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Saturday, December 31, 2011

2011 Roundup

2011 has been a tumultuous year for the stock market. Research analysts from various brokerage firms have expected the STI  to rack up 10% ~ 15% of growth and hit 3,500 ~ 3,600. As it turns out, the STI has fallen 17% or 543.69 points to 2,646.35 ( from 3,190.04 on Dec 29, 2010 ).

It is now the time of the year where crystal ball gazers are giving their prediction again. For example, the S&P has predicted that the STI will gain 16% in 2012 to reach 3,100. For the full report from S&P, please click here.  On the other hand, Robert Prechter is bearish about the market. He predicted that January is as far as the stock market could hold up. For details, watch his interview with Yahoo Finance here. Note that Prechter has been a big bear for many years now. He predicted that the Dow Jones Industrial Average will fall to below 1,000 by 2015 ~ 2016.

In general, most people are expecting the first half of 2012 to remain violate and bearish bias. A possible turn around may happen in the second half of 2012. 

I do not have a crystal ball and do not know how to forecast that far. I will be happy if I can be accurate on a week to week basis. As a trader, we trade regardless of the market is up or down. We may go long in the morning and turn short in the afternoon. Overall, I tend to incline that the first half of 2012 will continue to be difficult. Beyond that, we will need to reassess the market again.

Happy New Year!


Thursday, December 29, 2011

Window Dressing Time

Back from holiday....!

Traditionally, the STI will stage a mini rally from December 30 ( window dressing ) to around January 5. This has been the case for 2009 and 2010. I suspect this year will be of no exception. 

The first 5~6 days in January is going to be very crucial  based on the maxim "As January goes, so goes the year". 

[Update] There was no window dressing this year end. STI dropped 26 points on the last trading day. So window dressing is not a must to occur. -- Updated on January 3, 2012


Thursday, December 22, 2011

Merry Christmas!

There is no change in my market view!

I will be off for a family vacation overseas beginning tomorrow till next Thursday. 

Wishing everyone a Merry Christmas and Happy New Year !


Monday, December 19, 2011

Intra-day Update ( 10:00am )

Intra-Day Update ( 10:00 am )

As of 10:00am, STI was downed 41 points. It is very clear by now that last Thursday low was a lower low, not a double bottom. We can now confirm that the STI will revisit 2,520 in the near future. However, we believe this will happen after STI attempt to edge up later the week ( till year end ) to first touch the downtrend resistance at around 2,730. Many stocks are oversold and offer good value for the year end rally ( bear market rally though ).

The major trend remains down, any rally remains bear market rally.


Saturday, December 17, 2011

Weekly Technical Update - The STI

The Straits Times Index:
Last Thursday, STI breached the last significant low by 13 points created a lower low in the downtrend channel. However, the degree of penetration is not large enough to consider a successful violation yet. In fact, the rebound on Friday is creating confusion on whether Thursday's low is a lower low or a double bottom. Meanwhile, the index remains oversold based on Stochastic. It is possible the STI may head for a weak start due to lackluster performance of Dow on Friday but it may edge up gradually later in the week. Volume is likely to be light due to festive season. Upside is cap at 2,730 ( downtrend resistance ). Breakout above 2,730 signals a possible trend change.

Stock To Watch:

SembCorp - The major trend is down but there is upside potential from Friday close at $4.01 to $4.20 before it meets the downtrend resistance.


