SPH

Analysts are looking at the potential dividend payout to support the shares. Citi Investment Research expects a 9.9% dividend yield for FY2009, Kim Eng expects a prospective 7.5% dividend yield in FY 2009. DBS and OCBC are forecasting dividend yields of 8% and 7.1% respectively. For more information please refer to The Edge Investment Weekly.

The technical picture for SPH is not looking good. It broke the $3.00 support level on 13 Jan 09 and closed at $2.73 on Friday.

The Fibonacci objective point indicates a target price of $2.72 so the stock may stage a rebound from this level.

However, looking at the MACD charts and ADX charts, any rebound will be simply be a technical rebound and traders who are still holding on to their long positions will try to liquidate their holdings to limit their losses.

Capitaland

Capitaland had a roller coaster ride this week with the stock going to as high as $3.68 before hitting a low of $2.89 on Friday. The stock managed to close above its low on Friday to end at $2.91.

The stock is now sitting on the 61.8% Fibonacci Retracement level as well as the support level. With the Dow closing near its low of the day on Friday, this support level will be difficult to hold come Monday.

The test will be to see if the break is a false breakdown. If that is the case, the stock should quickly reclaim the $2.90 level. However looking at the big sell down volume, the bears should have the upper hand. The next support line is at $2.66.

In the latest issue of The Edge Magazine, it was mentioned that there were rumors that Capitaland may announce a right issue and the ratio would be at one-for-four, at $2.50 per share. If the rumor turned out to be true, the possibility of the stock retracing all the way to 5 Dec 08 low of $2.43 is very high.

STI Update

DOW opened 2009 with a bang, going up 258 points to close above 9000 points for the first time since 5 Nov 08.

Singapore market also got off to a good start on Friday with the index closing above 1800 points.

The technical indicators are bullish at this point but do not seem to point to a sustainable rally.

The MACD indicator is still above its signal line which is a bullish sign. But one concern is that the indicator made a bullish crossover at the end of Oct 08 and may pullback anytime soon.

ADX indicator is still at the low end indicating that any rally will not be sustainable. The good thing for the bulls is that +DI is now above –DI. So there should be a short term rally.

RSI is also not at overbought level and there is still room for the market to go up.

Hence for the short term the market should be positive but mid and long term the market is still not in good shape unless we see further evidence on the technical charts.

Happy trading!