From the horizontal trendline, that is the current support line ($1.25). As far as I see, MACD is falling back to zero soon, RSI constantly below 50% and stochastics touching the 20% mark. Now, here's the catch. Dow has rebounded back at about 100 points and I do not foresee it dropping at its closing. One thing that worries is the YEN/USD trade. This is the most critical part where everyone is probably missing out here.
Which is more critical? Rising oil prices vs deflating USD? Tough choice, especially when both affects any individuals directly and indirectly. With oil prices steadily dropping, currently at $92.45 per barrel, it is in my opinion still overpriced. The high price is due to the spook of the war caused and suddenly so many bad news about oil. If it remained within the $80-$85 mark, it should probably stabilize the market.
As for the USD, think of it this way, when the value of your currency drop, it just simply means that you can afford lesser things (imported stuffs). Why? Imports are dealt with USD towards the country's currency. When USD deflates, it just means that more USD is being paid for the product, and in turns, the supplier would need to increase the price slightly to adjust to this. When this happens, the consumer indirectly won't be able to buy more with the deflated currency.
When this happens, consumers buy less, suppliers can't buy more, imports fall, the country exports also fall. This is a domino effect and Asian countries depend heavily on exports to USA.
As for celestial, the report has been released and it has produced a nice report card as follows:
The overall favourable business environment has enabled the Group to continue its growth in all product segments. Total sales of the Group have grown by 46.4% from RMB310.3 million in 2006Q3 to RMB454.3 million in 2007Q3. Significant growth was noted for the product lines (including industrial proteins, biochemical feedstuff and lecithin, etc) in the Soybean Zone, which commenced operation in the second half of 2006.
The Group's overall gross profit margin has dropped from 42.2% in 2006Q3 to 39.0% in 2007Q3, mainly as a result of change in sales mix and increase in raw material costs. Attributable to the promising growth in sales, the Group's gross profit has increased from RMB131.1 million in 2006Q3 to RMB177.1 million in 2007Q3. Average soybean costs have increased by 24.7% from RMB2,216 per ton in 2006Q3 to RMB2,763 per ton in 2007Q3. Given this, the following factors have mitigated
the impact brought by the cost pressure:
(i) The Group has increased its selling prices gradually.
(ii) The Group continued to improve its efficiency and utilisation of the production facilities to reduce its costs as evident from the improved gross margins.
The Group's reported net profit has increased by 35.8% from RMB77.2 million in 2006Q3 to RMB104.8 million. The Group's net operating profit has grown by 21.6% from RMB102.1 million in 2006Q3 to RMB124.2 million in 2007Q3.
Another interesting information on celestial:
As announced in 2006, the Group has entered into a contract for the production of bio-diesel with target annual capacity of 100,000 tonnes. The Group has started individual machinery testing, and expects to commence the trial run by end of this year. In preparation, the Group has been negotiating with several potential (both local and overseas) customers for the sales of bio-diesel. Announcements will be made when more details are finalised.
In 2007, the Group has announced expansion plans on the following new health food and beverages:
- High protein nutrient beverages (target annual capacity of 15,000 tonnes)
- High protein nutrient powder (target annual capacity of 5,000 tonnes)
- High protein nutrient noodles (target annual capacity of 10,000 tonnes)
- High protein nutrient pastries (target annual capacity of 5,000 tonnes)
As of all these plans, it indicates celestial as a very nice potential company to stay invested. While I'm more interested in its bio-diesel investment, as this is a source of alternate energy which is very future looking. The only thing lacking now is the clarity of the market to open the position in celestial. Tomorrow, there may be a high chance that celestial will surge quite a fair bit, probably by 10 cents coupled by dow (if it stays in the +1% mark). Still, when the market dropped a total of 900 points for dow, a rise of 100 points now doesn't really make much of a difference eh. :)
As of now, NASDAQ is the leading index, with 1.71% increase (12am). I have mentioned this before, for any major fall or recession, tech counters must be the one leading out of the mess. However, when anything falls, tech counters or NASDAQ will also suffer the most.
Time to take a break and get ready for tomorrow. Anything can happen and I'm ready to take a position. :)
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