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Sunday, October 10, 2010

Straits Times Index - Shooting Star

The Straits Times Index has risen toward the upper boarder of the broadening formation, about 100 points away from our target at 3,280 ( ref : Sept 14 post ). From the daily chart ( below ), all seem well as the index has rallied in a relatively steep fashion with occasional pull back, which is healthy.

However, a quick glance at the weekly chart reveals a Shooting Star candle (weekly RSI is in overbought ) signify potential weakness and selling pressure ahead ( upcoming weeks ). The Fibonacci levels mark the respective defense should the weaknesses turn into reality.

For the much longer term outlook ( 12 ~ 18 months ), we maintain our previous bearish view. Dow continues to trace the right shoulder of the Head and Shoulder pattern on the monthly chart. The tracing of the right shoulder is going to take a long time, probably 1 ~ 2 years to complete, because the left shoulder is a pretty complex one and has taken many years to complete. The occurrence of the pattern is on the monthly chart so it is expected to take a long time instead of several weeks or months.

Finally, an excerpt from today's Zaobao :

(香港讯)明报报道,在美国狂印银纸的量化宽松货币政策下,热钱持续流入香港,前金管局总裁、现中国金融学会执行副会长任志刚公开警告,现时国际金 融市场是百年一遇的混乱情,风险近似1997年和2008年的两次金融风暴。他呼吁市民避免入市炒卖,要问自己能否承受股票随时下跌三四成、息口上升5 厘的压力。


  任志刚表示现时金融市场和实体经济已经脱节,就如97年亚洲金融风暴及08和09年金融海啸般,若脱节到某个阶段,当有什么事情刺激到金融市场内的人们,「便一齐走,bye bye罗,又一次泡沫爆破」。

  他特别提醒市民不要炒卖,「我觉得现在市场情是等待有什么东西刺激它再上升或者刺激它大幅下调。作为一个小投资者或小市民,很难捕捉 到那个转势,所以小心些为妙」。他说,虽然现时储钱入银行没有利息可收,股价又似乎每天都上升一些,很吸引人。但大家应想想如果资产下调很厉害时,我会蚀 30、40%,没息收总比蚀30、40%好」

Original article link : Here