Cosco

Cosco is down on profit taking, currently trading at 1.78/1.79. It probably will test 1.75 support now that the higher support has broken. My view is unchanged that Cosco is still on the way up. This is a retracement. My view will be negated if Cosco breaks 1.75 and trades all the way down below 1.60. If this scenario happens then reevaluation is needed.

Falcon Energy

Update on Ezion- 0.73 traded but closed lower. Once it closes above 0.73, expect it to test the 2nd target at 0.75.

Falcon Energy- Considered a laggard as it usually moves in the 2nd wave of an uptrend, this stock usually moves after a significant move in other oil counters.

I did not project a long term downtrend line as i found it to be more insignificant as the immediate trend is unclear. While the long term trend line has been broken, the expected upward movement is not occurring as yet. Instead, Falcon is going in to a triangular squeeze. The moving averages are converging around the center, representing the fair value to be right smack in the middle of the tight price range recently. This means a breakout above this triangular squeeze will be significant and telling a longer term, perhaps 2-3months. As of now, Falcon is not displaying any strength as it tested the upward resistance thrice but failed to close on top. It closed both below my short term horizontal channel and the 2 MAs, so the conclusion to be drawn is that it is leaning to a downward breakout. As of now, there is no reason for a trader to be caught long in Falcon energy. Things could change in a few days if the price action proves otherwise. KIV.

Cosco


This ship has been sailing slowly and disappeared off the radar of many investors and traders. My view however, is that this could be back in action in this bull run. Not all the way back to its hay days, but it would not be unrealistic to expect a rally back to 2+ region. A quick browsing of the yearly reports revealed that Cosco was making net profit of $419m in 2008, and $137m in 2009. These were achieved under the massive cancellation of shipbuilding orders and an economic slowdown in seaborne trade. Citi group recently upgraded Cosco and raised target price to $2.30. My emphasis however, is on the fact that during the bad times, Cosco was still putting up decent performance, despite underperforming expectations. If prices move on expectations of future earnings rather than actual earnings, does it mean an upward revision of expectation is the catalyst needed to kick start a rally?

Those were just some basic fundamental approach in looking at Cosco. The reason that i will put up a trade on this is because Cosco has been trading in an uptrending channel for close to a year very slowly. Despite all the volatile events in the international economic scene, the Stock managed to absorb the negativity and trade higher, evident of the available information being priced in. Unless an equally devastating collapse happen, the expectation on Cosco's future earnings is already higher than in 2009. The resistance formed at 1.87 is significant and the breakout will occur at 1.87, while an early entry can be made once Cosco closes above 1.84 firmly. The first target is $2.31, the second $3.20. The wide spread gives a substantial upside of 25% at the first target. Cut loss below $1.60. This trade may take a while to play out so holding power is requred. Caveat Emptor.

Ezion breakout


Following up on the last Ezion post, it broke out today, closing on top of the downtrend channel. The next target is 0.73. As the focus is now on the 2nd and 3rd liner stocks, the pennies will be in play. A lot of stocks are displaying either triangular patterns or breakout setups. I think that the pennies will breakout one after another in the next few days. Afterwhich, STI should be correcting downwards, in preparation for the next wave of buying.

Trade suggestion: Long@0.70. Target 0.730 (1st target), 0.750 (2nd target). Cut loss once close below 0.660.

Bank stocks


Despite the STI rallying close to 80 points since breakout at 3000, the 3 banks have not been performing. In fact, the 3 of them are testing support near their respective support lines. The main component stocks that have strapped the STI along the rocket ride are mainly Genting ,Jardine C&C as well as the commodity stocks. Should the banks break below 8.70 OCBC, 13.80 DBS, 18.43 UOB, i believe one should be wary going long for the time being. The correction in financials will take a toll on the index and especially if Genting's steriods run out.


On the other hand, this will be a good opportunity to load up on the bank stocks should the price action prove that the sector finds strength in the pullback to rally further. In that case, the process of playing catchup will mean the upside could be pretty violent. Keep a close watch on the financials.

