Dairy Farm

Asian retailer. Owns and runs supermarkets, hypermarkets, health and beauty, and convenience stores.

Slow but steady grower. Over the last five years, sales are up 48% and profits up 70%.

Business Model
-------------------
Use cashflow generated from existing operations to set up new retail stores. If it succeeds, keep growing. If it fails, sell off and try again.

Most stores are owned and operated. Stores usually rented through operating lease. Convenience stores may be franchised.

Expanded steadily over the years:



Not sure how many convenience stores are franchised and how many owned.

Balance Sheet:
------------------

Their expansion has usually been through internally generated cashflow. Very conservatively financed: total borrowings almost always less than one years operating cashflow:
The debt above does not account for cash held - most years they were net cash.

Keep in mind their high fixed costs, esp. operating leases, below.

Competitive Advantage:
-----------------------------
For supermarkets/hypermarkets, they have a significant presence in HK, Malsysia, S'pore and Indonesia, but would not have pricing power (like Walmart in the US or Coles/Woolworths in Australia).

HK

• Largest supermarket operator with 276 stores. Closely matched by ParknShop (Hutchinson Wampoa) with approx 280 stores.
• Many other players: Yu Kee Food with 70 stores, DCH food mart with 60 stores, Jusco (AEON) with 10 stores.

M'sia

M'sia market more fragmented. DFI may be the largest, but have many competitors:

• DFI has 69 supermarkets, 58 hypermarkets.
• Carrefour: 22 hypermarkets, 5 supermarkets
• Jusco (AEON): 25 stores (09 AR)
  
• TheStore: 58 supermarkets, 5 hypermarkets
• Tesco: 34 stores, probably hypermarkets

S'pore
DFI is first or second largest (95 supermarkets, 7 hypermarkets) vying with NTUC (100 supermarkets) with a few competitors:

• Sheng Siong: 23 supermarkets and hypermarkets
• Carrefour: 2 hypermarkets

Taiwain:
Seem to be a smaller player, running smaller stores open 24hr. No hypermarkets.

• DFI has 299 supermarkets
• Carrefour: 64 hypermarkets
• Article: http://thelostswede.com/?p=33

Indonesia:
2nd largest, far behind Carrefour. This 07 report gives the 5 largest chains:

• Matahari: 53 foodmart, 11 hypermarts (for sale, Wallmart?)
  
• Carrefour: 66 hypermarkets, 14 supermarkets
• PT Hero, now owned by DFI: 113 supermarkets, 35 hypermarkets
• Alfa, now owned by carrefour: who may be forced to divest
• Superindi (Delhiaze): 66 stores

Cyclical
-----------
How much of their gross margin (in 09: 2117m) is taken up by fixed costs?

• Employee costs: 627m (~ 29%)
• Operating lease: 515m (~ 25%)
• Depreciation and amortization: 147m (~ 7%)
• 423m PBT (~ 20%)
  
• The other 400m (~ 20%) don't know

First 3 items are fixed costs (~ 60% of gross margin). Any slowdown in sales could have a large impact and swing their profits into losses.

How did they fare in the 08 recession? (The recession started with 2Q08 being the first quarter of negative growth in SG and HK):

Topline: No slowdown in sales, and gross margins did not fall:

Bottom line. This time break up by segment:

Can see:

• Increasing operating profits throughout the recession.
• C-Stores profits dropped even after the recession. Mgt said this was due to China restrictions on selling tobacco.
  

But, sales and profits were helped by the opening of new stores. Trying to estimate on a per store basis for their different segments:

• Supermarkets/hypermarkets are combined, I'm taking one hypermarket to equal 4 supermarkets.
• Did not exclude stores opened less then a year - not available. Could skew the results lower for stores opened halfway through the year.

We get:
Due to seasonality, show the YoY % change (e.g.: compare 2H08 with 2H07):


We can see:

• SSS for H n B is unaffected by recession. However profit was.
  
• C-stores most affected: biggest plunge in SSS and profit on 2H08.
  
• Supermarket/Hypermarket are still affected, but by less. Seems not all goods they sell are non-discretionary.
  

Comparing with the Operating Profit chart, we can see that even though sales/profits dropped on a per store basis during the recession, they were opened enough new stores to increase the overall numbers.

US Mkt in correction

Still tracking IBD's market direction calls. Even doing nothing now, I may want to position trade in years to come.

