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Market View
The Straits Times Index ( 2,940.10 ) :
The STI has finally closed above the 200 MA decisively. Next target 3,010 ( Fibo 61.8% ). A fresh buy signal** in the mechanical trend following chart has surfaced ( circled ). This implies the bull has regained control of the market for the mid term trend.
** No, I am not suggesting you buy now. Wait for pull back as the market has rallied too much.
On the shorter term perspective, there is clear sign of RSI bearish divergence. I don't know how long can the bulls procrastinate the honoring of this bearish sign. Chances is it can't procrastinate forever and will soon has to honor this sign with some decent pull back. The pull back should ideally not cross below 2,874. A close below 2,874 is a sign of weakness and suggest the breakout today is a bull trap and may glide down to 2,793.
Yangzijiang Update :
YZJ met resistance at $1.21 as well as the 200 MA and closed below it. There is a clear sign of RSI divergence. The closing today is an inverted hammer candlestick ( shooting star ). Unless the bull decides to negate all these bearish signs as it has done many times recently. We should see a decent pull back to $1.15 / $1.08. Buy on dip.
Labels: Market Action, Stock Pick
Weekly Technical Update - The STI
In a strong uptrend, bullish signals are observed better than bearish signals. In a strong downtrend, bearish signs are heeded better than bullish signs. This explains why some of my recent stocks pick like Yoma and NOL are pretty accurate. This is not because my technical analysis skill has improved but rather those are bullish calls in a strong uptrend market. There are other bearish observations such as the "failure swings" in STI and UMS which were ignored by the market. This is not because the observations were wrong but rather those are bearish signs in a strong uptrend market.
Many people are caught by the recent bull run since January 3. They missed the train because they have initially thought the bull run is not real. When they are convinced later, they hope to buy on dip but the market refused to dip.
The failure swing in STI remains valid. However, at the backdrop of Dow gaining 156 points over the weekend. The market may choose to ignore this bearish sign again. This is quite disturb to me too because I have hoped the bearish signs could translate into some short term pull back so that I can buy cheap but that is not happening!
So it is quite tricky for now until a clear follow through on either direction above or below the 200 days moving average is seen.
In the event if the index manage to break above the 200 MA decisively and touch 2,990, Parabolic SAR buy phase in the monthly chart will be triggered. This is going to be very bullish for the rest of 2012.
Yangzijiang Chart Analysis:
Labels: Market Direction, Stock Pick
Market Update
This morning, I almost thought that the STI will overcome the 200 days moving average but unfortunately not. 2,910 is like a water level where STI has been treading the water. Occasionally, it pokes its head up but not for long before it is being forced below the water again.
A "failure swing" on the RSI has developed. This is a sign of weakness and may lead to some points loss in the near future.
NOL hits $1.46 during intra-day and closed at $1.45. Parabolic SAR buy phase in the monthly chart has been triggered. A lot more upside can be expected over the mid to long term. The counter is currently quite overbought where profit taking may occur - a good chance for those who missed the move to buy on dip.
UMS - A "failure swing" has formed. Wait for pull back to $0.43 to re-enter.
Labels: Market Direction, Stock Pick
NOL - Closed Above 200 MA
NOL closed above the 200 days moving average today. If the gain can be sustained, we could expect much more upside ( immediate target is $ 1.47 ). There are, however, some signs of caution for short term profit taking since the counter is quite overbought and that Parabolic SAR is tracking the prices quite closely.
The Market:
I like the comment from POEMS today : "The STI has poked its head above the 200 day moving average again, third time. We need
some follow thru in either direction". I have expected some short term pull back to around 2,795 but it has not happened ( yet ). As stated in my previous post, 2,910 is not easy to defeat. However, the STI is much more resilient than I have expected. My gut feel is that the STI will ultimately break the 2,910 ( with or without the pull back I have expected ).
Labels: Stock Pick
Yoma - Bull Flag Breakout
Yoma breakout from a textbook fashion's bull flag formation today. I was late in identifying this opportunity but if it is going to give me a 2nd chance tomorrow with some retracement to say $0.315, I will consider picking up some as the target is $0.45. Judging at the flag pole being a straight line, I suspect it will not be giving me that chance.
