Technical View
STI, F&N, AusGroup

Straits Times Index: Not a mere blip

Our previous call that a rebound in the Straits Times Index (FSSTI Index) would occur during the previous week was generally proven right as the index appreciated some 34 points although trading was highly volatile. Once again, we highlight that we believe the STI had probably already hit rock bottom when it touched the 2,862 mark a fortnight ago, a contrast to market consensus which is of the view that last week's performance was a mere technical rebound.

The various technical indicators are supporting our view. The 14-day ADX has turned downwards, an indication that the previous downtrend is losing strength while the MACD chart has also produced a bullish moving average crossover. Nevertheless, if price action turns bearish once again, our unchanged support level at 2,862 should be able to cap any further declines. On the flip side, we identify immediate resistance at the 2,986 mark as seen from the trend high on 30 Jun. Further resistance is also available at the 3,050 level.


Fraser and Neave: Double Bottom at play

Fraser and Neave (FNN SP) is currently looking to complete the last leg of its double bottom pattern which suggests that price action has bottomed out when it hit a low of 4.38 recently. We therefore believe that share price should rally, further substantiated by fact that it has bounced off the lower bollinger band and that the MACD chart has produced a bullish moving average crossover.

Our positive view will hold as long as support at the 4.38 – 4.39 area is not taken out, as derived from the trough of the double bottom formation and the lower bollinger band. On the other hand, resistance is identified at the 4.65 – 4.68 range, courtesy of the peak of the double bottom pattern.


AusGroup: Breaking out from a Falling Wedge

Current price action of AusGroup (AUSG SP) looks to be breaking out of its falling wedge formation which is implicative of further upside. Additionally, other technical indicators are also concurrently signaling for further advances in share price – the 14-day RSI has formed a double bottom pattern while the MACD chart is depicting a potential bullish moving average crossover.

Initial gains should be capped at the 0.74 resistance mark. Besides an existing unfilled technical gap, this level also represents the 38.2% fibonacci retracement move from 0.95 to 0.61. In the unlikely event that the share price encounters a fall, however, support at the 0.595 – 0.61 area should be able to cap further declines.





DMG & Partners Research Guide to Investment Ratings

Buy: Share price may exceed 10% over the next 12 months
-----------------------------------------------------------------------------------------------------------------------------------------------
Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain
-----------------------------------------------------------------------------------------------------------------------------------------------
Neutral: Share price may fall within the range of +/- 10% over the next 12 months
-----------------------------------------------------------------------------------------------------------------------------------------------
Take Profit: Target price has been attained. Look to accumulate at lower levels
-----------------------------------------------------------------------------------------------------------------------------------------------
Sell: Share price may fall by more than 10% over the next 12 months
-----------------------------------------------------------------------------------------------------------------------------------------------
Not Rated: Stock is not within regular research coverage



This research is for general distribution. It does not have any regard to the specific investment objectives, financial situation and particular needs of any specific recipient of this research report. You should independently evaluate particular investments and consult an independent financial adviser before making any investments or entering into any transaction in relation to any securities or investment instruments mentioned in this report.

The information contained herein has been obtained from sources we believed to be reliable but we do not make any representation or warranty nor accept any responsibility or liability as to its accuracy, completeness or correctness. Opinions and views expressed in this report are subject to change without notice.

This report does not constitute or form part of any offer or solicitation of any offer to buy or sell any securities, DMGAPS and its affiliates, their directors, connected person and employees may from time to time have interest and/or underwriting commitment in the securities mentioned in this report.

DMG & Partners Securities Pte Ltd is a participant in the SGX-MAS Research Incentive Scheme and receives a compensation of S$5,000 per stock per annum covered under the Scheme.

DMG & Partners Securities Pte Ltd is a joint venture between OSK Securities Berhad (a subsidiary of OSK Investment Bank Berhad) and Deutsche Asia Pacific Holdings Pte Ltd (a subsidiary of Deutsche Bank Group). DMG & Partners Securities Pte Ltd is a Member of the Singapore Exchange Securities Trading Limited.

More

Towards a brighter tomorrow
At a time when a lot of companies are expected to weigh in with weaker sales and profit numbers amid the current global financial turmoil and downturn, JK Yaming expects to chalk up record figures for the full financial year.

Insulated US tech companies hit by slump
The US technology industry, which resisted the economy's growing weakness over the last year as customers kept buying laptops and iPhones, has finally succumbed to the slowdown.

BlackRock Global Views: 4th Quarter
Amid all of the current turmoil, our best advice is for investors to focus on broad diversification among asset classes. In these circumstances, we recommend that investors remain cautious...

Commodities to outperform stocks, says Superfund
Most commodities are likely to rebound and outperform stocks both in the short-term and over the next 3-5 years, according to managed futures fund provider, Superfund.

Deflation Fears Lurks as Global Demand Drops
As dozens of countries slip deeper into financial distress, a new threat may be gathering force within the American economy – the prospect that goods will pile up waiting for buyers and prices...

Global investors see equities as undervalued
Investors are waiting for the right conditions to return to equity markets amid the most pessimistic outlook yet recorded, according to Merrill Lynch's latest survey of fund managers.

Buy American. I Am by Warren Buffett
I've been buying American stocks. This is my personal account I'm talking about, in which I previously owned nothing but United States government bonds.

Sarasin finds silver lining in financial storm
Investors are advised to take a fresh look at global markets and seek opportunities despite the financial crisis over the past four weeks...

Threadneedle offers funds with short-sell capabilities
The UK-based Threadneedle group will soon be offering investors in Singapore mutual funds with short-sell capabilities known as 130/30 funds.

Investors eye the Fear Index
Fear is running high on Wall Street. Just look at the Fear Index. With all those stomach-churning free falls and sharp reversals in the stock market recently...

Q&A with Lead fund manager at Midas Capital International
Given the bearish market conditions, what would be your advice for investors in their approach towards their asset allocation strategies?

Q&A with Saxo Capital Markets, Asia Pacific Strategist
Given the bearish market conditions, what would be your advice for investors in their approach towards their asset allocation strategies?

Stock Pick
Man Wah Holdings: Neutral (Phillip Securities, 18 Nov), Swiber Holdings: Neutral (DMG, 18 Nov), Armstrong Industrial: Buy (DMG, 18 Nov), Olam: Buy (DMG, 17 Nov), Sembcorp Marine: Buy (DMG, 17 Nov)