PS: Due to a family vacation overseas on Dec 23 ~ 28. Weekly Technical Update next week will be interrupted. Stay tune for 2012 Market Outlook when I return.

~~~~~~~~~~~~~~~~~~~~~~~~~Merry Christmas !! ~~~~~~~~~~~~~~~~~~~~~~~

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Wednesday, December 14, 2011

UOB ( $15.83 ) - Short Setup

The Market
The STI closed below 2,680 today - a support level that has defended well the past two days. The index is now 29 points away from a critical support at 2,643. Once this level is breached, a new lower low is formed where it is likely to retest Oct 5 low at 2,523. 

An upside breakout to 2,790 is required to invalidate the bearish view.

UOB ($15.83) - Short Setup
UOB buck the trend today and gained $0.14 to close at $15.83. The closing price is a doji candle touching the 40 MA and downtrend line. CCI is overbought. If the market is down tomorrow, this counter will be an ideal candidate to go short.

Trading Plan:
Short entry : $ 15.70
Stop loss   : $ 15.95
Target         : $ 15.20 (50%)  / $ 14.75 (50%)
Risk / Reward Ratio : 35 cents /  70 cents**
** average of $15.2 and $14.75

Update For Past Posts:
GOLD: It looks like Gold has chosen to breakout from the wrong side of the symmetrical triangle
CityDev: The trigger at $9.11 was not reached so no trade was taken. Note that the trigger price was intentionally placed at 1~2 bids above previous day high instead of the last closing price to ensure the bull has conviction. Same goes for UOB above, the trigger price is 1 bid below the previous day low ( not the closing price ) to ensure the bear has conviction.

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Sunday, December 11, 2011

Weekly Technical Update - The STI

The Straits Times Index:
The chart below is the exact same chart I used for last week. The STI retreated after touching the downtrend line and found support at 2,680. The index fell 4 out of 5 days last week. It has lost 79 points the entire week where many stocks especially the property counters have been beaten up badly. At the backdrop of Dow gaining 186 points on Friday, chances is we will see a rebound on Monday / Tuesday. Resistance 2,730. Beyond that, we will have to assess the market again by mid-week. The major trend remains down. Any rally remains technical rebound in nature and could be short-lived. This view will be invalidated if the downtrend line is breached decisively.

This is one of the property counters being beaten up badly and should see a technical rebound since RSI is showing a bullish divergence. Buy trigger is one bid above Friday's high, which is $9.11. The long term trend is down so we are looking at nimble rebound play.


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Friday, December 9, 2011

Gold - Symmetrical Triangle

Gold appears to be forming a symmetrical triangle chart pattern. A symmetrical triangle is usually a continuation chart pattern. Since the prevailing trend was up, the likelihood is that it may breakout from the upside. Expect big move in the forthcoming weeks.

A stated in my post last Saturday, I was bearish bias this week. As it turns out, STI fell 4 out of 5 trading days except Wednesday.  I will post my next analysis on the stock market by this weekend. I think next week should have buying opportunity.


Tuesday, December 6, 2011

Updated Charts - DJIA, S&P500

The Dow made a 2nd attempt to breach the downtrend resistance line last night but failed again.  The S&P500 finally touched the downtrend resistance line but closed below it. These are signs of weakness suggesting the bulls have weakened.


Monday, December 5, 2011

SembMar - Attempt To Breakout

SembMar attempts to breakout from the downtrend line today. However, the degree of penetration is not large enough to consider a successful violation yet. We shall watch and see if there is any follow up rally the next 1~2 days. If it is able to violate the downtrend line decisively, this will be the first foray toward a possible inverted head and shoulder pattern.

Biosensors Update ( Entry $1.34, Exit $ 1.43 ):
Biosensors closed with a shooting star today, a sign of short-term bearish reversal. I have taken profit from my position awaiting new opportunity.


Saturday, December 3, 2011

Weekly Technical Update - DJIA, S&P500, STI

Dow Jones Industrial Average

The massive rally last week took place within a large downtrend channel. Friday, the index attempted to break the downtrend line but failed. It closed the week with a long legged dogi in evening star position while Stochastic is overbought. We should see some retracement this week to the respective support levels marked in the chart above. Breakout above 12300 is unlikely but would be a strong bull signal which will invalidate the bearish view expressed earlier.


Likewise, the S&P500 has rallied to nearly touch the downtrend resistance line and closed the week with a shooting star candlestick while Stochastic is overbought. The odds favor a retracement from here. Breakout above 1290 is unlikely but would be a strong bull signal which will invalidate the bearish view implied.

Straits Times Index

The STI has about 10~15 points more before touching the downtrend resistance line. Late buying interest Friday afternoon lifted the index to close above the positive territory. There may be residual momentum on Monday morning pushing prices higher before the index begin to test the downtrend resistance line. 

Overall, I am bearish bias for the week ahead.


Thursday, December 1, 2011

A Day To Take Profit

The Dow rose 490 points last night to 12,045. It has risen 814 points in three days and is very near to a short term downtrend line.  S&P500 rose 52 points to 1,247. It has risen 88 points in three days and it is already touching the short term downtrend line where Stochastic is overbought :

Locally, the STI is approaching the important downtrend line mentioned in my previous posts. I have taken 50% of profits from my recently added positions. Biosensors, Genting and SembCorp are all making good gains.  I believe today is not the day to add new long but to take profit.