Labels: Stock Pick
Weekly Technical Update - The STI
The Straits Times Index ( 2,916.26 )
The STI closed above the key resistance at 2,910 by 6 points. Should we consider this a successful violation of the key resistance? My take is not (yet) ! Real life application of Technical Analysis differs from academic model. Support and resistance isn't going to be textbook fashion all the time. When we said a key resistance is 2,910, the resistance is likely to fall within a band of +/- 5 points to 10 points. The rationale is that market participants aren't going to enter or exit their positions at the exact same spot. Therefore, when we talk about successful violation. We should apply some filters to qualify the violation. Some common filters are the "1% ~ 3% rule" and the "2 day rule". In other word, unless the STI closed above 2,910 by at least 29 points ( 1% ) and/or for at least 2 days, it is not considered a successful violation yet.
Given the facts that the STI is still sitting on the key resistance as explained above, RSI has reached overbought, volume has declined the past three days while prices edged higher and DJIA felt by 74 points over the weekend... The odd favors a weakening start for the upcoming week. There is, however, a wild card : All of the 21 points gain on Friday was rack-up on the last trading hour. Normally, late Friday rally would mean renewed buying interest on Monday morning.
To sum up, STI may have breached 2,910 by a tinny margin but the violation was not decisive enough to have considered a breakout. It may be worthwhile to stay at the sidelines to see if STI will overcome ( breakout ) or succumb ( triple-top reversal ) to 2,910 in a decisive fashion.
Labels: Market Direction
Weekly Technical Update - The STI
Straits Times Index
When the market resumes trading after the Chinese New Year holidays on Wednesday, we are likely to see the STI retesting the key resistance at 2,910. This is a key level because it is the resistance of the last significant highs, Fibo 50% of a major peak and trough, and the 200MA. It is not a level that can be defeated too easily considering that the index has already rack-up considerable gain without a decent pull back since January 3 where the market is quite overbought. Failure to overcome 2,910 calls for a pull back to 2,790 and 2,730. On the contrary, successful breakout from 2,910 will likely see the index propel to 3,000 ~ 3,200.
-- Stocks Review and Commentary --
UMS Holding Limited
UMS has successfully breakout from the Fibo 50% confluence by 200MA. Next resistance is $0.48 ~ $0.50 which is where Fibo 61.8% is. Once $0.50 is taken, Parabolic SAR buy phase in the monthly chart will be triggered. More upside can be expected.
Note : Granted that RSI is overbought but overbought during a strong uptrend is not a reason to liquidate a long position ( unless a failure swing is developed ).
Genting
Genting has successfully breakout from a downtrend resistance line but resisted by Fibo 23.6%. If the breakout can be sustained, next target will be $1.75 which is Fibo 38.2% confluence by 200 MA.
IndoFood Agri
Watch for breakout at $1.45 and $ 1.50 ( 200 MA ) for more upside.
Olam International
Latest prices met resistance of a downtrend line and 200 MA where RSI is reaching overbought. Failure to overcome this level ( and the next downtrend resistance of a larger time frame ) calls for a pull back to $2.30.
Yangjiziang
Prices met resistance at Fibo 23.6% while RSI has reached overbought. Some short term retracement is possible. Thereafter, the next target will be $1.21 ( last significant high confluence by 200 MA ).
Capitaland
Capitaland has met the downtrend resistance line. If it is able to breakout from the downtrend line, the next two targets will be $2.75 and $3.1. Failure to overcome the downtrend line will likely see a pull back to form a new low.
Labels: Market Direction, Stock Pick
UMS Holding Limited
This is a counter where position trader ( 3 ~ 6 months ) may want to watch.
On the daily chart, prices have now met the resistance of 200 MA and Fibo 50%. Prices need to break $0.45 to propel further to $0.50. $0.50 is where Fibo 61.8% is. Once cleared, Parabolic SAR buy phase on the monthly chart will be triggered. More sustained upside can be expected when that happen.
As far as the index is concerned, the STI has turned to bullish zone yesterday in the mechanical chart. Key resistance 2,910.
iOCBC published a nice technical analysis on STI. I share the same technical view as them. ( click iOCBC )
Labels: Stock Pick
Weekly Technical Update - STI
Straits Times Index
The STI has rallied to the resistance at 2,790 while the Stochastic is overbought. At the backdrop of S&P downgraded the credit ratings of 9 European countries and DJIA fell by 48.96 points on Friday. We expect a likely pause here, but renewed rally should ultimately return to test the 2910 in the coming weeks.
