Technical Analysis of CapitaLand
CapitaLand is in the business of real estate and is listed on the Singapore Stock Exchange. In this article, we present our technical analysis of CapitaLand using Elliott Wave Analysis. The below chart is the Long Term Bearish Chart of CapitaLand dating back to 2000. CapitaLand embarked on a five wave impulsive fashion from the bottom in 2003 at around 1.00 and topped in 2007 at 8.70. Thereafter, the share price slid rapidly to a low of 1.7 in March 2009. This slide was a strong move as confirmed by volume as well as MACD. As can be seen, the volume was increasing with the sell down. This is a typical impulsive Elliot Wave. This is labelled as Primary wave [A].
The recovery that followed this heavy selling was quite impressive as it looked like an impulsive wave as well. This prompted some people to call this as a new bull. The volume was strong initially but it tapered off. The MACD was also weakening which meant that the momentum was not catching up. This I have labelled as Inter wave A. The Inter A was then followed by continued selling with some decent volume compared to Primary wave [A]. This move is labelled as Inter B. Finally, CapitaLand recovered again in Inter wave C.
I’m of the opinion that Inter wave C and with that, Primary wave [B], is near completion. Comparing Inter wave A and Inter wave C, one can identify that the C wave is much weaker than wave A. The volume as well as the MACD is lower on C compared to A. This is clearly pointing to a weak recovery. Further downside is highly likely in the form of Primary wave [C]. Primary wave [C] is the continuation of the earlier downtrend and the projected target for this wave would be below Primary wave [A].
The below chart is the daily bearish chart for CapitaLand. Once again, we turn to the volume and MACD for clues on the strength of the move.
The volume on the first part of the rise (A in amber) was quite decent and it was a quick rise. The MACD was also strong. When we compare that with the second upwards wave C (in amber), we can see that the volume is still quite decent but there are equally selling volume. This made the move into a choppy move which is reflected in a weaker MACD. This is a good indication that the recent ‘bullish’ move on CapitaLand is a bear market rally rather than a new bull. This points to further downside once wave C is complete. I’m of the opinion that there is no upside for CapitaLand from here.
No analysis is complete without the alternate view. In this section, we look at possible bullish moves for CapitaLand. Looking at the same Long Term Chart for CapitaLand, it is possible that the share price bottomed in Mar 2009 at 1.7 and the move up is wave 1 of a new bull. As I have mentioned earlier the volume was decent for this move up. Then the corrective wave 2 came into effect and what we are seeing now is a 1-2-i-ii setup which is a very bullish setup according to Elliott Waves. For this count to take place, the share price of CapitaLand should not fall below wave 2 which is 2.20.
In summary, the opinion is that CapitaLand is toppish and further downside is very likely. This is expected to take place over a time frame of a few years. The key level to watch is the 3.00 and followed by 2.20 level.