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Market View - What is in the pot for August?
I understand some traders are bearish about the month of August. Their rationale are based on:
1. Calendar effect - Historically, August is one of the worst performing months in a year
2. US debt ceiling deadline - If US is unable to raise the debt ceiling by Aug 2, it will has an adverse effect on the stock market
Technically, there is no evidence suggesting August should be bearish. On the contrary, STI has been very bullish and resilient. However, item 2 above is a valid concern. Therefore, it may be wise to stay at the sidelines until August 2.
The Straits Times Index :
Based on Point and Figure chart, STI is quite bullish. In fact, another 20 points up will generate a fresh strong buy signal. However, Dow Jones is very uncertain. It may jeopardize the performance of STI :
STI Point and Figure Chart:
Dow Jones Industrial Average :The DJIA appears to be tracing a Head and Shoulder chart pattern. We need to watch whether the neckline will be broken. When it occurs, we will be looking at 10,750. The validity of H&S pattern rely heavily on volume. Unfortunately, volume is not available in my MetaStock. Therefore, please take this with a pinch of salt.
DJIA Daily Chart :
Yahoo Finance expected the stock market to tumble by 30% if US is unable to resolve the debt ceiling crisis which will result to a downgrade of credit rating from the current AAA.
Labels: Market Direction
IndoAgri Update
On
June 28, I have identified a bullish divergence in IndoAgri. This bullish divergence, along with a mini double bottom formed between June 17 and July 18 provided the basis of a bullish reversal. The counter breakout from a horizontal resistance on Friday and is now facing resistance from a major downtrend line.
The bulls need a sustained violation of the major downtrend line in order to advance to $1.775 and $2.00. Failure to surpass this downtrend line calls for a retest of the double bottom low at $1.51.
Parabolic SAR buy phase has been triggered in the Weekly Chart. The odd favors that IndoAgri is likely to overcome the downtrend line and continue to advance. Position traders may consider to start their accumulation.
Labels: Stock Pick
Yangzijiang Update
Since my last post dated July 19, Yangzijiang has gained 13 cents.
Daily Chart:
Prices are now facing resistance from the downtrend line. Stochastic is over bought. We may see some short term retracement if it is unable to overcome the resistance.
Weekly Chart :Parabolic SAR buy phase triggered ( Bullish )
Monthly Chart :A hammer candlestick in star position, a typical sign for bullish reversal
Conclusion:
This counter is still trading below the 200 MA and thus considered a bearish stock. However, the weekly and monthly charts are shedding light for bullish reversal. The daily chart signals a possible pull back, ideal for position trader to start accumulation.
Labels: Stock Pick
DJIA - Updated Chart
Following my last post dated July 25 Monday where a bearish divergence was spotted, DJIA lost 379 points in the next 3 sessions and is now sitting at Support 1. It is hard to predict whether Support 1 will hold because RSI is not oversold yet. We need to watch how the market unfold. If Support 1 is taken, the index will sough support from Support 2.
Labels: Market Direction
Biosensors
The Market All eyes are watching on whether US will raise the debt ceiling by the deadline on August 2nd. If they don't, their credit rating will fall and it will likely trigger a new round of financial crisis. Technically, STI has turned bullish but external factor such as this will affect the index performance in the upcoming months.
Biosensors
A symmetrical triangle is in the making. If it is able to breakout successfully, it has the potential of hitting $1.60 as the target.
Labels: Stock Pick
DJIA - Bearish Divergence
The Dow Jones Industrial Average is showing a bearish divergence between the underlying prices and RSI. This may be a sign of further downside lying ahead....
Labels: Market Direction
STI - Bullish Breakout
Finally! STI has managed to breakout from the major downtrend line, which is also the upper boarder of a symmetrical triangle. The upside target is
3,650. It is likely to see some profit takings in the upcoming sessions, a good time to buy on dip.
On the mechanical long term chart, the index has turned bullish too :
The Point and Figure chart is showing the same bullish sentiment with a target of
3,700 as previously stated :
Note : In regard to the target, I have mentioned many times here. It should not be taken as a straight target that will be fulfilled without any interruption of the bears. Market is going to move up and down before reaching the target eventually ( it may take months ).
Labels: Market Direction
Yangzijiang
A long green candlestick may be the early sign of a bullish reversal :
Labels: Stock Pick
Wilmar
Wilmar has become a hot stock again recently!China has removed price limits on edible oils according to an unidentified official from the National Development and Reform Commission's price department. If this news is true, it is viewed as a positive to Wilmar as it allows Wilmar to raise its cooking oil prices and improves profit margins for this division.
