Market Diary:
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Tuesday, November 29, 2011

Biosensors ( $1.34 ) - Flag Formation

A bull flag could have been formed pending breakout on the direction of the prevailing trend. If breakout does occur, the price target is $1.6.

I agree the duration of the downtrend channel is more than the usual 1~3 weeks. In this case 4 weeks, which is slightly too long. Let see if it still pan out as a bull flag although not textbook fashion.

One thing about this blog is that there is seldom hindsight view. Most of the charts or analysis posted are usually predictive in nature. So it is not possible to score 10/10 in every opportunity spotted.


Saturday, November 26, 2011

STI Analysis ( Nov 28 ~ Dec 2 )

The Straits Times Index is facing two possible scenarios:

1. An Inverted Head & Shoulder Pattern ( Bullish ):

2. Trapped Within a Large Downtrend Channel ( Bearish ):

Within the next 1~2 weeks, we will know which of the two scenarios will come true. What we need to watch is whether prices will rebound from here and break above downtrend line 1 - this is the first foray toward an Inverted Head & Shoulders Pattern. On the other hand,  if prices continue to dip ( most likely after a short-lived rebound since the market is quite oversold now ), this will indicate the market is opting for scenario 2.


Tuesday, November 22, 2011

SembCorp - Possible Symmetrical Triangle

If successfully breakout, target will be $ 4.8.


Monday, November 21, 2011

Low Risk Buying Opportunity

Intraday Update ( 2:00pm )

The STI hits an intraday low of 2,693, close enough to the trendline violation target of 2,690. Stochastic is in oversold region. Although we cannot rule out downside risk due to influence from other markets, the risk/reward ratio justify some trades which are low risk at this level. Stop loss at 2,670.  In the event if 2,670 is breached, the likelihood is that the index will revisit 2,520.

Genting ( $ 1.51 )
Stochastic has reached oversold, this counter presents us with low risk opportunity for accumulation . Stop loss < $1.41.


Saturday, November 19, 2011

STI Analysis ( Nov 21 ~ 25 )

The Straits Times Index retreated toward the target of trendline violation. Strong support is found at 2,670~2,690 but chances is it may not reach there. Stochastic has entered oversold level, there should be buying opportunity next week.

In the US, both DJIA and S&P500 have broken out of the symmetrical triangles from the wrong side. This is bearish and may signal further downside after the short term oversold situation is corrected. 


Sunday, November 13, 2011

STI Analysis ( Nov 14 ~ 18 )

Reference the daily chart below:

1. Trendline 1 is a short-term uptrend line. It was violated decisively on Thursday. The trendline violation target is 2,690.

The above hypothesis is, however, not infallible because trendline 1 can always be redrawn to accommodate the sharp plunge of Thursday ( see trendline 1" ). 

2. Trendline 2 is a valid downtrend line. It is valid because it has been touched 3 times ( a trendline that has been touched twice is only tentative trendline ). Successful breakout from this level strengthen the confident we are already riding a new uptrend since Oct 6.

3. Trendline 3 is a major resistance, some people consider this the neckline of an inverted head and shoulders pattern. I am not certain if such a pattern is valid. However, a break above this level does have significant meaning. It marks a new higher high in the new uptrend which is an important evidence confirming the uptrend we are riding is here to stay.


Wednesday, November 9, 2011

Olam International ( $2.62 )

Based on my trend following mechanical trading system, a fresh buy signal has been generated today. The trigger for this buy signal is at $2.65.

Based on classical technical analysis, prices have risen to a point where it is now facing resistance from an important downtrend line confluence by the 200MA. A decisive breakout from $2.70 is required for a trend change.

Trading Plan:
Entry        : $ 2.65 ~ $ 2.70   ( 50% at $2.65, 50% at >$2.70 )
Target      : $ 3.00
Stop loss : $2.45
No position should be taken without trigger being hit.


Monday, November 7, 2011

K39 - The Last Stochastic Technique

Most people are already familiar with the use of Stochastic as a momentum indicator. However, few may have heard of "K39 - The Last Stochastic Technique". This setup consists of two indicators:

1. Stochastic Oscillator, setting:  %K=39 and %D=0
2. OBV and its M30 ( M30 = 30 SMA of the OBV )

A buy signal is generated when :
1. K39 line crosses the 50% line from below;
2. OBV line must be above the M30 line.
See green arrows in the chart.

A sell signal is generated when:
1. K39 line crosses the 50% line from above;
2. OBV line must be below the M30 line.
See red arrows in the chart.

For details, please refer to the website of ( click HERE ).

Although K39 is a trend following indicator, it does generate very early and reliable signals ( see examples below ):

I have been familiar with this indicator for 2~3 years now but haven't been too serious about it. I will try to pay more attention to it from now on and will post here counters with fresh buy signals.


Saturday, November 5, 2011

STI Technical Analysis

Last Friday, STI closed with an inverted hammer after touching Fibonacci 50% resistance and a downtrend line.This may signal some degree of selling pressure early next week. Once selling exhausted, we may see STI overcome both these two levels later in the week and generate a mechanical buy signal. Dow Jones is already in the bullish zone, it is a matter of time STI will follow.