Market Diary:
World Indices:

Thursday, July 15, 2010

Something is brewing .....

Something is brewing in the horizon.... !

Admittedly, many chartists have abused chart patterns without paying due respect to volume ( or time to Apex, in the case of triangle ). Therefore, I have always been quite careful when naming a chart pattern. With this understanding, the probable Head and Shoulders (H&S) pattern of STI is becoming more and more real when volume is taken in consideration. A H&S pattern should have heavier volume on the left shoulder, a light volume on the head and a even lighter volume on the right shoulder. The current development of STI met all the criteria!

A break below the slanting trendline will bring us one step closer to the deadly H&S pattern. The pattern is confirmed when the neckline at around 2,640 is taken. The price objective of the H&S pattern is around 2,200.

A break above April 15's high at 3,037 will invalidate the fear of the H&S pattern.

PS: I am staying with cash for the time being !


Wednesday, July 14, 2010


The Straits Times Index

Three signs to be cautious about :
1. Prices have arrived at the left shoulder resistance

2. Hanging man candle at bearish star position

3. Volume divergence

Dow Jones Industrial Average ( DJIA )

DJIA hits trendline resistance:

Another US analyst, Colin Twiggs**, is bearish about the market, see link here.
** other than Robert Prechter


There is a buy signal from Point and Figure Chart. Current prices are still below the bearish resistance line. A stronger buy signal will emerge when prices breakout from the bearish trendline. Buy on dip: $1.78 ~ $1.80

Labels: ,

Sunday, July 11, 2010

F&N, STI - Updated P&F Charts

The recently strong move of F&N is due to the ( A.W. Cohen) 3-box Catapult mentioned in my previous post:

STI has broken out of a multi-tops pattern too. Will watch closely to see if this will become a Catapult too :

Dow Jones Industrial Average - Monthly Chart ( Updated )

Labels: ,

Thursday, July 8, 2010

Robert Prechter's Market Forecast

I received the June edition of "Market Technician" yesterday from The Society of Technical Analyst ( STA ) UK. Apparently, Robert Prechter visited STA UK in February and presented a speech to the STA members during the monthly meeting.

Robert Prechter is considered the authority of Elliott Wave Theory. He is the 5th generation successors of R.N Elliott ( followed by Hamilton Bolton, Charles Collins, A.J.Frost, Richard Russell ). These people have been able to make accurate predictions of the major turning points of the market since 1942.

Anyway, to cut the long story short.... Prechter has made the following prediction to the market:

"..... in March 2009, we predicted the Dow would rally all the way back to 10,000. We also said that the rally, regardless of extend, would peak out amidst substantial feelings of optimism, and by its end investors would be convinced that the bear market was behind us. This would occur right before the onset of wave three, the steepest portion of the steepest wave, which will see the most intense stock selling in nearly 300 years...."

".....To sum up, I think we have had three major tops in the past 10 years - in January 2000, October 2007 and here in 2010. I believe we are tracing out the right shoulder of a large head and shoulders pattern......"

After reading the article, I turn the DJIA chart to monthly view. I was able to find the Head and Shoulders Pattern Prechter mentioned:

Note, however, that this is a monthly chart and we are talking about a very large time frame ( super cycle wave ) tracing back to 1942. I don't think he meant to say the stock market will crash in 2010 and will fall like a bag of beans. The left shoulder took 2~3 years to complete. The right shoulder may probably take an equal amount of time too. I think what he said was DJIA will glide down gradually. On a day to day, week to week basis, there will still be rally after rally giving the illusion we are in a new bull. But for every "high" it has made, it is going to be lower then the one before. If he is correct, then you will not see Dow revisiting 11,000, 12,000, 13,000 or 14,000 in the coming years!

PS: Anyone interested in the article may leave me a comment with your e-mail address.


Monday, July 5, 2010

Head & Shoulder Threat

Straits Times Index :

On the Point and Figure chart, STI is forming a symmetrical triangle. Not much conclusion can be drawn yet except to wait for the breakout ( on either side ).

On the daily candlestick chart, there is concern of a potential head and shoulder pattern being formed. However, it is still premature to draw the conclusion at this time. But it is definitely something to be cautious about when considering to add new long.

The next 1 ~ 2 weeks movement will be crucial !

Dow Jones Industrial Index:

The monthly chart is currently in Parabolic SAR sell phase ( bearish ).

Daily chart looks set to have a head and shoulder pattern formed pending for completion ( confirmation ).