IBD flagged market under pressure on 12th Nov, due to the build up of distribution days (Dow 5, NYSE 4, ):

"Avoid trying to predict the market's next move. The next step could be a correction or a resumed uptrend. The past 12 times IBD termed the market outlook as "under pressure," the next move was to correction six times and to resumed uptrend six times."

Then 'in correction' on Nov 16th:

Recent history shows no consistent pattern. In four of the past six cases, the Market Pulse's outlook remained at "correction" for nine sessions or less. In two cases, the correction label stuck for four or five weeks.

The market was overbought, and ready for a correction. Lets see how far it goes.

[Update: 12-Dec-10]
Uptrend resumed on 3rd Dec, even with no FTD, due to the strength of market leaders and market depth. No breakdown yet.

6 years is a long time....

I've stopped trading, I am not wired for TA. Position trading sounds good in theory, but in practice I cannot predict the market direction clearly enough. Whipsawed by non-trending markets. The time and risk to get a mere 10-20% return is not worth it.

My best bet is to wait for the next bear marker or recession, when I can easily get a 50-100% gain within a few years with less risk. I am comfortable going against the crowd. Wait for:

• Newspaper says recession and job loss.
• Stocks fallen 50% from previous highs
• Revenues have fallen for 2 or 3 quarters, PEs become compressed.
  

Historically, bear markets may take up to 6 years in to occur Singapore (1998, 2001, 2003, 2008). 4 more years to go....

Next time, remember to:

• Buy and hold. Bull markets last a lot longer that expected, and its painful not to participate. Don't know when/if I'd sell.
• Beware the market taking off too fast (e.g.: Mar 09, or after the AFC).... Need a simple criteria to catch this and speed up my buying.
  

In the meantime, my goals are:

• Save enough for a meaningful stake.
• Research and track enough SGX companies (aim for 10) that I would be comfortable buying when things are going to hell..

AirAsia

AirAsia is the largest LCC in a rapidly expanding market.

Their expansion is fueled by debt. How do their numbers stack up?

Balance sheet and Cashflows

Cashflows from Operations are quite good (ignoring unwinding of interest rate swaps). eg: in 09 they generated enough CFO to pay off their debt in 10 years.

Problem is due to the Capex, mostly funded by debt. CFI has been larger than CFO every year since listing (with the single exception of 09).... and not just a little but larger, usually double or triple....

Existing Debt

How is their debt hedged?

Footnotes 28 and 35:

• Approx 80% term loans, 5% bonds (sukuk)
• Approx 90% denominated in USD (700m). 35c: Abt 60% of this protected by a currency hedges (settlement dates "in accordance with the loan instalment repayment dates").
  
• Overall interest rate approx 5%.
• 2.7% long term debt is floating, the rest covered by interest rate caps or swaps.

Not much risk there...

When is refinancing required? Safe for the next five years, with 4-500m a year due for refinancing, should be safely covered by CFI. The are:

• 2013, when 420m sukuk due (940m in total due for that year)
• More than half their debt (400m out of 700m) is due after 2015, not detailed when.
  

I believe that current debt levels are sustainable.

Future Capex

As of 09: 16bn contractual capital commitments., with 8bn optional.

AirAsia has deferred aircraft orders 3 times: in July 09 8 A320s, another 8 in October, and 7 in October this year.

Year	Planes Due
2011	9
2012	24
2013	24
2014	26
2015	7

Source: table from The Star, adding the latest deferment. I did not find anywhere to confirm these numbers.

Tony Fernandez stated they would like to receive 12 aircraft per year, and keep their current gearing level (Oct 2010). additional financing may come from the planned IPO of AirAsia Thailand, Air Asia Indonesia and AirAsiaX.

Main risks:

• Fuel prices. In 09, fuel was their largest cost (30% of revenue). Higher fuel prices will increase airline ticket prices industry-wide, lowering the difference between full service and LCCs.
• External events. e.g.: SARS, 911, tsunami
• They trip up on execution. eg: New routes/planes are not filled as they expected.
  

Conclusion

Sexy, fast growing and profitable company. But too much debt. Need to see:

• Clarification of future expansion plans. In particular: timetable for plane deliveries, debt refinancing schedule. Calculate if their cashflow can support it.
  
• Since I only buy shares in a severe downturn, see how well revenues hold up. Rising or flat sales in a declining economy will confirm that the Asian LCC market is still in its growth stage. Eventually the market will mature, and follow the general economy.

