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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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