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Sunday, September 2, 2012

Straits Times Index - Volatility Ahead

As expected, the Straits Times Index has turned bearish. Out of 30 components stocks, 17 have sell signal, 10 hold, 3 buy :

Capitaland C31- Sell
CapitalMall C38U -Buy
CapitalMalls JS8 - Sell
CityDev C09 - Sell
ComfortDelGro C52 -  Buy
DBS D05 -Sell
F&N F99 - Hold ( Weak )
Genting G13 - Hold
Golden Agri E5H -Sell
HKLandUS$ H78 - Hold ( Weak )
Jardine CC C07 - Sell
JMH400US$ J36 -Hold ( Weak )
JSH500US$ J37 - Sell
KepCorp BN4 -Sell
NOL N03 - Sell
Noble N21 - Hold ( Weak )
OCBC BK O39 - Sell
Olam O32 -Sell
SembCorp U96 - Hold ( Strong )
SembMar S51 - Hold ( Weak )
SIA Engg S59 -  Buy
SPH T39 - Sell
ST Eng S63 - Hold
SingTel Z74 - Sell
SIA C6L - Sell
SGX S68 - Hold
Global Logistic Pro - Hold
Starhub CC3 - Sell
UOB U11 - Sell
Wilmar - Sell ( downtrend stock )

On the daily chart ( Chart 1 ), the STI has decisively broken the uptrend line. It has generated the first sell signal since June 4 ( see Chart 2 ). We need to be able to differentiate the current weakness from the previous two pull back ( circled in Chart 1 ). The previous two pull back did not break any uptrend line and there were no sell signal generated. They were therefore opportunities to buy on dip. The current weakness may constitute a trend change or at least a change in the rate of ascend. There may be rallies from time to time but they are probably technical rebound in nature that won't sustain ( sell on bounce ).  The basis of this assumption is derived from the inverted hammer in the monthly chart ( Chart 3 ).  Typically, an inverted hammer ( shooting star ) in evening star position foreshadow weaknesses ahead. Since this is found in the monthly chart, the effect is more profound and we will see the impact within the next 1~2 months.

 Chart 1 - STI Uptrend Line Broken

 Chart 2 - STI First Sell Signal Since June 4

Chart 3 - STI Monthly Chart Shows An Inverted Hammer