Petra foods

Consists of 2 businesses:

• Branded consumer division, which manufactures their own branded confectionery products and distributes 3rd party products in SEA (mainly Indonesia).
• Cocoa ingredients division, which processes cocoa into chocolate ingredients used by chocolate manufacturers (e.g.: Mars, Cadbury, Meiji)

The Consumer division is well established, the Cocoa Ingredients is still starting up. In 09, Cocoa Ingredients accounted for 70% of EBITDA, despite both divisions having similar revenue.


Cocoa Ingredients
------------------------

Involves processing cocoa beans into cocoa powder, cocoa liquor and cocoa butter. The last two are commodity products, the last may have some value add (by customizing to different customers needs).

Business Model:

High capex, high volume, low margins. Borrow money. Build processing plant. Borrow more. Buy large quantities cocoa beans, process them, and sell the resulting commodity products at a slight profit. The low margin nature of the business is shown by single digit margins for EBITDA (No Gross & Nett margins were provided by business segment).

	04	05	06	07	08	09
Revenue (U$ mil)	266	302	328	597	874	945
EBITDA	22	26	28	27	22	28
Margin (for EBITDA)	8%	8%	8.5%	4.5%	2.5%	2.9%

They use derivatives to hedge against cocoa price movements. Management says they consider "the cocoa market to be a forum for managing risk rather than an opportunity for profit." [p5 09AR] i.e.: no trading profits. Gross cocoa grinding margins are not provided by Petra and its competitors for comparison.

Compeditive Advantage:

[From Apr 2010 S&P report, SGX research scheme]
One of the largest cocoa grinders in the world, based on grinding capacity:

• 14%: ADM - publicly listed.
  
• 14%: Cargill - private
  
• 12%: Barry Callebaut - publicly listed, vertical integrated chocolate provider.
  
• 11%: Petra
  
• 5%: Blommer

Petra is large enough to stay around... but in this sort of market, the top players are evenly matched: everyone is a price taker.

Its top three customers, Nestlé, Cadbury and the Mars Group each account for about 5%-7% of revenue.



Cyclical:

Cocoa grinding margin is affected by the difference in the price of unprocessed cocoa beans and the finished product. This seems cyclical - there was a glut of grinding capacity in 2002, and there was some margin compression last year after ADM and Cargill added capacity before the 2008 crisis.

(Wikipedia) If the combined butter and powder price is less than 3.2 times the bean price, grinding becomes uneconomical. Historical average is 3.5. See 'combined cocoa ratio' - grinding cocoa beans produces equal amounts of cocoa powder and cocoa butter (cocoa liquor is an intermediate produce, irrelevant here).

High cocoa bean prices per se do not affect their profit margins, as it is run on a cost-plus basis. Cocoa beans are bought (or secured through futures) after receiving an order. However record high prices increase working capital requirements, which hit Petra's cashflow in 2009.

The industry is highly cyclical, depending on the grinding capacity and the demand for it. I cannot predict the cycle, but Petra should be large enough to ride it out.

Industry Trends:
Continued increase in outsourcing trend expected. Attractive for chocolate makers to outsource the capital-intensive production of ingredients.

Branded Consumer
------------------------

Business Model:
Manufacture and distribute their products (48% 09 revenue). Distribute 3rd party products (52% 09 revenue).

Competitive Advantage:
Petra has a more than 50% share in Indonesia's confectionery market. Closest competitor is PT Mayora Indah’s Beng-Beng (14.5% market share). Combined mkt share of MNCs is less than 10%.

Large distribution network, with 110 air-conditioned stock points and a fleet of delivery vehicles delivering directly to 70,000 outlets.

Cyclical:

May be affected by:

• cocoa, sugar, milk price.
  
• general economy. Branded Consumer revenue dropped 11% yoy in 4Q08, after rising
  

Whole Company
--------------------

Free Cashflow

Petra has been consuming cash for the last 6 years:

	04	05	06	07	08	09	1H10
CFO	7.3	41	29.5	-29	18	-64	-55
CFI	-14	-45	-35	-50	-78	-81.9	-19

Notes on CFI:

• 07: 28m PPE (15.8m brazil + europe, and 12.1m upgrade indonesia production capacity). Remainder 22m: acquire 70% Hamburg plant
  
• 08: Almost all PPE: 76m to cocoa processing. 59m of that to Hamburg.
• 09: Half PPE: 41.3m for cocoa processing. 26m of that to Hamburg. Hamburg finished.
• 1H10: 70% is for purchase remainder of Hamburg plant.
  

