Market Commentary
STI is currently supported by 10 days & 250 days moving averages. The weekly candle is a bullish engulfing candlestick although not large enough to my liking. At a glance, all is well. The uptrend is still intact ( and that may still be true ). However, the failure for STI to break 2,283 on Wednesday provided the first warning sign of market weakness. RSI exhibited clear sign of Failure Swing** provided a even more serious signal that the trend is weakening and likely to reverse.
That said, there is still hope because all those are only 'warning signs' at this time. It is not uncommon for the index who had failed on the first attempt to clear a major resistance to pull back / gather strength and then clear it on the next attempt. The labels "1/1, "2/2" in the chart are not Elliot Wave count but to demonstrate the argument on how STI has behaved before. I am cautiously optimistic that last Friday marks the pivot point of the pull back and we can clear 2,283 next week. Usually, rally on late Friday afternoon would mean there is follow through buying momentum on Monday. I hope this tradition will not be dampened by the 14 points drop in Dow on Friday & that the US market will be closed on Monday ( Memorial Day ) where locally STI may be searching for direction.
If the 'hope' I have depicted does not come true ( ie: STI to break 2,283 does not come true ), then the 'warning signs' will turn into reality ! For now, this is something to be cautioned about !!
** ChartNexus does not show the failure swing, I don't know why. But MetaStock & SI Dynamic TA chart show it very clearly.
PS: I am scaling down on my post as I need to commit more time to crunch 8 ~ 9 books from now till Oct in preparation for the CFTe level II Exam. Some of the books are harder than hell to read. If you are not convinced, try reading "Forecasting Financial Markets" by Tony Plummer. I think it required someone from A*Star to understand the book!
That said, there is still hope because all those are only 'warning signs' at this time. It is not uncommon for the index who had failed on the first attempt to clear a major resistance to pull back / gather strength and then clear it on the next attempt. The labels "1/1, "2/2" in the chart are not Elliot Wave count but to demonstrate the argument on how STI has behaved before. I am cautiously optimistic that last Friday marks the pivot point of the pull back and we can clear 2,283 next week. Usually, rally on late Friday afternoon would mean there is follow through buying momentum on Monday. I hope this tradition will not be dampened by the 14 points drop in Dow on Friday & that the US market will be closed on Monday ( Memorial Day ) where locally STI may be searching for direction.
If the 'hope' I have depicted does not come true ( ie: STI to break 2,283 does not come true ), then the 'warning signs' will turn into reality ! For now, this is something to be cautioned about !!
** ChartNexus does not show the failure swing, I don't know why. But MetaStock & SI Dynamic TA chart show it very clearly.
PS: I am scaling down on my post as I need to commit more time to crunch 8 ~ 9 books from now till Oct in preparation for the CFTe level II Exam. Some of the books are harder than hell to read. If you are not convinced, try reading "Forecasting Financial Markets" by Tony Plummer. I think it required someone from A*Star to understand the book!
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Labels: Market Direction
posted by Market Wizards @ May 24, 2009
Comments: 5
