Tough Business Conditions - NOL, Vard Holdings

[Previous post: Twice Lucky in a Month? - Asian Pay Television Trust IPO]

NOL (Shipping & Logistics Chain)
NOL reported a US$76 million profit on the back of the sale of its NOL headquarters building. Without the gains from the sale, it would still be in the red with EBIT at -US$85 million. The company has been having a very tough 2-3 years due to supply glut of liner vessels putting pressure on shipping rates but it seems that with a new CEO and leadership team, the cost cutting measures have become more aligned and aggressive to unlock value for shareholders in these tough times. For both liner and logistics, core EBIT losses have been narrowed and it is now in a stronger cash position after tapping new loans and increasing investment in PPE with cash from its sale of the building. Having said these, its performance is still highly correlated with shipping rates where there still seems no end to the oversupply of vessels. Europe and US are still in the doldrums and economic trade has not improved much compared to 2012.

• Black candlesticks for the last 5 weeks of trading. Share price has been plunging since the start of 2013 until a strong resistance at $1.10.
• MACD - seems to be turning upwards weakly.
• RSI (25w) - still downtrended
• Chance of technical break on narrowing losses - $1.18 (8% from current levels) Chances are traders will take this chance to buy at a low/major resistance and attempt a short term trade on NOL. Given that prices have been sliding since the start of the year, this announcement today may give some relief to the selling pressure. 

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VARD (Shipbuilder,Offshore Services Company)
Previously known as STXOSV, Vard has had its share prices fall since Oct 2012 after poor quarterly results in Nov and a price offer for shares by Fincantieri at $1.22/share. Vard had secured new contracts for 3 OSCVs worth some 3 NOK million in the first quarter, one of the slowest start since 2009. Delivering only 5 out of its 24 vessels scheduled for delivery this year, EBITDA has fallen some 23% in 1Q2013. Cash position has also dipped to 2 NOK billion from 3 NOK billion in March 2012.

• Share price slide since Oct 2012 with little indication that there will be a reversal in trend. 
• MACD - is negative but with some chance of turning upwards.
• RSI (25w) - trending downwards towards 30%. 
• Bad news and bad technical chart - $0.90 (-15% from current levels). It does seem that investor interest in this stock has been waning since 2011 when its prices were on a one way trajectory. Oct 2012 has marked the start of its share decline and so far there is still no good news to send its prices up. Bad news, bad technicals. Go short.

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Gloomy Days Ahead for Gold and SPDR Gold Shares

[Previous post: Earnings Report Trade - Kreuz]


Gloomy Days Ahead for Gold and SPDR Gold Shares

Gold has been correcting sharply this week owing to two main reasons: first, the economic situation seems to have lifted tremendously from days of yesteryear. Europe is pretty much well contained, at least for now while USA is growing albeit slightly and China has rebounded strongly from its slump towards the end of last year. Political uncertainty worldwide has also decreased. Secondly, comments from the Fed yesterday indicated that the current unlimited stimulus could be withdrawn soon given how the outlook has improved again. What is still uncertain is that the Fed committee is still at odds with when is the appropriate time to remove it. Nonetheless, with lesser stimulus, expect commodity prices to fall on a whole and hence gold will not be spared too.

• Large back solid candlestick this week bringing prices down to a major support level at US$150.
• MACD - has turned negative and diverging downwards.
• RSI (25w) - has turned below 50% sharply
• Short TP - $140 (8% from current levels) expected in 3-5 weeks. With the current outlook, it seems like gold prices should break support and head further south on the jittery Fed minutes that was recently disclosed. With more market opportunities elsewhere, it is easy to understand why this out flow of money has just begun.

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Earnings Report Trade - Kreuz

[Previous post: Back in Focus - STXOSV]

Earnings Report Trade - Kreuz

1. Kreuz (Offshore services)

Kreuz had recently announced contract wins totally US$15.5 million in January resulting in a considerable surge in its share prices. Prices have already risen a whopping 100% since its 2 year low in May 2012. Traders have turned considerably bullish lately again on the nearing of its earnings report tomorrow 21 Feb 2013.

• Large white candlestick last week that has broken a 2 year major resistance line on some trading volume.
• MACD - is high in the positive with some wavering though.
• RSI (25w) - is recapturing 70% high since Oct 2012.
• Short term trade TP - $0.54 (11% from current levels) expected in 1-2 weeks. On the back of anticipated strong earnings, if reported tomorrow, will give the bulls more reason for higher prices. Of course, the risk here is that the company reports lower than expected earnings and prices fall through the support. If nothing drastic, prices could still be supported by $0.47 support levels and it does seem like a decent risk-reward trade.