Capex has dropped significantly in 2010 - management stated that have stopped all 'non-critical' capex.

In 09 and 1H10 CFO ballooned due to inventories. Inventories rose due to:

• rising cocoa prices (25% in 2009):
  

• Increased volume:

Cocoa Ingredient division - Volumes processed (000's mt)

05	06	07	08	09	1H10
114	136	148	160	234	119 (up 12% yoy)

Balance Sheet

High debt. Long term debt may be 5 to 10 times 2010 earnings. And it may increase more.

Total debt at 1H10 is U$514m. Of which 314m is current and 200m is long term. For comparison, FY09 earnings were 19m, earnings for 1H10 (alone) were 17.8m

Three things to watch:

1) Inventories. During 1H10, Cocoa inventories (for Cocoa Ingredients) rose 16%, while Cocoa processing volume rose only 12% yoy (search for 'mt' in Financial Results). Cocoa prices fell over this period:

From http://tfc-charts.w2d.com/chart/CC/W

Why are inventories rising faster than production, when the price of cocoa has fallen? It may make sense as they are ramping up production, and I do not know the exact time the inventories were bought. Not a red flag yet, but something to watch for.

2) Debt Maturity

Most of the 314m current debt is funded by short term borrowings:

For the U$200m non-current debt, $US130m of it is due between 2011 and 2014. They will have to refinance in the next few years:

• 45m MTN due between 2011 and 2014
• 25m MTN due between 2011 and 2013
• 20m Term loan due 2011
• SGD 60m (approx U$45m) MTN due 2012

Management said they are starting to fund inventories using medium term funding, I have not seen this appear in the numbers yet.

3) When can they start generating free cashflow to pay off their debt? Thev'e stopped capex, any remaining cost is working capital.

A simple back-of-the-envelope calculation... As most WC is for inventory, this would depend on their processing volume and the cocoa price. Assume their inventory level in 1H10 at 400m was for the 87% utilization that period. Assume they increase to 98% utilization, then another 10% is needed: 40m at current prices. If cocoa prices change, this affects the all the inventory (i.e.: the 400m, not just the 40m):

Worst case, if Cocoa prices go up another 100%, they may need U$500m. Best case if they drop 50% then reduced by 180m.
Others
---------
This stock is very illiquid. Mkt Cap @ $1.00 is 525m. Approx 82% held by insiders (those with > 5%), gives free float of 105m. Fund managers cannot buy. Not trade-able, even by retail investors. Suitable for long term fundamental buy only.

Indonesian family owned business.

Conclusion:

Consumer business is a cash cow, with high barriers to entry. I like it.

Ingredients processing is a cyclical, commodity business, with high capex and working capital requirements. I don't like it. They have spent heavily since listing in 03 to become one of the largest cocoa processors in the world (processing capacity up from 7% (2003) to 14% (2010) of worldwide capacity). However they will never gain pricing power in such a fragmented market which has several strong players. Capital expenditure is now over after 1Q10, but more working capital may be required if cocoa prices rise (40m to 500m).

From comparing the two divisions, we can see why the chocolate makers are outsourcing their production....I wonder why Petra is doing the opposite? Well... if they didn't raise money to do this then they would never have listed in the first place...and we wouldn't have a chance to buy in.

Wait to see:

• Inventories vs utilization vs cocoa prices
  
• When can they start generating free cashflow?
• Then do they pay off their debt?
• How do they refinance their remaining debt?

And lastly... wait a while, years if need be... for the market to drop...

Neither here nor there...

The US market's uptrend came under pressure 11th Aug, correction on 24th Aug. To me, this 'uptrend' was not significant enough to position trade. IBDs ratings do not work in a trendless market. I do not yet have this crucial skill to judge the state of the market (up, down, trendless) without hindsight.

However, following IBD does work well in a bull market. The previous examples I saw were from bull of 2003-2004. Waiting for a FTD, when the (brief) corrections are over, buying stocks that did not fall would have been profitable then. I'll keep my subscription to IBD while I see if I can learn to judge the markets better.

I have done nothing since June. Zero gain, zero loss. Right now, I do not know if the current market is still in a trading range, or correcting.

I am not cut out for swing trading, especially with a full time job. Position trading is difficult as I can't judge the market. I am changing my strategy to wait for stocks to be cheap, similar to end-08 or the 2001-2002 bear market. I may have to wait another 5 years....


