) would yield a better result. 

3. Key Sector Performances of the STI

Looking at the performance chart of the key sector indices referenced on 1 Dec, it is clear that the maritime index has been way better than the STI. It is almost a 24% increase in the profits that would have been obtained by longing the STI on 1 Dec and reviewing it today! The next outperforming index is the Oil&Gas sector that has also traditionally been pretty strong given Singapore's fundamentals in this area. Not surprising that these 2 sectors have been leading the charge on the recovery and although the performance of the maritime sector has been way stellar, one contributing factor was the tremendous loss it suffered in late 2011. 

So comes the question of which area to look at? Well of course, this ultimately boils down to your preference, risk appetite, portfolio optimisation and objectives. There are clear outperformers in this market. Will they last the trend? Of course one day they will too become expensive and people will begin avoiding them, seeking for more undervalued ones. Then comes the next question of which undervalued one? As it seems, the real estate index is still recovering from its losses in late last year due to stamp duty legislation. This is one area to look at given key blue chips like Capitaland and Keppeland are solid in balance sheet while reits provide good dividend yield.