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Back in Focus - STXOSV

[Previous post: Largest IPO in 2 Years - Mapletree Greater China Commercial Trust]

Back in Focus - STXOSV

1. STX OSV (Offshore support vehicles)

STXOSV shares slid in Nov after reporting dismal quarterly results. Share prices were then hit again by news of a buyout by Fincantieri mopping up their shares at $1.22/pc and will be making a cash offer for the rest of the shares. However, last week STXOSV reported securing 3 new contracts for OSCVs illustrating a  positive outlook for the OSV market in Europe.

• Large white candlestick last week that erased a 2 week-loss. Trade volumes was almost twice higher than the average for the last 3 weeks of trading.
• MACD - is recovering with decreasing negative divergence.
• RSI (25w) - is rebounding off ~45% and heading towards 50%. Note that the RSI is at a 1 year low.
• Long with TP - $1.50 (16% from current levels) expected in 4-5 weeks. Buying pressure seems to be coming back with the stock scheduled to also report their quarterly results on the 26 Feb. Seems like traders have been repositioning and accumulating for the last 2-3 weeks, stemming the stock price decline. On the back of good contract win news, this buying momentum should be good for this coming week and possibly after the next on good earnings.

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Gaining Steam - Biosensors

[Previous post: Large Caps Gain Steam - SGX, Semb Corp]

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.

Large Caps Gain Steam - SGX, Semb Corp

[Previous post: Mixed Fortunes of Oil & Gas - Ezra, Swissco]

Large Caps Gain Steam

1. SGX (financial services)
SGX 2Q profit grew to $76 million on the back of increased daily average traded volume. This 16.7% increase in quarter profit reflects the resilience and rebound of Singapore's key market place and the work SGX has been putting into attracting more securities and derivatives trades.

• Price broke out last week above $7.20. Even stronger buying pressure ensued in the first half of this week with yet another big white candlestick with an open at the same levels as last week's close. Very bullish situation.
• MACD - is trending upwards is increased positive divergence.
• RSI (25w) - heading towards 70% levels with some leeway to go before overbought status.
• Long with TP - $$7.80 (-2% from current levels) in the near term (1-2weeks). If buying pressure still persists, expect the stock to breakout to the next support level at $8.60 which translates to almost a 10% gain from Wednesday close price. Prepare to provide 6-8 weeks for $7.80 resistance to be broken as that is roughly the same time period between May to Aug 2011 where the stock tumbled through the price region.

2. SembCorp (Oil & Gas; Utilities; Env Management)

• Prices appear steadily appreciating towards $5.70. In a stealth rally, Semb Corp has almost risen $0.60 since Nov 2012. Volumes are still thin but that is the surprise of the move since 2 months ago. Large white bullish candlestick currently formed this week.
• MACD - MACD crossed into the positive territory this week. Positive divergence showing good pace.
• RSI (25w) -RSI climbing steadily but slowly and managed to ease past 50% already.
• Long with TP - $$5.70 (~5% from current levels) over 2-3 weeks. No reason for prices to remain resisted at current levels. Expect trend to continue upwards in the absence of company/industry news.

Mixed Fortunes of Oil & Gas - Ezra, Swissco

[Previous post: Weekly Update - STI to Charge Further?]

Mixed Fortunes of Oil & Gas

1. Ezra (Oil & Gas)
Ezra's year-start rally had its wings clipped severely after the company reported a 49% drop in 1Q net profit of US$6.8 million on 14 Jan. That resulted in a week tumble and the share price reduction continued this week with strong selling pressure. Despite all the enthusiasm regarding oil & gas counters, it is clear that cherry picking in this time of intense competition will still help the investor weed out stocks that are potential pit-falls. 

• Selling continued this week seeing the stock tumble a further $0.04 from last week's close. In these 2 weeks, share prices have plummeted almost 14 cents. On the fundamental front, stock prices have been hit by poor profits, in canny resemblance to the situation Rotary engineering was in in 2012. Bad news at a fragile time.
• MACD - declining positive divergence with MACD failing to challenge the Sept 2012 peak. Possible turnaround/volatility to ensue. 
• RSI (25w) - perched along the 50% levels
• Short with TP - $$1.09 (-6.5% from current levels) in the near term. If selling pressure still persists, expect the stock to continue down to the next support level at $0.97 which translates to almost a 2012 low.