Resist the urge to do something....

[Update: 13th Sep 10]
There was a FTD on 1st Sept. I am still doing nothing.

US market: new bull market?

After 2 attempts that died out within a few says, we get a FTD on Jul 7th:



A distribution day occurred on day 7 of the rally. S&P500 down 2.9% on 30% higher vol, Nasdaq down 3.1% on 10% increase. Mitigating this (from IBD):

• Higher volume partially accounted for by options expiration
• Friday's volume increase in Bank of America alone accounted for most of the NYSE's increased trade.
• Many top-rated stocks fell with the market, but in reduced or only average volume. This was a sign of strength, especially considering the options expiration day, which typically boosts trade.

I'll take this to be a normal pullback in a bull market until proven otherwise. Trying to determine the US market trend for the Singapore market.

I think its time to dip my toes in the water. Looking for SG stocks that are showing signs of accumulation, but also have clear support (cut loss) levels...it may still turn out to be a range bound or downtrending market. Have to remind myself that it is only when things feel uncertain..then it is safer to buy.

Goodpack

Since the market's doing nothing, decided to go back to fundamental research for companies to buy during the next bear market.

Goodpack is probably the closest thing on SGX to a CANSLIM company. It has shown profitable profitable growth for at least the past 4 years, is entering new markets, and while being the largest player in its segments, still has room to grow. On the negative side, its market is cyclical. And it has consumed cash for at least the past 4 years due to high capex.


1) Business Model

They rent IBC containers for customers to transport their transport natural rubber, synthetic rubber and juices, from one point to another. For the past 4 years, all profits, plus money from additional debt and share issues, have gone towards building up their fleet of IBCs.

a) From their 09 P&L:

• Main costs are for logistics and handling (40%), staff expenses (8%) and depreciation (15%). The last two are fixed, the first looks like a variable cost but cannot be sure.
  
• Nett profit margin of 30% is very high.

b) From their 09 cashflows:

	06	07	08	09
CFO (incl. dividends)	14.8	22.5	28.1	42.5
CFI (all outflows)	51	34.3	81.9	59.4
CFF (new bank borrowings)	34.1	23.5	68	15.1
FCF	36.2	11.8	53.8	16.9

The company still requires cash to grow, probably a long time from being a cash cow. Most of the cash used is for purchasing Property Plant and Equipment (95% of PPE held on balance sheet are IBCs).

There's also a small drain in cashflow for working capital - for the past 3 years, the increases in inventories or accts receivables could be justified by a corresponding increase in sales.

c) From their 09 balance sheet:

• Long term borrowings are 107m, abt 4.1 times their 09 profit. Quite high, but still manageable.
• All of their debt is floating rate (as of June 09, there is no hedging - item 4bii footnotes).
• Most of their debt is unsecured at SIBOR+1%, but the latest (Aug 08) 20m loan is at SIBOR+3%. Are they finding it harder to borrow?
  
• Vast majority of their long term assets held are PPE, which consists of IBCs.
• Minimal operating lease commitments (~ 3m), but this may increase later as Goodpack leases IBCs from its supplier.
  

My view is that their debt is manageable now... But it could be a risk if they keep rolling it over or adding to it.

On Jun 18, they announced a 300m medium-term note program where the company may issue these notes when appropriate. 300m is a bit much, zero interest rates will not last forever.

From a Aug 09 article:"Asked about the supply of additional IBCs for the new business to come, David said Goodpack will not be coming up with money for the capex. Its Chinese supplier, who is also a shareholder of Goodpack, has agreed to build the IBCs for lease exclusively to Goodpack."

2) Competitive Advantage
IBCs are supposed to be cheaper and more environmentally friendly that the conventional wooden pellet packaging. It is also cleaner with less contamination, esp. for rubber.

a) How big a player is Goodpack?

Estimated market share from Kim Eng (19 Mar 2010) report:
They are trying to gain an advantage being the first mover and largest player in the IBC space.

David Lam in a Dec 07 interview: “One of the reasons, our customers prefer to work with us is because we have the global presence. Our nearest competitor has 60,000 IBCs compared to our 1.6 million. They are after just a niche market."

b) Goodpacks IBC design is patented. (I think this is for the rubber IBC). The patent was sold by the founder to the company in 09.
The carrying amount of patent at June 30, 2009 is US$4,700,000 (2008: US$Nil) and the remaining amortization period for the patent is 20 years (09 AR, footnote 16). Why 20 years (from now)? This is the normal patent life, I don't see how it would apply unless the patent application was just made.

c) Sample compeditor is CHEP: subsiduiary of brambles: "issues, collects, repairs, washes and reissues more than 255 million pallets (mostly wooden) and intermediate bulk containers worldwide."

