Mixed Fortunes of Oil & Gas - Ezra, Swissco

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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.

Weekly Update - STI to Charge Further?

Current Weekly Market Theme:
Market euphoria over partial resolution of the fiscal cliff is on the wane and the market has been looking for new catalysts to spur another round of rally. 
The debt ceiling is looming around the corner and due for another round of political 'negotiations' by end Feb - expect more market volatility and jittery. Nonetheless, the debt ceiling has been raised countless times before and going by the remarkable standards US politicians set for themselves (and their political paths), we should see yet another kick-the-can-down-the-road situation unfold. Nothing new.
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: Breakout of the Laggards? - Wilmar, Midas, Tiger]

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STI Index goes from strength to strength; to Charge Further?
The STI has always been a huge beneficiary when China recovers given the large Chinese market links that the 30 component stocks have such as Capitaland, CapitaMalls Asia, Wilmar and Genting. The STI is also Oil & Gas heavy owing to Keppel Corp, Semb Corp, Semb Marine and Noble Group. These two sectors have been winners in the recent rally given a better-than-expected China and emerging markets recovery, bringing the STI to almost a 3 year high.
Taking a break this week, and owing to jittery fears about the looming debt ceiling, the unresolved debt crisis still ongoing in Europe, the STI took a breather with much profit-taking occuring this week. The big question is if the STI will continue to charge up further or see a near-term decline to even lower levels.

• Challenged 3190 key support levels in this week to close at 3211 on Friday. 
• MACD - positive divergence albeit declining. MACD still upwards trending but may seem to peak given the current run.
• RSI (25w) - exhibiting a seeming turning point.
• Level to watch - 3190 key support line. The STI is well perched on 3190 having tested the support this week by rallying to close on the support line despite dipping to 3160 in mid-week. Continue resting here will provide traders with confidence with the STI's rally strength and future upside may be more likely. If this support level is breached, the STI may seek a tumble down to 3080 levels.

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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.