Labels: Market Direction
STI - Buy Signal From K39 The Last Stochastic
The STI breakout from the downtrend resistance line earlier this week. A buy signal was generated on the "K39 - the last Stochastic technique" Immediate resistance 2,790. Notwithstanding the buy signal and the rally, the larger trend of STI remain bearish unless it is able to break the resistance at 2,910 which is where the 200MA is.
NOL finally breakout from the congestion zone with high volume.
Labels: Market Direction
Market Updates
The STI closed with an inverted hammer today while Stochastic is overbought. This may signal the end of the New Year rally.
NOL did attempt to breakout on Wednesday but it was not able to hold on to the initial gain. In other word, it was a false breakout or a bull trap. However, the counter is currently in the bullish phase of my mechanical chart ( see below ). So it is too early to rule out that the buy signal was wrong.
SembCorp has weakened as expected upon touching the downtrend line. The short call was valid.
Biosensor has been trending up very strongly but today closed with a long tail and RSI bearish divergence. Some pull back is expected, a good entry will be $1.2 ~ $1.4 ( to be assessed as market unfold, see note below ).
Note : Do note that the market is very dynamic whereas the posts made here are static. It is impossible to attain 100% accuracy as I am not a fortune teller. Anyone reading this blog is expected to pay attention to the market action the next day(s) and decide what to filter....
Labels: Market Direction, Stock Pick
Weekly Technical Update - The STI
The STI rose 42.01 points or 1.59% to 2,688.36 on the first trading day of 2012. This is in accordance with our view on December 29 where we stated the market is likely to stage a mini rally until January 5~6.
The rally today occurred within the downtrend channel. The bulls need a sustained violation of the downtrend resistance line for further rally to the next resistance at 2,795. Failure to surpass the downtrend resistance line calls for a pull back to 2,520.
Depending on how the market pan out. Breakout from the downtrend resistance is a sign of strength, candidate to long is NOL. Reversal from the downtrend resistance is a sign of weakness, candidate to short is SembCorp.
NOL - Long only if market shows sign of strength:
SembCorp - Short only if market shows sign of weakness:
Labels: Market Direction, Stock Pick
2011 Roundup
2011 has been a tumultuous year for the stock market. Research analysts from various brokerage firms have expected the STI to rack up 10% ~ 15% of growth and hit 3,500 ~ 3,600. As it turns out, the STI has fallen 17% or 543.69 points to 2,646.35 ( from 3,190.04 on Dec 29, 2010 ).
It is now the time of the year where crystal ball gazers are giving their prediction again. For example, the S&P has predicted that the STI will gain 16% in 2012 to reach 3,100. For the full report from S&P, please click here. On the other hand, Robert Prechter is bearish about the market. He predicted that January is as far as the stock market could hold up. For details, watch his interview with Yahoo Finance here. Note that Prechter has been a big bear for many years now. He predicted that the Dow Jones Industrial Average will fall to below 1,000 by 2015 ~ 2016.
In general, most people are expecting the first half of 2012 to remain violate and bearish bias. A possible turn around may happen in the second half of 2012.
I do not have a crystal ball and do not know how to forecast that far. I will be happy if I can be accurate on a week to week basis. As a trader, we trade regardless of the market is up or down. We may go long in the morning and turn short in the afternoon. Overall, I tend to incline that the first half of 2012 will continue to be difficult. Beyond that, we will need to reassess the market again.
Happy New Year!
Labels: Market Direction
Window Dressing Time
Back from holiday....!
Traditionally, the STI will stage a mini rally from December 30 ( window dressing ) to around January 5. This has been the case for 2009 and 2010. I suspect this year will be of no exception.
The first 5~6 days in January is going to be very crucial based on the maxim "As January goes, so goes the year".
[Update] There was no window dressing this year end. STI dropped 26 points on the last trading day. So window dressing is not a must to occur. -- Updated on January 3, 2012
Labels: Market Direction
Merry Christmas!
There is no change in my market view!
I will be off for a family vacation overseas beginning tomorrow till next Thursday.
Wishing everyone a Merry Christmas and Happy New Year !