3) Cyclical Aspects
Their main business is shipping natural/synthetic rubber (~75% revenue in 09). The main usage of rubber is for car tires. And they are also looking to gain entry into shipping parts for the automotive industry. Thus they will be mostly dependent on the automotive industry cycle, which (I think) depends on the general economy.

In 09, revenue from natural rubber fell approx 18% due to 8 months of bad sales that year.

4) Growth and Valuation

Revenue growth for at least the past 3 years:

Segment	07	08	09	Notes
Synthetic Rubber	25.7	36.3	43.3
Natural Rubber	36.6	42.4	34.6	Downturn in 09 - only 5 months good sales
Juices & others	12.8	20.9	24.5	Drought in 07
Total	75.2	99.6	102.4

The natural rubber market is probably saturated (see 2a), but the growth is expected in Synthetic rubber. The natural rubber market size is 6.8m tonnes, synthetic rubber is 13m. The company is also trying to break into automotive parts and ink.

5) Summary

The Good:
Growth.
- Is a leader in its segments, but still has room to grow (synthetic rubber, juice).
- Entering new markets (auto, ink).

The Bad:
- Cyclical, mostly based on auto market. Witness the 09 decline in natural rubber revenue. Do not know if the largest expense on their income statement ("Logistics and Handling") is a fixed or variable cost.
Debt - Already quite high at 4X 09 earnings. Why the 300m note program? Zero interest rates will not last forever.

Conclusion:
Wait till after cyclical downturn to buy.
Watch their debt. Including any new operating leases for IBCs from their supplier.
If their revenue drops, try to confirm whether their "logistics and handling" costs are fixed or variable.

US Market

For the record.

IBD signaled a market correction around the start of May.

There was the intraday flash crash on May 6th.

A Follow-thru-day on Wed 2nd June suffered a distribution day on the 4th. A distribution day within the first few days of the FTD nearly always marks the end of the trend. The FTD went nowhere.
Another FTD on 4th Tues 15th. Market has been flat since then for the past 4 days, with no distribution. Not very bullish either. IBD notes that "for the 10 best follow-through days since 2000, there are none that look identical to the action of the past three sessions." Right now, I think this is one has a 50/50 chance.

[Update 30th Jun 10]

Markets fell last night on heavy volume.
S&P:


Nasdaq:


The downtrend continues.

[Update 11th Jul 10]
Another FTD was signaled on Wed 7th Jul. But vol was only up 1% on that day. Market has kept going up in the crucial few following days - 5% last week - but on low vol. IBD notes: "A strong uptrend may create regrets among investors who stay on the sidelines for the first few days after a follow-through. A false signal could create quick losses for anyone who buys stocks. But this fledgling uptrend has done neither."

Bespoke notes:

• 8th July: Breadth: many stocks still trading below 50MA. "For bulls, this means there could be a long way to go before the rally runs out of steam. For bears, this shows that even after a pretty big rally, breadth remains rather weak."
• 8th Jul: The heaviest falling stocks have been the best performers in the rally. Is it just short covering?
• 9th July: Bearish sentiment highest since March. Fuel for a rally?

Mixed signals. Since I've no opinion on market direction, won't do anything.

If stocks on the SGX pull back to support levels, I can consider dipping my toes in. The STI, and many SGX stocks, have been trendless rather than downtrending.

Sold everything

Sold everything abt 3 weeks ago:

• 10 lots NOL @ 2.04
• 5 lots parkway @ 3.31
• 2 lots citydev @ 10.32
• 18 lots midas @ 0.99
• 10 lots wing tai @ 1.75 (bought @ 1.85).

Altogether a 6.5K loss, including brokerage.

At one point I was up 5.5K. Must change the way I trade:

- Don't feel compelled to buy just because of the bull, only buy carefully on retracement. Mkt takes money a lot easier than it gives it. It is not reasonable to go from 0 to 100% invested, or even 0 to 50% in a few weeks. Edge my way into a rising market.

- Learn to recognize when the market is overbought. The length and strength of the rally:

• 11 weeks without a dip is too long.
  
