KeppelCorp Technical Analysis

After selling my sembcorp marine stake, I'm still bullish on the Offshore Marine Sector.
Since I can't buy Keppel Corp (too expensive), I am keen on buying some underlying warrants on KepCorp.

As you can see from the graph,

Stock price is WAY above all moving averages, a very bullish sign
Stock price has been on an uptrend since 25/08/2010
Volatility, as seen on the bollinger band range, is low, making the warrants cheaper
HOWEVER, prices are above the middle band for quite awhile already, indicating overbought territory/little upside.
PSAR indicates bullish trend
MACD is somewhat bullish...Both signal lines and MACD line is above 0, however signal line is above MACD Line
No trend in RSI, whether overbought/sold
Stochastic basically shows the same thing as MACD

KepCorp is currently consolidating and the TA indicators are only somewhat bullish (MACD/Stochastic/MA bullish trend, Bollinger, RSI neither bullish nor bearish, PSAR bullish). I will KIV this counter. If KepCorp can break out of it's $11.00 resistance at high volume, it would be a good time to get a warrant on it. However if it drops below $10.75 support then it'll be time to stay out.

But since the TA indicators are somewhat bullish, maybe I should take a punt on KepCorp...

Anyway, for Kep Corp some of the warrants I'm eyeing are:
1.) Something medium term (3-6 months long)
2.) Must be in the money

KEPCORP DB ECW110221 (LT3W) ASK: 0.630
Exercise Price 9.10

Expiry	21 Feb 2011	Break even price at Expiry	10.99
Last Trading Date	14 Feb 2011	Moneyness	16.21% ITM
Time to maturity	72 days	Intrinsic Value per Warrant	0.593

And
KEPCORP DB ECW110530 (MN6W) ASK: 0.395
Exercise Price 10.10

Expiry	30 May 2011	Break even price at Expiry	11.285
Last Trading Date	23 May 2011	Moneyness	7.00% ITM
Time to maturity	170 days	Intrinsic Value per Warrant	0.260

The former looks good as the ask price is close to the intrinsic value and Delta is 0.87, however, it's spread is 1 cent while the latter's spread is 0.5cents.

Shall track KepCorp and these 2 warrants.

NOL MBL eCW110303, SembMar MBLeCW110303

Bought more warrants this time.

I've read that what I'm doing is speculating (momentum trading), not investing. And yep, I agree with it, I am speculating. :)

In the long run, value investing is my target investment style, however, I'm trying my hand out in momentum investing for now. Reason being, i don't have much money, hence warrants can get me large exposure to equities with just a fraction of the cost, being safer than CFD, yet being able to achieve high percentage gains (and losses.)

Anyway, I made a small mistake today. in buying NOL MBL eCW 110303, i accidentally saw the price wrongly and ordered at a higher price than market rate. hence POEMS transacted my order at the current market price, which was not very attractive. I bought 5 lots at $0.24 each, thus immediately losing about $100 since the buy price dropped to $0.230, inclusive of my brokerage fees.

Anyway, i didnt make the same mistake when buying SembMar a few hours later. I placed my order (and double checked!) at a low price, $0.400. SembMar dropped and i got it at that price.

With regards to Coscocorp warrant that i bought last friday, it went thru a tumultuous week, at one point i lost about 20% of the warrant value when cosco dropped below $2. but cosco seems to have rallied with their announcement of the 2 contracts they received, and I'm hoping that the fabled "SANTA CLAUS RALLY" will help me gain some profits for christmas.

Apparently, December to February has historically been the best months of the year, one reason being that retail investors sell off in dec to claim capital loss for tax reasons, and unit trust managers have to transact to meet requirements. not sure how true these reasons are, but since 1930+, most of the market rallies have been at the year end.

Reason for buying NOL:
Profit and revenue rose YOY consistently, Most of the fundamentals look good, it's PE ratio is around 11, however I'm concerned with its high debt level, at USD 1.3 billion, which is 20% of net equity. Bought the short term warrant instead of the share due to the reasons mentioned above.

