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Sunday, March 18, 2012

STI Elliott Wave Structure

According to Elliott Wave International ( EWI ) March 15's report, the Elliott Wave count for the STI Weekly Chart is labeled in blue as below:

As always, the commentary from EWI is very brief. They did not elaborate much on the wave structure leaving it to the readers to interpret ( which is frustrating ). 

Based on my interpretation, if a downtrend has five waves ( 1, 2, 3, 4, 5 ) followed by a three waves ( a, b, c ) counter-trend move. We should be looking at a 5-3-5 correction ( from the "Top" marked in the chart )  where the 1st five wave ( 1, 2, 3, 4, 5 ) is corrective wave "A" of a higher degree, the three wave ( a, b, c ) is corrective wave "B" of a higher degree ( which is where we are in now ).  From here, we should expect another downtrend  of a 2nd five wave ( remember we said 5-3-5?  The 5-3 has unfolded.  The last 5 in the 5-3-5 is what we are heading for now ).

Please note that the Elliott Wave counts ( in blue ) are not my view, it is the view of EWI. I have merely added my interpretation ( those labels in gold color ). 

Below is the Elliott Wave count for STI Daily Chart ( according to EWI ):


Thursday, March 15, 2012

Some Caution Signs....

There are some caution signs spotted in the STI daily chart and the Dow weekly chart.  Do note that these are just caution signs at the moment ( mainly derived from RSI bearish divergence ) but they are not definitive.  The underlying price trend is more important than the technical indicators. Therefore, these caution signs are preemptive in  nature and should not warrant any drastic actions ( eg: liquidate old long or initiate new short ) until the price trend prove the observation correct.

Straits Times Index Daily Chart

Dow Jones Industrial Average Weekly Chart


Tuesday, March 6, 2012

Market View

  1. For as long as prices stay above the uptrend line, the long term uptrend is still intact.
  2. Key support at 2,875, which is the last significant low confluence with 200MA. 2,912 could be a good support too.
  3. If the correction terminates between 2,875 ~ 2,912 and rebound from here. The correction since Feb 21 fulfills Elliott Wave corrective count of A, B, C. This is provided IF it terminates here. Elliott Wave is accurate often at hindsight. As the market unfolds, recount is often necessary. Which is why I always have reservation relying too much on Elliott Wave. 
  4. If 2,875 is taken, the risk of trendline violation of the uptrend line increased. If the uptrend line is violated, we are likely to see Oct 5, 2011 low ( 2,521 ) be retested. If the correction goes beyond 2,875, there is a likelihood this is wave 3 of the corrective A wave.