• The rally (follow thru day) started on Mar 1st, and it kept getting more and more overbought.
• At one point we had 8 consecutive weeks of gains.
  

- Learn to recognize when individual S'pore stocks are overbought. This is harder: possibly I should just say that when a stock has shot up and is now far from support, I can consider selling. NOL for example?


Remember, speculating is just a way to skim a little off the market...to keep out of trouble.... until the next bear market opportunity.

Bought citydev

Bought 2 lots @ 11.06 on Thurs 22nd Apr.

Has retraced slightly on low vol.

Cut-loss at previous low (10.56).

The rally that won't die

US:

• Market still in uptrend. Despite Greece, Goldman Sachs... etc, it is still going up.
• IBD reports favorable breadth (IBD 100 still rising).
• 8th consecutive week of gains.
  

Back in Singapore:

• GS sparked off a round of selling in the local market. Now we have had 5 days of almost continuous broad-based selling. My broker suggested that this is a safer time to buy, as all the contras are wiped out.
  
• Also gives an opportunity to select stocks based that have retraced slightly (not below a previous low) on low vol... as a way to sort the wheat from the chaff.
  

Tiong Woon

Bought at 56c (21-Apr-10), healthy retracement on low vol:


Sold several days later, as it gapped below moving average during the ,market's broad based fall.

May have been a mistake to sell, as vol was low when it fell.

I think the mistake here was the original buy decision - buying in an overbought market, and also buying a stock with cut-loss too far away.

Sold Osim

15 lots at 0.92 on 22-Apr-10.

It was (and still is) not completely certain that the stock is undergoing distribution:

• Was only one day's selling.
• Market fell heavily, and broadly that week too.

So hard to tell....One reason for selling was because of the high drawdown (stop loss at 0.87).

Don't think this trade was a mistake... it just didn't work out.

Bad Trade: Straits Asia

Bought 6 lots at 2.34, sold at 2.11.

Mistake was to buy when the market was overbought. Must learn patience. Don't have to be invested, even in a bull market.

Sold Capitamall Asia

Sold Capitamall Asia on 21st Apr, at 2.21.

Not a shred of anything bullish in the chart:

Bought OSIM, Parkway

Osim:

• Breakout after flat for 3 weeks.
• Bought 15 lots @ 95.5 cents

Long term chart shows next resistance at $1.12:


Short term chart shows previous low at 87.5c (cut loss slightly more than 8%):


Parkway:

• bought 5 lots @ $3.25
• healthy retracement, still in uptrend. Support probably 3.20 (MA).
  

[Updated 25/Apr/10]

It has retested 3.14 twice since then. This level is also a previous high.

Was a mistake to buy this too soon, before the support became apparent, by retested at least once... or having a clear low..., which we still don't have, so not sure if this is it.

Still, the retracement is healthy:

• low vol
• Did not fall much in the broad-based selloff that lasted the whole of last week.
  

Will hold for now.

Accumulation is more apparent on weekly chart.

Fortis is still accumulating, up to 25% by 29th Mar.

Sold Venture

Sold 2 lots at $9.51.

Still in uptrend, but overbought, approaching resistance.

It has shot up on healthy accumulation, from 8.36 to 9.50, 10% in 3 weeks. I bought halfway through, so 5% profit in 7 days. Since support is below my buy price, decided to take profit.

May be able to buy back on a healthy retracement, if it could establish a support level.

Sold ARA

Sold 15 lots @ $1.17.

An uncertain decision:

• Main reason to sell was that it was not rising, even in a bull market. And I'm impatient.
  
• But falling MACD with steady price can mean that it is just working off its overbought condition...
  
• ... but stock is still in an uptrend...
• in a bull market.
  
• Uncertain price action, yesterday: accumulation, today: distribution.

This decision is either going to look very smart or very dumb with hindsight, but when pulling the trigger, everything is uncertain.

Sold CWT

Sold 20 lots @ 1.04.

Although not 100% the uptrend is broken, the weight of evidence points to it:

Accumulation examples

I missed these: Accumulation shown by small bursts up on high vol and retracing healthily on low vol.

CSE:


Straits Asia:

Missed this one as I was busy at work yesterday, had already shot up after I looked at it.

Don't chase now, too risky...I'm half invested in a bull market, so doing OK...the bear can appear and turn profits into losses within a few days, like in Jan. Buying on pullback will help to avoid this.

