Market Diary:
World Indices:

Monday, February 6, 2012

Market View

The Straits Times Index ( 2,940.10 ) :

The STI has finally closed above the 200 MA decisively. Next target 3,010 ( Fibo 61.8% ). A fresh buy signal** in the mechanical trend following chart has surfaced ( circled ). This implies the bull has regained control of the market for the mid term trend.

** No, I am not suggesting you buy now. Wait for pull back as the market has rallied too much.

On the shorter term perspective, there is clear sign of RSI bearish divergence. I don't know how long can the bulls procrastinate the honoring of this bearish sign. Chances is it can't procrastinate forever and will soon has to honor this sign with some decent pull back. The pull back should ideally not cross below 2,874. A close below 2,874 is a sign of weakness and suggest the breakout today is a bull trap and may glide down to 2,793.

Yangzijiang Update :

YZJ met resistance at $1.21 as well as the 200 MA and closed below it. There is a clear sign of RSI divergence. The closing today is an inverted hammer candlestick ( shooting star ). Unless the bull decides to negate all these bearish signs as it has done many times recently. We should see a decent pull back to $1.15 / $1.08.  Buy on dip.

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Saturday, February 4, 2012

Weekly Technical Update - The STI

In a strong uptrend, bullish signals are observed better than bearish signals. In a strong downtrend, bearish signs are heeded better than bullish signs. This explains why some of my recent stocks pick like Yoma and NOL are pretty accurate. This is not because my technical analysis skill has improved but rather those are bullish calls in a strong uptrend market. There are other bearish observations such as the "failure swings" in STI and UMS which were ignored by the market. This is not because the observations were wrong but rather those are bearish signs in a strong uptrend market.

Many people are caught by the recent bull run since January 3. They missed the train because they have initially thought the bull run is not real. When they are convinced later, they hope to buy on dip but the market refused to dip.

The failure swing in STI remains valid. However, at the backdrop of Dow gaining 156 points over the weekend. The market may choose to ignore this bearish sign again. This is quite disturb to me too because I have hoped the bearish signs could translate into some short term pull back so that I can buy cheap but that is not happening!

So it is quite tricky for now until a clear follow through on either direction above or below the 200 days moving average is seen. 

In the event if the index manage to break above the 200 MA decisively and touch 2,990, Parabolic SAR buy phase in the monthly chart will be triggered. This is going to be very bullish for the rest of 2012.

Yangzijiang :

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Thursday, February 2, 2012

Market Update

This morning, I almost thought that the STI will overcome the 200 days moving average but unfortunately not.  2,910 is like a water level where STI has been treading the water. Occasionally, it pokes its head up but not for long before it is being forced below the water again. 

A "failure swing" on the RSI has developed. This is a sign of weakness and may lead to some points loss in the near future.

NOL hits $1.46 during intra-day and closed at $1.45.  Parabolic SAR buy phase in the monthly chart has been triggered. A lot more upside can be expected over the mid to long term.  The counter is currently quite overbought where profit taking may occur - a good chance for those who missed the move to buy on dip.

UMS - A "failure swing" has formed. Wait for pull back to $0.43 to re-enter.

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Wednesday, February 1, 2012

NOL - Closed Above 200 MA

NOL closed above the 200 days moving average today. If the gain can be sustained, we could expect much more upside ( immediate target is $ 1.47 ).  There are, however, some signs of caution for short term profit taking since the counter is quite overbought and that Parabolic SAR is tracking the prices quite closely.

The Market:
I like the comment from POEMS today : "The STI has poked its head above the 200 day moving average again, third time. We need some follow thru in either direction". I have expected some short term pull back to around 2,795 but it has not happened ( yet ). As stated in my previous post, 2,910 is not easy to defeat. However, the STI is much more resilient than I have expected. My gut feel is that the STI will ultimately break the 2,910 ( with or without the pull back I have expected ).