On Jan 12, Frasers Logistics & Commercial Trust (FLCT) broke out of a three-month sideways range. As at Jan 14, it was at a new all-time high of $1.52. On the other hand, Ascendas REIT has languished at the $3 to $3.05 range, and has over the past three months underperformed FLCT. Traders may want to stick with FLCT given that it has greater comparative relative strength.
Comparative relative strength compares a security’s price change with that of a “base” security or a related security — like two industrial REITs or a security against an index, for example. When the comparative relative strength indicator is moving up, it shows that the security is performing better than the base security. When the indicator is moving sideways, it shows that both securities are in equilibrium. When the indicator is moving down, it shows that the security is performing worse than the base security. Comparative relative strength is often used in developing spreads, so traders would buy the better performer and perhaps sell the weaker security short. Comparative relative strength is a separate indicator from RSI or relative strength index which compares the security’s latent strength or weakness against itself.
Since FLCT broke out of a sideways range at $1.46, a target can be obtained from the breakout level, and for FLCT this is $1.75. The breakout was accompanied by a notable expansion in volume on Jan 13. This took place as the 50- and 100-day moving averages made a positive cross. Quarterly momentum had moved above its equilibrium line in December, hovering around its equilibrium line before starting its ascent on Dec 29. Support in the event of a retreat is at the breakout level.
Ascendas REIT is weaker than FLCT. Its unit price has been trending lower to sideways since last November, probably in reaction to its large equity fund raising exercise. Technically, prices are entrenched beneath the 50- and 100- day moving averages which have met at $3.11. This level — $3.11 — coupled with price resistance at $3.05, represents two levels of resistance. In addition, volume is limited, suggesting little buying interest. On the other hand, quarterly momentum has been strengthening gradually, suggesting some latent strength. There could probably be further sideways meandering till quarterly momentum manages to rise above its equilibrium lime, and prices are able to break above at least $3.05, before strength returns. Support, meanwhile, appears at $2.99.
Elsewhere, Black Crane — one of the activist hedge funds that wrote open letters and voted against the merger of Sabana Shariah Compliant Industrial REIT with ESR-REIT in November last year — has divested some two million units at 35 cents each. Black Crane, according to press reports and the open letters, grumbled about the ‘low-ball’ price offer of 37 cents from ESR-REIT. Sabana REIT experienced some volume on Jan 8 and Jan 11. However, the candlestick on Jan 8 was a doji, which is not necessarily an indication of buying power. Other than that, Sabana REIT has been entrenched within a narrow range of 33.5 cents to 36 cents for the past four months. The Black Crane divestment takes its stake below 5% and of course investors’ radar. Hence, the fund can divest its stake without having to make any further announcements.
