Singapore stock highlight: Neptune Oriental Lines (NOL)

The shipping industry in Singapore may have taken a backlash from the current global economic crisis but this is the industry to watch when the economy recovers and see growth. One of the bigger shipping companies in Singapore, NOL’s share price performance is lagging as compared to other shipping companies and the overall market performance. Nevertheless, its share price has doubled since the low in March. The price trend has moved up steadily with new highs and modest corrections along the way. Its share price has climbed as high as $1.90 before making a correction to the current level at $1.67.

The company net income fell sharply in year 2008 at US$83 million from US$523 in year 2007. Its share price in beginning of year 2008 was around $3.00 (adjusted) and fell to $0.78 in March this year. The share’s highest price was $5.55 on 16 July 2007. Therefore, there is a lot of room for this share price to move upwards as compared to other shares which have recovered more than 50% from the 2007-2008 bear trend. NOL have only recovered about 20%.

The reason why this stock is highlighted is because the price has come near a crucial level. This level acted as important support and resistance in the past four months. In June, this level acts as a resistance and once it was broken in July, it became support in August. This crucial level is $1.60. Since price is near this level, a technical rebound is expected.

Trend is still strong upwards as the short to long term 30 to 90-day moving averages are increasing. The price is in a correction now because it fell below the 30 and 60-day moving averages. However, the price is still above the longer term 90-day average. There is a concern about the current uptrend because the price broke below the uptrend line that existed since March. Technically, when a trend line is broken, the trend is over and a trend reversal is expected. The crucial support level is going to determine whether the uptrend is going to be supported.

The momentum indicators are indicating bearish momentum and this was because of the current correction which is quite substantial. The longer term momentum however is still bullish as the price trend is in convergence with the pivot highs of the momentum indicators that include RSI and MACD. The indicators are still above the middle level on the weekly chart.

There is a high chance that price may rebound at this crucial support level at $1.60. If it breaks below $1.60, the uptrend has failed and may change direction. If the price stays above $1.60 then it may rebound to $1.80 to move back into the uptrend and may even climb to the resistance level at $2.00. Therefore, a low risk buying opportunity exists between $1.60 and $1.65 with a stop loss below $1.60. To overcome price volatility, stop loss should not be lower than the Average True Range (ATR) which currently reads $0.06.


Daily NOL price as at 2 October 2009 using NextVIEW Advisor

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.