Ascott REIT Still Under Pressure

It's been awhile since I updated the ongoings with Ascott REIT with my last post being more than a month ago (see Ascott's Bounce Unsuccessful for the detailed discussion). In that analysis, I highlighted that "we might see hovering around its current support at $1.21 to $1.23 for the next few days." I also said that prices may "even breech $1.21 to its previous support at $1.20. As volume is still weak I doubt there'll be any testing of the $1.28 resistance any time soon." Here's how that played out.

It's been more than a month and prices have still yet to come close to its previous resistance. Also, although the $1.20 wasn't breeched or reached firmly, prices did briefly touch for two days in a row before leap-frogging upwards for another failed rally.

Prices however remain steadfast with support of the 50 day moving average despite what seems to be quite a bit of pressure from the last three days. Furthermore, a gravestone doji forming yesterday doesn't bode well. So turning to the indicators, it may be possible to get some clues as to what can we expect next.

%R and OBV has dipped downwards with %K looking to be doing likewise. Also, although volume bars for the MACD seemed to be turning up, the action yesterday brought it back down once more. RSI too, hasn't turned up decisively which doesn't contradict the negative sentiments displayed by the other indicators. Furthermore, volume is lacking so it looks like price will remain weak for awhile.

Looking at the other indicators, P&S shows that momentum is still down. ADX shows no strong trend developing with DI- and DI+ turning downwards. Confusing this is...However Bollinger bands and GMMA have entered a squeeze which could mean a sudden explosion of movement is arriving soon. But the million dollar question is...in which direction?

My take:

It is likely that prices are gonna be stuck in the range of $1.22 - $1.24 for awhile longer. However, as the pressure seems to be like a hammer on the 50dma, it wouldn't surprise me if support at the 50dma breaks and someone will sell out and release his/her shares at a lower price possibly causing prices to dip to their 100dma briefly. That's briefly because there are buyers waiting at $1.20. As such I remained undecided which direction the prices will take when the spurt occurs.

On one hand, if the spurt happens, as hinted by the Bollinger Bands and GMMA, we may see prices catapult upwards like it did previously as indicators are mostly in the oversold region or heading there so there's a good chance that it may spring up instead of down. But if volume is not there to back it up like before, it may just turn out to be another fake rally. On the other hand, pressure from above may see prices drop to the 200dma instead.

With a yield of 7.14%, gearing of 40% and a 5% discount to net asset value or a price to book of 95%, Ascott REIT may be better  and more alluring as a dividend stock especially with backings from Temasek. However, in terms of growth, that remains a question.

Not vested,

~K

Ascott's Bounce Unsuccessful

Last Friday, I commented that the spike in the share price of Ascott REIT seemed weak and that "Ascott's leap today did so on a rather small volume. Futhermore, you can notice the volume making lower highs. Such divergence in volume and price movement must be viewed with caution. Don't be an "ass caught" (pun intended) as prices may be sent downwards hereafter." See Ascott Reit Making A Weak Leap for details.

We can see from the chart that prices failed in its attempt to break through resistance at $1.28. However, as noted too that, "support seems to be strong from the collision of the 14day moving average with the 50dma at $1.22.", prices did indeed drop back to support levels ending the day at the predicted price.

But will the support hold?

Unfortunately, in the near term, the charts are rather unclear. There is no obvious trend from the indicators other than a slight dip in the MFI, a seeming plateauing of the OBV and a recent crossover in the Stochastics. These suggest selling and that prices could possibly dip for a couple more days but there is no strong trend from the ADX. MACD however looks set to cross, furthermore into negative territory which could drive prices down further.

However, as today's closing price coincides at the 14 day moving average, this may provide some stability in the price. The 50 dma too, trails at $1.21. As such, we might very well see prices hovering around its current support at $1.21 to $1.23 for the next few days.

That said, my personal opinion from all the clues and options is that I expect prices to drop a bit more before picking up, possibly even breeching $1.21 to its previous support at $1.20. As volume is still weak I doubt there'll be any testing of the $1.28 resistance any time soon.

Not vested,

~K

Ascott REIT Making A Weak Leap

In my previous post entitled Two Extremes: Starhub - Falling Star, Singpost - Blasting Off!, I noted the giant movement in prices in both Starhub and Singpost.

Today, Ascott Residence Trust, a subsidiary owned by Temasek Holdings (48.1% stake), is also another stock which made a nice leap upwards, trashing its resistance at $1.23 and headed to its next resistance of $1.28 where it closed. However a closer look at the chart below shows some uncertainty to this move.

Unlike Starhub and Singpost in the previous post, Ascott's leap today did so on a rather small volume. Futhermore, you can notice the volume making lower highs. Such divergence in volume and price movement must be viewed with caution. Don't be an "ass caught" (pun intended) as prices may be sent downwards hereafter.

Does this mean that prices won't head higher? No it does not. Prices may still breech resistance. However as the volume supporting this rise is low, the rise in price may only be temporary which may result in another pull back in the short term. 

On the other hand, support seems to be strong from the collision of the 14day moving average with the 50dma at $1.22. Furthermore with prices making higher lows, prices may rise higher thereafter. But once again, volume shrinking doesn't support this. So caution.

That said, personally with uncertainty lurking, yield at 5.8% and Price to Book at a premium of 1.04, I wouldn't invest at the moment as Ascott REIT is rather unattractive at current prices. 

Not vested.

~K