STI - short term weakness

Ireland bailout, China and HK fighting property bubble and now N Korea launches artillery into S Korea. The impact on the Singapore market? High 3313, now 3126 - a loss of 187 pts or 5.6% over two weeks. The STI has closed below its 50-day moving average - very negative in the short term. It closed near the previous pivot low of 3120. If this support is broken, then it signals further downside to the STI.

My suggestion is to stay out of the market since the short term trend is very negative and to reenter only when the price bounces off the 50-Day moving average trend line. Longer term trend based on the 200-day moving average is still up.

Support level for Genting Singapore?

After Genting Singapore announced its 3Q earnings, the price gapped down and has been weak for the past few days. The price has barely held above its 50day moving average over the past 2 trading days. This appears to be the near term support (about $2.04). It is also near the psychologically important $2.00 level. If Genting Singapore should close below $2.00, i would suggest short term traders to exit their position and look to re-enter only when the price resumes its uptrend.

A look at Singapore's big 3 banks

After seeing OCBC break $10.00, i decided to have a look at the weekly charts of our big 3 local banks. I have always had the impression that DBS, having the largest market cap among the three, would be the best buy.

Market cap (not up to date, but indicative):

DBS: $33B
OCBC: $29B
UOB: $27B

However, looking at the weekly charts of the three banks (attached above), it is clear to me that OCBC outperforms the other 2 banks.

Noble Group - longer term outlook

Good morning, i was watching the progress of Noble Group with great interest after it broke another resistance level of $2.11. When I scrolled up the chart to look for the next resistance level, i suddenly saw that the next resistance level is its all time high of $2.24. Attached above is a weekly chart of Noble Group.

This is a major price level. If Noble Group manages to close above $2.24 on a weekly candle, then the potential upside price target is $2.24 + ($2.24-$1.56) = $2.92.

Breakout: STI and COSCO CORP

Long weekend for most of us. Significant 'happening' for the STI - today the STI closed above its recent high of 3220; it closed at 3240. Looks like we will see a Christmas rally this year. My near term target for the STI: 3240 + (3220-3120(recent swing low)) = 3320. I suspect the STI may hit 3400 by Dec 2010.




The other counter that also 'brokeout' is COSCO. It announced spectacular results yesterday:

3Q10 results

Cosco reported 3Q10 revenue of S$952.7m (+27% y-y) and net profit of S$55.1m (+147% y-y). The strong performance was due to higher revenue from ship building and offshore marine engineering projects as well as dry bulk shipping.

As a result, it brokeout from its previous high of $1.98 to close at $1.99 today. My near term target is $1.98 + (1.98-1.81) = $2.15.

Longer term indicators (its 50 and 200 day moving average) show that counter is in a strong uptrend.

STI - Trend reversal or correction?

The STI has come down quite sharply over the past few days. Will this be the start of a reversal in the uptrend or just a normal correction in the uptrend?

I attach a daily chart of the STI above for some simple technical analysis. The daily chart of the STI shows a steady uptrend since late May this year. It has steadily been making higher highs and higher lows. During the previous retracement in August, the STI retraced about 61.8%, and then proceeded to rally until 14 October. It has consolidated to about 61.8% fibonacci retracement. If the STI does not fall below the 61.8% mark (about 3100), then i would say that the uptrend is still intact. If history is to be a guide, the STI rebounded before reaching the 61.8% retracement. Let us see if this would be the case again. Also, the 50day moving average line also give a good indication of the STI's trend and looks like a good support level as well. During the previous retracement, notice that the STI did not really close below the 50day moving average. Now, the STI is approaching the 50day moving average. As long as the STI is able to close above the 50day moving average, i would say that the uptrend is still intact.

In my opinion, i would say that this appears to be a normal correction in an uptrend. But if the STI should breach the 61.8% fibonacci level or close below the 50day moving average, then the uptrend may have reversed and it may be time to pull out of long positions.

I will be watching the market closely and will update my thoughts on this blog if this should happen.

target for golden agri

Golden Agri-Resources Ltd is the world's second largest palm oil plantation with a total planted area of 433,200 hectares (including small holders) as at 30 June 2010, located in Indonesia. It has integrated operations focused on the production of palm-based edible oil and fat products.

Founded in 1996, GAR is listed on the Singapore Exchange since 1999 with a market capitalisation of US$5 billion as at 30 June 2010. Flambo International Ltd, an investment company, is GAR’s largest shareholder, with a 49% stake in the company. GAR has several subsidiaries, including PT SMART Tbk (“SMART”) and PT Ivo Mas Tunggal. SMART listed its shares on the Indonesia Stock Exchange in 1992.

GAR is focused on sustainable palm oil production. Its primary activities include cultivating and harvesting of oil palm trees; processing of fresh fruit bunch into crude palm oil ("CPO") and palm kernel; and refining CPO into value-added products such as cooking oil, margarine and shortening. Through its subsidiaries, GAR operates 35 palm oil processing mills, three refineries and six kernel crushing plants. It also has an integrated operation in China including a deep sea port, two soybean crushing plants, and production of refined edible oil products.



Please look at the short term daily chart of Golden Agri above for a study of its price action.

The price hit a high of $0.70 on 18 Oct and has since retraced to sit between support of $0.655 (previous high) and $0.645 (61.8% fibonacci retracement).

If this support zone holds, and the price resumes its uptrend, then my near term target price for Golden Agri will be between $0.75 ($0.70 (recent high) + ($0.70-0.65)) and $0.785 (161.8% fibonacci projection).

But if the price of Golden Agri breaks significantly below the 61.8% fibonacci retracement of ($0.645), then it is a pattern failure and the above analysis becomes invalid.