Market Diary:
World Indices:

Sunday, June 6, 2010

Volume Precede Price

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.