Labels: Trading Digest
Intra-day Update ( 10:00am )
Intra-Day Update ( 10:00 am )
As of 10:00am, STI was downed 41 points. It is very clear by now that last Thursday low was a lower low, not a double bottom. We can now confirm that the STI will revisit 2,520 in the near future. However, we believe this will happen after STI attempt to edge up later the week ( till year end ) to first touch the downtrend resistance at around 2,730. Many stocks are oversold and offer good value for the year end rally ( bear market rally though ).
The major trend remains down, any rally remains bear market rally.
Labels: Market Direction
Weekly Technical Update - The STI
The Straits Times Index:
Last Thursday, STI breached the last significant low by 13 points created a lower low in the downtrend channel. However, the degree of penetration is not large enough to consider a successful violation yet. In fact, the rebound on Friday is creating confusion on whether Thursday's low is a lower low or a double bottom. Meanwhile, the index remains oversold based on Stochastic. It is possible the STI may head for a weak start due to lackluster performance of Dow on Friday but it may edge up gradually later in the week. Volume is likely to be light due to festive season. Upside is cap at 2,730 ( downtrend resistance ). Breakout above 2,730 signals a possible trend change.
Stock To Watch:
SembCorp - The major trend is down but there is upside potential from Friday close at $4.01 to $4.20 before it meets the downtrend resistance.
PS: Due to a family vacation overseas on Dec 23 ~ 28. Weekly Technical Update next week will be interrupted. Stay tune for 2012 Market Outlook when I return.
~~~~~~~~~~~~~~~~~~~~~~~~~Merry Christmas !! ~~~~~~~~~~~~~~~~~~~~~~~
Labels: Market Direction, Stock Pick
UOB ( $15.83 ) - Short Setup
The Market
The STI closed below 2,680 today - a support level that has defended well the past two days. The index is now 29 points away from a critical support at 2,643. Once this level is breached, a new lower low is formed where it is likely to retest Oct 5 low at 2,523.
An upside breakout to 2,790 is required to invalidate the bearish view.
UOB ($15.83) - Short Setup
UOB buck the trend today and gained $0.14 to close at $15.83. The closing price is a doji candle touching the 40 MA and downtrend line. CCI is overbought. If the market is down tomorrow, this counter will be an ideal candidate to go short.
Trading Plan:
Short entry : $ 15.70
Stop loss : $ 15.95
Target : $ 15.20 (50%) / $ 14.75 (50%)
Risk / Reward Ratio : 35 cents / 70 cents**
** average of $15.2 and $14.75
Update For Past Posts:
GOLD: It looks like Gold has chosen to breakout from the wrong side of the symmetrical triangle
CityDev: The trigger at $9.11 was not reached so no trade was taken. Note that the trigger price was intentionally placed at 1~2 bids above previous day high instead of the last closing price to ensure the bull has conviction. Same goes for UOB above, the trigger price is 1 bid below the previous day low ( not the closing price ) to ensure the bear has conviction.
Labels: Market Direction, Stock Pick
Weekly Technical Update - The STI
The Straits Times Index:
The chart below is the exact same chart I used for last week. The STI retreated after touching the downtrend line and found support at 2,680. The index fell 4 out of 5 days last week. It has lost 79 points the entire week where many stocks especially the property counters have been beaten up badly. At the backdrop of Dow gaining 186 points on Friday, chances is we will see a rebound on Monday / Tuesday. Resistance 2,730. Beyond that, we will have to assess the market again by mid-week. The major trend remains down. Any rally remains technical rebound in nature and could be short-lived. This view will be invalidated if the downtrend line is breached decisively.
CityDev:
This is one of the property counters being beaten up badly and should see a technical rebound since RSI is showing a bullish divergence. Buy trigger is one bid above Friday's high, which is $9.11. The long term trend is down so we are looking at nimble rebound play.
Labels: Market Direction, Stock Pick
Gold - Symmetrical Triangle
GOLD:
Gold appears to be forming a symmetrical triangle chart pattern. A symmetrical triangle is usually a continuation chart pattern. Since the prevailing trend was up, the likelihood is that it may breakout from the upside. Expect big move in the forthcoming weeks.
STOCK MARKET:
A stated in my post last Saturday, I was bearish bias this week. As it turns out, STI fell 4 out of 5 trading days except Wednesday. I will post my next analysis on the stock market by this weekend. I think next week should have buying opportunity.
Labels: Market Direction