2. Swissco (Oil & Gas)
Another of my long-tracked counter that only recently staged a spectacular increase in its share prices. Had all along felt a mismatch in fundamentals of the company with the its stock price (almost constant in 2012 after the year-start rally). Nonetheless, it is always an intriguing question to when such an inefficiency will eventually realised in the market - sometimes perhaps never. So happen, the time for this stock seem to have arrived on the back of very thin news. 

• Prices challenged the key support levels at $0.27 last week to close above. This week, prices have shot above $0.30 for the first time though late selling today in the SGX caused prices to fall back to $0.295.
• MACD - MACD has been on the rise for the past 5-6 weeks and does not seem to be waning any time this week.
• RSI (25w) - RSI, though, has hit 70% on the back of a very strong run.
• Long with fast TP - $$0.32 (8.5% from current levels) over 2-3 weeks. Prices are straddling between $0.33 and support by $0.27 with little in between. Still some room more for the rally to run unless selling pressure takes over and prices go back to $0.27 support again.

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.

Weekly Update - of Stimulus and Steel

The market has turned pretty optimistic since ECB's bond buying initiative was announced last Thursday. In response, China also issued a stimulus packaged that was unveiled over the APEC meetings over the weekend that aimed to restart its national rail projects that were in limbo ever since last July due to the Wenzhou rail incident. 

Now, the flooding of money into this global malaise does seem to require some sort of concerted shake given the lengthy 'depression-like' conditions that the world has endured since 2008. Similar to the response in 2008, a flood of money from major superpowers would definitely give the economy a good boost in the short run in order to allow it to prop up and get moving on its own again. Cynics against the stimulus idea must surely take lessons from the 2008 crash that such a organised effort may will be required this time around. We must not forget that all talk but no action on the fundamental restructuring required for our global and local economies to get moving again is going to be a protracted process, cynically, may not even occur in time to come.

Then, surely, Mr Bernanke and his aides, after declaring and hinting that a stimulus package is not far-fetched in their latest Fed meeting minutes, will be putting together their pieces for a follow up to the week's actions. No wonder the market has been responding optimistically, rallying day to day. It is coming, after way too long.

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On a side note, steel play has clearly been dominant again with Midas, a steel producer with strong business foothold in China's rail industry. Its share price has already risen some 16% over the last 5 trading days on the back of very strong volumes. OCBC research has Midas at a TP of $0.435, which was just revised. Maybank just upgraded Midas to Buy with a TP of 0.48. Also, I had written a blog post over the weekend on my own analysis of Midas, with a TP of 0.45.

Steel play heating up? - Midas

Midas is a steel company that comes to direct consideration for more upside given the current resumption of rail development by the Chinese govt. It is a recovering stock that has seen a vast inprovement in its fortunes in the later half of thia year with impact expected in its 2013 FY earnings. It has sealed several successful contract wins over the 2nd half of the year as opposed to a very poor first half of 2012. In fact, a small table below has been compiled regarding its contract wins in 2012. There has been increased optimism too that it will be able to secure more rail contracts given the recovering China rail industry after the recent rail incident.

Midas contracts history for 2012 so far:

• 1 March Midas' JV Company Nanjing SR Puzhen Rail Transport Secures RMB526.9 Million Metro Contract
• 12 May Midas Secures Two Metro Contracts Worth RMB62.2 Million
• 2 July  Midas' JV Company Nanjing SR Puzhen Rail Transport Secures RMB860 Million Metro Contract
• 11 July Midas Secures New Contract Orders Worth RMB139.3 Million
• 14 Aug  Midas' JV Company Nanjing SR Puzhen Rail Transport Wins Two Metro Contracts Worth RMB1.4 Billion
• 3 Sept Midas' JV Company Nanjing SR Puzhen Rail Transport & Consortium Partners Secure RMB588 Million Intercity Rail Project
• 5 Sept Midas Strengthens Its Foothold In China's Power Industry With RMB123.4 Million New Contracts

Fundamental Outlook - Buy. It is clear that the Chinese government are indeed ramping up rail development once again after a hiatus from the Wenzhou railway incident 1 year ago. Let's not forget that it is in the interest of the Chinese government to link up cities and continue the economic boom, although possibly at a slightly lower pace from before. Nonetheless, resuming of the rail development business is definitely going to be a boon for Midas. 

