Well it's the wee wee hours of the morning, 4.10am to be exact. *yawnz* I've just finished watching Day 2 of the Roger Federer vs Rafael Nadal exhibition match in bid to raise money for charity in Africa. Enjoyable match I must say. Light-hearted yet well played with some amazing shots and teases. Well done to both athletes.
Anyway I'll make this post quick before I head for a shower and then to bed. Late night showers aren't good so says my mother but hey it's not late when it's so early in the morning huh? =X
So on to the today's observations.
I've been eyeing Singtel for a long time now for diversification as well as an income stock for its steady dividends and low payout ratio, not to mention its relatively low gearing compared to its closest rival Starhub (which I am invested in). Not going to do any financial analysis here but suffice to say that it's a rather stable company. For a more detailed analysis on Singapore telcos, I recommend reading these two post from Investment Moats blog entitled Yield Watch: Comparing Telecom Stocks Around The World and A Guide To Dividend Investing In Singapore Telecom Stocks. They're gems.
From the chart, price closed at its 200 day moving average again today at $3.04 for the second day in a row. Also, candlestick shows a doji which may indicate a reversal at hand. Furthermore, on both days, the lower wick dipped only one cent less to $3.03 perhaps an indication of the demand of the shares when prices drop lower.
But if we scrutinize once more, prices encountered their first big resistance on 9th of Nov at $3.31, driving prices down to their 100dma. The subseqent rebound saw prices encounter resistance on 9th of Dec at $3.17 before dropping lower further. Could this then be a start of a downtrend for Singtel? Perhaps but we have to take into consideration that Singtel went XD on the 21st of Dec. As such it is only natural for share prices to drop.
It is expected that share prices drop by the amount of dividends paid per share. In this case, Singtel is paying out a 6c as dividends. Therefore, it is reasonable for the share price to take a trip down to the 200dma we see today. If the stock had not gone XD, it is probable that the 100dma would have held as was the case before and may most likely have made a double bottom.
That said, the 14dma looks set to form a dead cross with the 100dma which may cause some people to sell when that happens. However, normally I don't really bother much about the 100dma. As a long term investor I prefer looking at the 200dma. Now if that crosses, then I might consider selling. Personal rule, don't worry about it. =)
Turning to indicators, Parabolic shows selling in process. However Bollinger bands show that prices are at the bottom of the range. Stochastics is in oversold regions with the RSI bordering it. MACD is in negative territory with no indication of crossing or turning up anytime soon. OBV seems to have bottomed and is now plateauing out while MFI has reached its previous bottom with no indication of smoothing out just yet. However, OBV and MFI made a lower high which is not a good thing. On the bright side though, ADX shows that selling strength is rather weak.
My take: Well, I am quite tempted to buy at current prices but that's just my emotions talking. This is because there could be a rebound around the corner when Stochastics cross. Furthermore, the current price has been tested twice before making this the third time prices are testing this support. However, it's not possible to tell what price it will head up to when the rebound does occur. Resistance lies at about $3.08 and then at $3.15. But as I have my own rules, and though I like dividends, I'm waiting for yield to increase to at least 5 - 6%. Keeping up with inflation you see heh. For now I'm sitting this one out. But for anyone who's keen or happy with the current 4.6%, you can try nibbling if you believe the 200dma will hold.
Not vested. Goodnight everyone or should I say, good morning =)
~K
