Market Diary:
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Saturday, October 29, 2011

Straits Times Index Technical Analysis


We begin our focus on the hourly chart. There are two signs suggesting the index may need a pause before deciding to advance further or to reverse from here. The two signs are RSI divergence and ADX over-extending as shown in the chart below. In the event if the index heed these two signs and spark off profit taking, 2.860 and 2,790 are key supports. 

 

On the daily chart, the bulls have reclaimed 50% of its loss ground since the successive draw-down began on Aug 1. The next key barrier is 2,960, which is Fibonacci 61.8% retracement. A sustained violation of this level will likely generate the first trend following buy signal in the mechanical chart below (after several months) and head toward 3,080. Failure to surpass 2,960 calls for a deeper pull back or possibly a reversal. 


Many people have warned that the rally from Oct 5 is a bull trap ( they said it many weeks ago ). However, I am unable to find evidence supporting this suggestion. Based on calendar effect, November / December are generally good months. I am cautiously optimistic that the odds favor the bulls.

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posted by Market Wizards @ October 29, 2011 Comments: 0

Saturday, October 22, 2011

Market View

The Market : 
The current market continues to be volatile and difficult to predict. This can be seen from the mechanical chart below where "Sell Short Exit" signal and "Buy Exit" signal whipsaw from each other 3 days apart. Prices are now trading within a congestion zone between Fibo 23.6% and 38.2%. An upside breakout (from Fibo 38.2%) will see 2,860 as target whereas a downside breakout (from Fibo 23.6%) will bring the index to 2,640.

The Weekly Chart shows a nice hammer followed by a bullish candle, the mid term prospect suggests the likelihood for STI to hit 2,860 even if it needs to first touch 2,640 ( based on Elliott Wave count).



SembMar Recap :

In my post dated August 19 ( see here ), I stated that SembMar will find strong support at $3.00 before a sustained rebound can be found. The counter traded in the exact manner. It hits $3.05 on Oct 4 and thereafter rallied to $4.09 on Oct 17. Honestly, when I made the commentary back then, I have no clue this will be the outcome. I was merely making the observation from the chart. This is a good example where Technical Analysis works, not that I am good.


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posted by Market Wizards @ October 22, 2011 Comments: 0