May 16-20, FA/TA for OCBC

FA for OCBC,

FA - Quantitative Analysis,

• NAV - 5.66 (Graham's recommendation - 66% of NAV)
• Yield - 3.2% (Yield on par with inflation 2.8%)
• PE - 14.1 (Graham's recommendation - 8x) 

Using Benjamin Graham's Intrinsic Value investment,

• Original formula, Intrinsic Value - SGD 10.07
• Conservative formula, Intrinsic Value - SGD 8.28. 

FA - DDM Intrinsic Value,

Using beta as 1.2, and Kr (expected return) of 7.5%, 7.6% and 7.7%. The intrinsic Value is 11.15, 10.26, 8.45 respectively. In the last one month, there are 9 analysts house recommended OCBC at 11.05 range. OCBC has a stable earning yield and you can use Gordon Dividend Discount Model to find the intrinsic Value.


FA - Qualitative Analysis,

Articles to read,
1- http://www.cnbc.com/id/42983891 (Why Singapore Banks Underperformed despite strong balance sheets).

May 16-20, TA for OCBC

Trend, (3 indicators confirmed side trending)

• - Side Trending along 100DMA and 200DMA. 
• - Pricing entering Ichimuko's cloud.  
• - MACD at 0 range

Momentum,

• RSI - Flat at 50%
• Stochastic - trending toward 80%. 

Support - 9.1 and 8.83

Resistance - 9.6

Candlestick - Hammer at resistance (indicates bearish reversal)

Chart Pattern - Possible Cup with Handler Formation. (this is a bullish chart if break resistance of 9.6)

General Comments,

Looking from FA prospective, 

If you are looking for a stable stock with stable earning yield, OCBC is the only bank that has constant growth rate. Personally, I like to invest stock I understand and also able to validate some basic FA valuation - at least, the intrinsic value can be computed. Analysts have recommended a buy at SGD 11 which aligned with its constant earning valuation of 7.5% constant growth rate. Theoretically, it's present price is below Intrinsic Value - indicates a Value Stock to Hold. 

Looking from TA prospective, 

On the chart pattern formation, I see a "Cup with Handler" formation. This is a bullish chart with a breakout strategy at resistance 9.6. However, overall trend indicators indicate Side Trending, which will weaken "Cup with Handler" formation. So I would personally watch the support at 8.8 if it hits and it is still a side trend. 

May 16-20 - TA for STI Index

May 16-20, TA for STI Index

• Trend - Side Trending
• Momentum - Moderate at 40-60% for Stochastic and RSI
• Resistance - 3170
• Support - 3092
• Bollinger Band - Trending into a bollinger Squeeze
• Candlestick - Harami -> indicates a possible bullish reversal 

STI is trading sideway into a narrow band. Bollinger Band is within 3.7% and support/resistance band is about 2.7%. Trading within such narrow band is difficult. May 12-13, a pair of harami is forming indicating a possible bullish reversal (probability can break the 3170 resistance). Volume is 1.3x above average on Friday.

In general, we need to understand Performance Indexes among DJI, S&P, HSI and STI. HSI is the under performer and now all indexes are entering flat or side trending.

May 13 - TA for Cosco Corp

May 13 - TA for Cosco Corp

Trend - Bearish reversal - Trending below 50D and 100D Moving Average.
Momentum - Oversold
Support 1 - 2.05
Support 2 - 1.93
Resistance 1 - 2.20
Candlestick - 2 black crows settling on the support line 2.05.

CoscoCorp has a very interesting secret code called 2.05. From the past 5 record of 2.05, you can see that it has either a very strong support at 2.05 and a very strong resistance at 2.05. But once it is broken, you can simply SHORT the stock or BUY when it crosses the line. Very interesting line - you must remember.

Mar 9 - Nikkei Index (break Resistance 9770)

May 9 - Nikkei Index Movement

Besides, STI Index and investment into Singapore Stocks. Some of you might want to consider the Nikkei Index. After the Tsunami and TEPCO nuclear issue, everyone seems to avoid those value investing stock. Over the last few weeks, Nikkei is trading in a narrow band (9336 and 9770). Suddenly, it has slowly but surely wake up and goes into +ve range. See my TA explanation below,

Nikkei 225
- Trend - Entering +ve range, 9D signal line crossing the MACD 0 reference line. Price trending above Ichimoku Cloud.
- Momentum - RSI indicate above 50-60% range.
- Candlestick - N.A.
- Pattern - N.A
- Support line - 9770
- Resistance line - 10000

Key observation, Nikkei index has break the 9770 resistance and turn support. This psychological line and MACD indicators are important indicators, as it will increase the momentum and interests for Japanese stock. Next time, I will try to blog some Value Investing stock for Nikkei.

May 9 - Performance Chart of US Dollars Index vs Commodity - Noble Group

May 9 - US Dollars Index vs Commodity Stock (Noble Group)

Reading general trending is important as it gives us a correlation between our major index and how it can affects others like Commodity. In my previous blog, I have highlighted the Gold and Silver Correction - plunging 2 supports line. However, I miss out the chart of showing the US Index on May 6. From the chart, you can see 2 strong candlesticks called "2 white soldiers". I am sensitive to some strong candlestick indicators as guidance, as they have higher probability than others. From my US Index of past 1.5 years, "2 white Soldiers" candlesticks had occurred 6 times. 5x times indicated up trend or bullish reversal and only 1x invalid.

I have again try to correlate Noble Group and US Dollars Index, very obvious you can see the High and Down relationship.

This is a good sign if you are playing commodity stock - The TA indicators messages are: Avoid LONG those commodity stocks temporary.

Articles to read,
http://seekingalpha.com/article/268673-the-commodity-run-is-over-time-to-go-long-usd-cad

May 9-10, TA for STI

May 9-10, TA for STI

1. Trend Indicators,

• MACD - 9D signal line trending toward 0 
• Price cross below 20D, 100D MA (indicate side trending) and sitting at 50DMA (indicate a possible rebound)

2. Momentum Indicators,

• RSI - at 35%, trending flat (indicate undecisive)
• Stochastic - at 12% oversold (indicate a possible rebound)

3. Candlestick

• On May3-4, 2 black crows (selling pressure)
• On May5-6, Doji (indecisive) and white Hammer (bullish reversal) respectively. (indicates a possible rebound)

4. Support and Resistance line

• Resistance 3140 and 3200
• Support 3070 and 2932
• Bollinger Band at lower Range (indicate a possible rebound)

The TA indicators give a general mixed signal and also a possible rebound in the making. Since May 3-4, Market already anticipate a general correction (-3.3% drop) of the GE results. So with PAP winning 81/87 with 60% winning votes but a drop of 6% confidence shares as compared to 2006 of 66% and 2001 of 75%.  How would the market reacts on May 9? It's important to monitor whether it breaks the support line of 3070. If breaks the support, then market decision is to punish it for another 3-4% of STI index. As long as index stays at 3070, a rebound indicators will be getting firmer.