STI rose by 18.35 points today at thin volume. On the Point and Figure chart, STI has once again faced resistance from the slanting thin black line ( Bearish Resistance Line ).
Looking at the STI chart, we can see that the columns of Xs are longer then the columns of Os. This is a sign of strength in Point and Figure chart. However, Dow is currently in Parabolic SAR sell phase so this may impact the performance of STI ( this is the only reason I am slightly bearish bais ).
F&N - Prices have moved too far from the 20SMA. Buy on dip at around $4.95 ~ $5.00.
NOL - Buy signal from my trading system. ( YZJ also has buy signal )
SembCorp - Managed to break $4.10, no buy signal yet but worth watching....
F&N breakout from the triple-top pattern as anticipated yesterday and posted a strong buy signal today. Since the triple-top pattern is span over a long period of time, this is a compound pattern and any breakout will be a "strong" buy.
There are two scenario from here ( I am doing some fortune telling here ):
Scenario 1: Prices continue to rally higher and higher ( look at the blue color "X" I have marked up in the chart ) giving the late comers no chance to enter unless you want to catch a moving train. I won't advise that because if this happens, it is forming a high pole and that is bearish.
Scenario 2: Prices either rally a bid more and reverse ( or reverse from here ) creating a new column of "O" (column "F"). The column of "O" must not generate a sell signal. After some retracement, prices rally again creating a new column of X" (Column "G") and subsequently breakout again. The breakout under this scenario is called "3-box Catapult" and this is the strongest buy signal you can ever get from a Point and Figure Chart.
F&N Breakout from a multi-years resistance. Although prices have advanced from the recent low of $4.69 to $5.17 where one may have thought that it is too late to enter, buy signal from Point & Figure chart has not even show up yet ( in other word, it is still not too late ).
Hopefully there is a throw back ( return move ) after the breakout to allow late comer to buy on dip. Notice the 20 SMA & 40 SMA are splitting and ADX is beginning to trend up from below 20.
STI retreated today because prices have reached the Bearish Resistance Line ( slanting black line ) and a horizontal resistance line ( horizontal black line ). However, the retracement is not large enough to cause a reversal ( yet ) in the Point & Figure chart.
On the other hand, Candlestick chart shows a bearish Harami candle today. Chances is we may see some short term weakness with support at 2,825.
If, however, the index is able to overcome the resistance and break above 2900, this will generate a new buy signal ( stronger than the previous one ) with a Horizontal Count target of 3,010. A Horizontal Count is possible due to the Fulcrum pattern formed between May 3 ~ June 8.
The technical landscape of STI appears to have improved during the past week.
ADX declined from 33 to 21 while DI- and DI+ are converging indicating the downtrend has weaken. RSI is at the verge of crossing the center line. All we need is a break above the last significant high at 2,821 to turn bullish.
Point and Figure chart is showing similar sign. Column A marks the low in the chart. Column B is the first column of Xs off the bottom. This column is fixed by Column C. Therefore, vertical count can be established at Column B.
Vertical Count Target = [ (number of Xs in column B) x (box size) x (reversal) ] +lowest low at Column A
Vetical Count Target = [ 11 x 10 x 3 ] + 2650 = 330 + 2650 = 2950
The trigger point is the potential breakout of a double-top buy signal at 2,830.
Remember not to be confused about the "double-top" or "double-bottom" ( with a dash ) buy or sell signals in Point and Figure with the classical TA chart pattern "double top" or "double bottom"
Both classical chart and Point and Figure chart confirm with each other that if STI can break above 2,830 it will turn bullish with a near term target of 2,950.
I know this post contradicts with some of the previous posts where there were concerned over STI based on Elliot Wave count. As stated though, wave count makes sense often with the benefit of hindsight. Price and volume action of the market are dynamic and therefore it is not surprising that technical view may change from time to time.
Last week, the euphoria of STI have prompted many to call for a market bottom because STI had rallied back to above the 200 SMA and a new higher high was seen. However, a closer look at the daily chart reveals that the rally from May 25 low ( 2,648 ) to the closing on Friday ( 2,806 ) was built on diminishing volume. On the premise of 'volume precede price', the market has given us a warning not to be complacent too soon.
Dow has plummeted by 323 points on Friday. STI is likely to take its toll on the recent rally that was not supported by volume.
On the weekly chart, many chartists have already cautioned on the bearish divergence spotted that resemble the one seen in 2007:
On the monthly chart, Parabolic SAR sell phase is tracking the monthly candle closely and is accelerating. Although not triggered yet, all three charts ( daily, weekly & monthly ) have now presented us enough warning it may be too early to call for a bottom too soon.
Elliot Wave count shown Wave 4 of Corrective Wave A may have met.
As reiterated, STI always take cue from the US market. If Dow is not done, STI is not done.
DJIA has been range bounce between the key support at 9,800 and the 200 SMA at 10,300.
ADX is over-extended along with RSI at low level suggesting the near term selling pressure maybe easing, at least temporarily.
For the mid to long term trend, I am unable to find evident of bullishness yet ( ie: bullish divergence, major chart pattern...etc. ). On the contrary, my Elliot Wave count seems to suggest we are completing Wave 4 of Corrective Wave A. If this is correct, the implication is bearish because after Wave 4 ( target 10,300 & 10,500 ) will see Wave 5 ( target 9,400 & 8,800 ) and thereafter Wave B & C. I will, however, take this with more than a pinch of salt not only because my Elliot Wave skill is subject to doubt but Elliot Wave itself will usually make sense in retrospect of the hindsight. As the market is still unfolding, the wave count continues to change...
Straits Times Index
As we are currently trading below the 200 SMA, the odds favor the bear! 2,775 is where the 200 SMA lies and it will form strong resistance at this level. Unless the index is able to break above this level decisively, the bear will continue to dominate the trend.
Similar to DJIA, Elliot Wave count suggested a bearish mid ~ long term view. The monthly chart shows that STI is at the verge of triggering Parabolic SAR sell phrase ( around 2,600 ). So unless STI is able to break above the 200 SMA, the odds favor that we have entered a bear market.