On top of that, Midas is clearly diversifying in light of their recent troubles to restructure their business to also incorporate power. Their first contract of 2012 in the power industry has been secured in 5 Sept, a few days ago, to positive market acceptance. 

Finally, OCBC research also has a coverage on Midas with a buy call and a FV estimate of $0.41.

Technical Outlook - Buy. Chart is looking good with a breakout on 7 Sept on the back of news of 2 contracts being secured in the week. Not overly expensive either. TP ~$0.44.

• MACD - Has just turned upwards again and is in positive territory. Divergence also just turned positive when MACD crossed its signal line.
• RSI (25d) - Bounced off the 50% level and has some room to maneuver before the 70% levels.
• Bollinger Bands - Prices have just broken through the upper bollinger band to signify further upwards momentum.
• Breakout - A large white candlestick appeared on 7 Sept on the back of a breakout through the $0.38 major resistance. Expect this level to form good support for further challenging of the $0.44 levels for Midas.
• Volume - A huge surge in volume occured on 7 Sept accompanying the major white candlestick. 

A Selling Market Offers Opportunities - Genting SP, Biosensors

As the old adage goes - "Buy when people are fearful, Sell when people are overly optimistic" - has a certain truth if you really look at it in perspective. What is more salient about this concept is the fact the market may not be totally efficient at any point in time. 

Our job as an acute investor is hence to identify market opportunities and make an intelligent 'bet' with all available information. In more obvious words, we always seek the cheapest buy with the highest potential for returns. That is by definition the meaning of a trader. 

Genting SP had been badly sold down since its early year highs due to its rumored take-over bid for Echo, an Australian casino player. The bidding war against Packer for Echo has not really materialized after much concern about Genting's strategy. Its prices had taken another nose dive on China growth concerns and poor tourism numbers from high-roller countries. However, in the last 2 weeks, its prices have recovered some 10% from Aug lows.

Outlook - Watch and Buy; cyclical accumulation. Tourism traditionally peaks towards the year end given the school holidays in Singapore as well as in neighbouring countries. Festive period in Christmas and New Year will definitely help to pump up some numbers both in tourist receipts around Genting assets as well as its casino. The cyclical nature of Genting's business is notoriously well known and observed in its stock prices over the last 3 years.

Technically, the stock has taken a beating and is recovering. While selling pressure day on day is still present, it is of the opinion that it will wane over the next 1-2 weeks with the broader market performing much more poorly. Weekly charts show good upwards momentum still.

• MACD(weekly) - About to cross its signal line and headed upwards
• RSI (25w) - Still below 50%, offering cheap opportunity to accumulate. Off RSI lows in late July.
• Bollinger Bands - Prices just rebounded off the lower bollinger bands in late Jul when the stock was badly oversold in light of poor China economy figures and slowdown in Asia as well as Singapore tourism.
• 20w MA - Prices are still headed to 20w MA.
• 200w MA - Prices are still a good 30% away from 200w MA.
• Volume - Thin volumes were observed over the last 5 trading days with the stock prices in decline. Fear factor is very high and perhaps it gives a good time to explore a cheap opportunistic bet.

Biosensors is a medical stent research company with global operations. A review of its latest operations has been provided in an earlier blog article - Stable Growth Intact - Biosensors . In summary, 

• Strong revenue growth
• Maintained operating income
• Operating cashflow has improved (US$36.3m inflow)
• Attractive valuations given the recent fall in stock price.
• Been meeting analyst expectations as a very solid company.
• Operating cashflow has been on a steady rise over the last 4 quarters.
• Cash pile has increased steadily over the last 4 quarters.
• Medical sector will continue to improve in SEA/Asia region given the improving incomes especially form neighbouring countries that are fast developing and attracting investments. A recent OCBC research report offers more insights.

Outlook - Buy. Selling pressure seems finally subsiding given a stabilisation in recent prices. While the broader market had been in decline, its prices have relatively stayed constant together with declining volumes. More importantly, bollinger bands have narrowed significantly that points to a soon sharp move highly possibly in the upwards direction barring any unfortunate news events. Kim Eng recently reiterated a buy call on the stock with TP at $1.42.