Technically, this counter has begun to trend again after making a double bottom on Mar 15 and May 6. There has been many buy calls the past few days, which are fine. However, for those who have not bought yet. You may wait for pull back and buy on dip.
There are two signs suggesting that there might be a pull back in the near future :
1. A shooting star candlestick with extremely long tail - a sign of rejection
2. A bearish divergence between the underlying prices and RSI
Recent prices have traveled too far and too fast away from the 20/40 MA. It may pull back to hug the two MAs again in the near future.
Labels: Stock Pick
Noble - Head & Shoulder Chart Pattern
Noble caught my attention today as the share price plummeted by 4.8% to S$1.78. I pull out the chart and immediately realized the counter is currently undergone a textbook fashion Head and Shoulder ( H&S ) chart pattern breakdown. The price target for the H&S pattern is S$1.54.
Labels: Stock Pick
Golden Agri - Symmetrical Triangle
I visited a blog which shows a chart depicting Golden Agri breakout from a symmetrical triangle. At the first glance, I was excited and agreed with the suggestion. However, when I open up my own chart and take a closer look. I realized the so called symmetrical triangle only has two-touch on the upper trendline ( see below ):
I feel a more valid way to trace the symmetrical triangle is to have three-touch on both the upper and lower trendline as shown below. Based on my tracing, there is no breakout yet. As a matter of fact, I am not certain if the breakout (when it occurs) will be from the upside or downside! Symmetrical triangles are usually continuation pattern. The prior trend was a downtrend. The upside volume appears to be lighter than the downside volume. Instead of calling for a buy too soon, I would prefer to wait for the actual breakout to occur.
Labels: Stock Pick
Market View - July 11 ~ 15
THE STRAITS TIMES INDEXWeekly Chart :
A hanging man candlestick was formed last week. Although not as bearish as a shooting star, a hanging man candle in evening star position does signals indecision between the bulls and bears, and foreshadow possible selling pressure in the upcoming weeks.
Daily Chart :
The index failed to breach the major downtrend line last week after retested it for the 5th times. Unless it is able to breakout from the major downtrend line ASAP, the symmetrical triangle will be invalidated due to the time to apex will soon be exceeding 3/4.
If a breakout does occur, the implication is extremely bullish as it signifies the validity of the symmetrical triangle.
Point and Figure Chart :
Levels to watch:
3,170 - Double-tops buy signal, the first foray to turn bullish
3,190 - Multiple-tops strong buy signal. Once this level is triggered, a vertical count target of 3,700** will be activated. 3,110 - Double-bottom sell signal ( to close long positions, not to open new shorts ), indicates the bullishness we saw maybe false ( we are in a bull trap ) ** Point and Figure target derived from "count" ( vertical count or horizontal count ) provides an indication instead of absolute target. It will be naive to think that prices shall move in a straight line heading toward the target with no retracement in between.
Labels: Market Direction
The Straits Times Index
On the daily bar chart, STI closed exactly at the 200 MA on Friday. It is crucial to observe how STI react to this major chart point early next week. If it is able to break above the 200 MA, we can look forward for a retest of the ( thick black ) major downtrend line in the chart. This major downtrend line has been intact since December 2010 and has withstood 4 tests before. The bulls need a sustained violation of this major trendline to turn the market sentiment from bearish to bullish. Failure to overcome the 200 MA will likely see the index pull back to the 100 MA level, which is 3,095.
On the Point and Figure chart, STI has successfully breached the Bearish Resistance Line on Friday. In other word, the index is now above the Bullish Support Line or simply it has turned bullish. However, no fresh buy signal was generated yet. A fresh buy signal will be generated if ( and only if ) STI managed to hit 3,190.Buy signal generated above the Bullish Support Line is considered strong and is meant to open new long. Buy signal generated below the Bearish Resistance Line is considered weak and is meant to close short position.On last Thursday, a weak triple-top buy signal was generated ( below the Bearish Resistance Line ). The vertical count target was 3,210. Remember, this weak buy signal only tell us to close the short position. To initiate new long, wait for the strong buy signal when it is triggered at 3,190.3,190 is where STI will overcome the major downtrend line mentioned above in the bar chart analysis. So both the Point and Figure Chart and Bar Chart analysis tally with each other. Point and Figure Chart is always known to be unambitious versus line, bar and candlestick charts! 
Labels: Market Direction