Reason for buying SembMar:
Revenue has dropped, yet profit has increased, they are in the running for Petrobras' 27 rig building contracts, debt level is pretty good, yet i can't afford it's share price. sigh...

NOL MBL eCW 110303
Buy price: $0.240
Target profit taking level $0.30
Stop loss level: $0.180 (25% away- loss of $350 incl brokerage)

SembMar MBL eCW 110303
Buy price: $0.400
Target profit taking level : $0.460-$0.480
Stop loss level: $0.300(25% away- loss of $350 incl brokerage)

CoscoCorp BNP eCW110530
Buy price: $0.485
Current price: $0.500
Revised profit taking level: $0.580
Revised Stop loss level: $0.385(21% away- loss of $250 incl brokerage)

In a side note,

Why are brokerage charges so HIGH in Singapore? In the US, POEMS comparable internet trading like E*Trade, TD Ameritrade, Charles Schwab, Fidelity charge a FLAT rate of US 7.95-USD9.99 for non advisory! Why is Singapore so expensive? could be due to Economies of Scale i guess. 

Emotions on the market

As per my previous post, I bought 2 lots of Cosco corp call warrants, which basically means im bullish on cosco. Today, however, cosco corp's share price dropped, at one point by 4 cents, which disproportionately affected the market maker's price of the warrant.

I set a stop loss target for myself at 38.5 cents. Reading alot of books, the authors all similarly and repeatedly hammer the point where you HAVE to bite the bullet and cut your losses. Today, i realised how difficult it is, the emotions that flow thru you when your own money is on the line.

Anyways, this can be construed as me paying tuition fees to Mr. Market for teaching me how to trade.

After all, you have to lose to win.

After a long day of trading, eventually cosco corp traded 1 tick down from Friday. (phew!)

Paper Losses and Warrants

In my fledgling investment hobby, I've made my first paper loss.

The loss is from Sabana REIT. This counter debuted on SGX at 1.00 and closed at 1.02, leaving me with a $30 paper loss (not including my brokerage fees). Oh well, there's still the 8% dividend to look forward to.

If Sabana rises to maybe $1.12-$1.13 (doubt it though), I will sell it off immediately. Reason being I'm not very sold on Sabana's parentage, which is Freight Links, and also the multiple restrictions on Shariah financial products, which is pretty cumbersome.

So for Sabana, my selling point will be $1.12 onwards.
I doubt REITS have a very low support level, since if it drops, the dividend yield is higher, hence the support level should be quite strong.

I also bought my first derivative product on POEMS today.
I bought 2 lots of "CoscoCorBNPeCW110530", KG6W, at $0.485, from the market maker. I was the only buyer of the stock today.
Reasons for buying:
1.) After reading Cosco's 3Q financial statement, it seems to be in a good position, with positive cash flows and increasing revenues and profits. They may also have a few big contracts which will hopefully increase their profit.
2.) 1 lot of Cosco cost $2060 today. Hence, by buying the warrant, issued by BNP Paribas Warrants, i gained exposure to 2 lots of Cosco for a mere $995 incl. brokage fees.


The warrants have an exercise price of $1.68, and is due to be redeemed on 30th May 2011. Warrant:Share ratio is 1:1, hence my break even price (after factoring in all costs including brokerage fees) is $0.51 per warrant. 


My short term view on Cosco is bullish, and hopefully I'll be able to gain some profits in the short term, hopefully before CNY.


The theoretical Delta for this warrant is 0.78, hence, for every 1c the counter moves, the warrant will move 0.78c. Hence, for my target profit taking level, Cosco Corp has to move roughly about 20.5 cents up.




If there's anyone reading, would you care to comment on my buying on this warrant?


Anyway,
Target Profit taking level: $0.65
Self Declared Stop Loss: $0.380 (21.8% away from my purchase price- at this price i will lose $260)