• MACD - Divergence turning up again with MACD line showing some form of a minimum. Still some nominal positive momentum as MACD is above 0.
• RSI (25d) - Hovering well around 50% for the last 3-4 weeks.
• Bollinger Bands - have narrowed tremendously. Volatility in prices have reduced with some anticipation for a future big move coming.
• 20d MA - Prices are moving in tandem with the 20d MA.
• 200d MA - Prices are a good 11% below the 200d MA line, offering good upside potential.
• Volume - Thin volumes were observed over the last 5 trading days. Buy when people fear excessively.

A Good Stock Remains A Good Buy - Ezion Holdings, Semb Corp

A good stock always remains a good buy. 

The fast growing phase of the business Ezion has been operating is indeed a very compelling investment story. Since last year, its management has shown good urgency and quality in making decisions to steer the company forward after a sharp decline in its stock prices between Aug - Oct. And it seems that this has been well executed over into the new year.

Outlook - Buy. OCBC research too has a good coverage report on Ezion following its 2Q earnings report. Fair value estimate is $1.20 which represents some further 16% upside from current prices. Technically, Ezion holdings has broken the $1.025 resistance with high volumes traded on Friday following OCBC research maintaining a Buy call and its favourable earnings report.

• MACD (weekly) - MACD trending upwards with increasing positive divergence.
• RSI (25w) - RSI trending towards 70% but not at extremely overbought regions yet.
• Bollinger Bands - Bollinger bands are widening and prices are headed towards the upper bollinger band with room to maneuver. 
• Volume - High volume on 10 Aug with a large white candlestick bodes well technically for further demand increase.

SembCorp is a government-linked company with strong utilities and marine expertise. It recently announced a good performance in its 2Q earnings report with an increase net profit of S$190million compared to 175 a year ago. Order book stands at $6.6billion where half of which has been procured in this year. Its share prices were given a further adrenaline boost, crossing a critical resistance level, after its Marine subsidiary Sembcorp Marine announced that it secured contracts worth US$4billion from Brazil.

Outlook - Buy. Knocking on the door of $5.40 and overcoming it presents a great psychological triumph for the demand and supply forces in the stock market. Technically, this break gives good upside to Sembcorp stock prices and further good news coming out of the Oil & Gas sector lately just bodes well for this GLC to reach new heights.

• MACD - MACD trending upwards with positive divergence.
• RSI (25d) - RSI trending towards 70% with room to go.
• Bollinger Bands - Bollinger bands are widening and prices are riding the upper bollinger band already. Possible further volatility to ensue.
• Volume - No presence of any spectacular change in volumes traded but some slight increase in average volumes traded over the last 14 days. 

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.

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

STI Index vs Performance of Stock Calls

The STI has risen some 6.9% (2960 on 4 July from 2770 on 25 May). To put it into perspective, by purely punting into an STI ETF on 25 May, one would theoretically have a $69 gain for every $1000 invested. In another light, an annualised 8-9% yield is probably the higher end of what fund managers aim to achieve before calling it a day for the year. In reality, this 2-3 weeks bull run, if you had predicted correctly and invested fully at the start, will have almost gotten you done for the whole year's investment's worth.

Nonetheless, we learned to ease into opening positions and not plonk everything totally in so realistically the yield that we expect to get together with our emotional market timing would be slightly lesser, probably 5-6% on the optimistic side. And in this light, I am pretty satisfied with the performance of stock calls that I have made in this period.

A quick check on my stock calls over this period, excluding those made earlier today, shows 

• a geometric (equally weighted) averaged return of 4.8%
• highest return was a buy call on NOL on 4 June that has a current (4 June 4:40pm latest price) unrealised gain of 10.10%. 
• Capitaland and Ho Bee where both have a realised and unrealised gain of 8.8% respectively
• the most underperforming decision was Kreuz at -3.39%
• winners to losers percentage is 80% (8:2).

On hindsight, satisfied I may be on the risk-reward structure and the guiding trading principles that I have been recursively employing, I still realise that the mathematics show that I have yet to beat the STI benchmark. Which struck a chord with me on the adage "You cannot beat the market" with the efficient market hypothesis. Some truth to it, but I still have firm belief that the efficient market hypothesis is not entirely applicable especially in the Singapore market where liquidity is still an issue across the lesser-known stocks while information flow is not anywhere near the coverage of US stocks. So, I still believe that there can be more to be done in my pre-call mathematical analysis such as a stock's historic beta to the STI that I have yet to properly employ in my articles. I look forward to employing that knowledge to complement my trading principles.

Nonetheless, this is clearly a good start and a healthy validation of my trading principles in making any technical or fundamental analysis recommendations on my blog. 

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