Bought Venture

Yesterday 5th Apr 10, bought 2 lots Venture @ 9.04.

I told my broker I was interested in the morning, after it broke through $8.98, she called me and said that this could be an opportunity if it holds that level...


Support levels are:

• $8.98 (recent high)
• $8.63 to 8.66 (previous low... but not clear)
• $8.38 (clearly the previous low) - I'll take this as my cut loss level for now.
  

Sold Ho Bee, SC Global

Mon 5th Apr, sold:

• 11 lots Ho Bee @ $1.84
• 10 lots SC Global @ $1.86

Main reason for selling was that my cut loss level was too far down...was a mistake to buy. Secondly, they were not performing even in a bull market.

Made small loss on the brokerage.

Don't know the market trend...

The Singapore market has been going up:

• only had short 1-or-2 day pullbacks in the past few weeks...
• not enough to remove the contra players and create any short-term oversold condition.. where I can enter safely.
  

Not sure of the trend: await direction from Uncle Sam.

The US market has not significantly corrected, and is still overbought.... don't know what the trend is:

• The market has moved in a tepid way (several distribution days and bearish candlestick formations in the last week)....
• but it has still been rising, killing the shorts.
  
• IBD's tone changes daily.

Now that 1st quarter window dressing and the low-vol Easter week is over, wait to see what happens...

Dur to the uncertainty, I would buy on retracement, instead of breakouts.

US market: strong uptrend... but overbought

Nasdaq's follow thru day was on 1st Mar, strong uptrend since then:

US market yesterday reversed (upward) strongly (healthcare bill passed), and ignored bad news (USD up, Greece). OK so far... BUT the US market is looking overbought.

This uptrend has been lead by Nasdaq. In S'pore, however, the tech stocks (Venture, HIP, STATS) have been miserable.

Bought NOL

Friday 19th Mar 10. Bought 10 lots NOL @ 1.97.

It had rebounded off its resistance-turned-support line at around 1.93. I bought the day after. It went below that the next day, but seemed to recover today.

Resistance at $2.20.

The retest of the 1.93 line a few days ago is not significant enough to make it a 'previous low' when viewed on a longer timeframe... I am a little uncomfortable buying with such 'flimsy' support...a break here would not convince me the trend was going down...hence the trade is a little too 'short term' for my liking... to open to be whipsawed.

But there's not much to buy...

Bought ARA

Bought 6 lots @ $1.15, 9 lots @ 1.16.

Cut loss probably at $1.08.

Bought Ho Bee

Bought 11 lots Ho Bee yesterday (9th Mar 10) @ 1.84, as it had broken out of triangle.

It has since pulled back to the trendline, but on lower vol.

Cut loss would be at 1.63. Resistance at 1.82, 1.93 and 2.24.

Bought SC Global, CWT, CapMall Asia

Yesterday Wed 3rd Mar 10:

• Bought 20 lots CWT @ 91.5c. Cut loss at 87c (-5%)
  
• Bought 10 lots SG Global @ $1.82. Cut loss at 1.64 (-10%)
  

Today Thurs 4th Mar 10:

• Bought 8 lots CapMall Asia @ $2.28. Cut loss at 2.19 (-4%)

Aim was to buy stocks that are in an uptrend (or may be bottoming, for CapMallAsia), but are not to overbought, in case the market direction heads down again.

CapitaMall Asia

Don't have data for this so have to use the chart from SGX.

Price/vol action looks good, accumulation in green above, is it reversing after a long decline?

May be added to STI, expected to be confirmed Mar 11th, takes effect Mar 19th.

All time low is $2.19, giving a 7% cut loss @ $2.35.

Not sure if it is above the 25 and 50 EMAs.

ARA Asset Mgt: Pennant?

Matches textbook description of pennant:

• Strong uptrend before start of formation.
  
• high vol on flagpole
• So far, replacement vol has been low

To trade, would need to see:

• Continuing low vol on retracement.
• Retracement does not last longer that 3 weeks (some books say one month). Currently on day 6.
  
• High vol breakout.

Cut loss would be just below the valley.

Take note:

• 1 for 5 bonus issue proposed approx Apr, need a multiple of 5 lots if buying.

[Update 13th Mar 10]

No pennant. It did not break out with a big strong white candle... rather we got a couple of pussy candles. A breakout finally occurred yesterday:

The uptrend is still intact. If I buy now, cut loss would be at $1.08, 7% below last closing price of $1.16.