GMG


Support has been seen in GMG global twice along the uptrend channel. The stock is attempting a ascending triangle breakout similiar to many stocks over the last week. In a week or two, this could be the next big gainer. A close at 0.235 signals a breakout.

DJI vs STI















On the mid term perspective, there is no reason yet to believe in a double dip recession. As the trendlines formed over many months tend to be more stronger, i do believe the support on the index is present unless broken on strong volume. Looking at how DJI has been trading, my view is that the index has found strength at the 10k support. Followed by a shallower dip in August as compared to July. However, here comes the tricky part. Although i highlighted 3 bottoms that coincided with a potential reverse H&S, the reverse could be true also if the 10450 level turn out to be the peak of this cycle.(another H&S pointing to a downside) Therefore, within the next 1-2 months, we will be watching the DJI close above 10450 to validate the bottom of this cycle.

On the short term though, 10450 has been tested 3 times this month and has been rejected from the resistance. The range now is between 10370 to 10450. DJI is becoming short term overbought so there could be shallow dips to the support level at 10370.

Lastly, comparing the relative strength between the DJI and the STI, it leads me to believe the funds are flowing into Asia now. Despite many extensive studies on how Singapore is dependent on the US in terms of international trade, the flow of investment money evident on the charts show a different story. Notice how the STI trades in the higher tier of the channel for a longer period of time compared to the DJI, and that the correction period within these last three months have been extremely brief and shallow. While the DJI is still struggling at the lower tier of the channel, the STI only touched the lower tier resistance once and rebounded off from there, proceeding to use the middle line as a support. STI has effectively closed above the year high as of 7th september, while it is clear DJI still has space to run. This lends evidence to the view that Singapore is at a relatively stronger position now given its rosy GDP reports recently.Given the behaviour in the past, STI would have been trading at a lower tier given the strong dependence on the DJI. STI continued to perform strongly despite all the problems with PIIGS, unemployment, debt and trade deficit, leading me to believe that the inherent bullish sentiment is starting to form, and the long awaited bull could really make a come back.

In summary, my view is that the DJI is poised to move up further, and that could lend an extra push to our local index towards 3140.

HL Asia



Since my last post, HL Asia did not trigger a buy as it did not close above 3.75 on 13th August. It fell to the low in July and promptly rebounded from there. Currently, it is trading below the resistance of 3.56. HL Asia is a stock to watch because the upside beyond 3.73 is all the way to the 2 year high at 5. On the technical side, we are currently seeing consolidation for the last few months and a triple bottom is likely to form. There is no compelling reason to go long yet, but it is definitely worth a watch, especially when it starts trading back in the uptrend channel and subsequently break the 3.73 resistance.

STI Outlook



Friday's Close on STI was spectacular. The 2970s was tested again with the lower end reaching for the intermediate support and rebounding, closing all the way above 3000. The next level to test is 3014. To maintain on this uptrend, STI cannot close below 3000. No signs of fatigue yet, i believe STI should be able to test 3014 before the next correction. Someone mentioned that STI formed an inverted head and shoulders from May to July, with the neckline being around 2900. Notice how STI reacted when it challenged 3014, with it reversing around 360 points to the low in May. The second try in August resulted in another correction but it was only about 100 points. A new bull market could be coming, especially if we witness the first close above the 3014 level. I believe one should start building long positions and await the next run up.

Ezion


No Strong reasons for trade, but i am charting this just to get a feel on the market after missing out the action for quite a while. On the mid term, Ezion is trading within a downtrend channel and support at 0.555 has been tested and it rebounded from there. The recent channel from my indicator shows that resistance in the short term has been broken at 0.635. Look for Ezion to test 0.66. A close above that may bring it to test 0.68. 0.68 will be the key resistance to watch. If STI can hold above the 3000 level and Crude oil continues to trade higher, Ezion may experience a change of trend once 0.68 is broken.