Market Wizards

Market View

2012-02-06T21:30:00.000+08:00

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.

Weekly Technical Update - The STI

2012-02-04T23:00:00.000+08:00

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 Chart Analysis:

Market Update

2012-02-02T20:00:00.000+08:00

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.

NOL - Closed Above 200 MA

2012-02-01T22:30:00.000+08:00

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 ).

Yoma - Bull Flag Breakout

2012-01-30T20:15:00.000+08:00

Yoma breakout from a textbook fashion's bull flag formation today. I was late in identifying this opportunity but if it is going to give me a 2nd chance tomorrow with some retracement to say $0.315, I will consider picking up some as the target is $0.45. Judging at the flag pole being a straight line, I suspect it will not be giving me that chance.

Weekly Technical Update - The STI

2012-01-28T15:30:00.000+08:00

The Straits Times Index ( 2,916.26 )

The STI closed above the key resistance at 2,910 by 6 points. Should we consider this a successful violation of the key resistance? My take is not (yet) ! Real life application of Technical Analysis differs from academic model. Support and resistance isn't going to be textbook fashion all the time. When we said a key resistance is 2,910, the resistance is likely to fall within a band of +/- 5 points to 10 points. The rationale is that market participants aren't going to enter or exit their positions at the exact same spot. Therefore, when we talk about successful violation. We should apply some filters to qualify the violation. Some common filters are the "1% ~ 3% rule" and the "2 day rule". In other word, unless the STI closed above 2,910 by at least 29 points ( 1% ) and/or for at least 2 days, it is not considered a successful violation yet.

Given the facts that the STI is still sitting on the key resistance as explained above, RSI has reached overbought, volume has declined the past three days while prices edged higher and DJIA felt by 74 points over the weekend... The odd favors a weakening start for the upcoming week. There is, however, a wild card : All of the 21 points gain on Friday was rack-up on the last trading hour. Normally, late Friday rally would mean renewed buying interest on Monday morning.

To sum up, STI may have breached 2,910 by a tinny margin but the violation was not decisive enough to have considered a breakout. It may be worthwhile to stay at the sidelines to see if STI will overcome ( breakout ) or succumb ( triple-top reversal ) to 2,910 in a decisive fashion.

Weekly Technical Update - The STI

2012-01-21T22:00:00.000+08:00

Straits Times Index

When the market resumes trading after the Chinese New Year holidays on Wednesday, we are likely to see the STI retesting the key resistance at 2,910. This is a key level because it is the resistance of the last significant highs, Fibo 50% of a major peak and trough, and the 200MA. It is not a level that can be defeated too easily considering that the index has already rack-up considerable gain without a decent pull back since January 3 where the market is quite overbought. Failure to overcome 2,910 calls for a pull back to 2,790 and 2,730. On the contrary, successful breakout from 2,910 will likely see the index propel to 3,000 ~ 3,200.

-- Stocks Review and Commentary --

UMS Holding Limited

UMS has successfully breakout from the Fibo 50% confluence by 200MA. Next resistance is $0.48 ~ $0.50 which is where Fibo 61.8% is. Once $0.50 is taken, Parabolic SAR buy phase in the monthly chart will be triggered. More upside can be expected.

Note : Granted that RSI is overbought but overbought during a strong uptrend is not a reason to liquidate a long position ( unless a failure swing is developed ).

Genting

Genting has successfully breakout from a downtrend resistance line but resisted by Fibo 23.6%. If the breakout can be sustained, next target will be $1.75 which is Fibo 38.2% confluence by 200 MA.

IndoFood Agri

Watch for breakout at $1.45 and $ 1.50 ( 200 MA ) for more upside.

Olam International

Latest prices met resistance of a downtrend line and 200 MA where RSI is reaching overbought. Failure to overcome this level ( and the next downtrend resistance of a larger time frame ) calls for a pull back to $2.30.

Yangjiziang

Prices met resistance at Fibo 23.6% while RSI has reached overbought. Some short term retracement is possible. Thereafter, the next target will be $1.21 ( last significant high confluence by 200 MA ).

Capitaland

Capitaland has met the downtrend resistance line. If it is able to breakout from the downtrend line, the next two targets will be $2.75 and $3.1. Failure to overcome the downtrend line will likely see a pull back to form a new low.

UMS Holding Limited

2012-01-19T20:45:00.000+08:00

This is a counter where position trader ( 3 ~ 6 months ) may want to watch.

On the daily chart, prices have now met the resistance of 200 MA and Fibo 50%. Prices need to break $0.45 to propel further to $0.50. $0.50 is where Fibo 61.8% is. Once cleared, Parabolic SAR buy phase on the monthly chart will be triggered. More sustained upside can be expected when that happen.

As far as the index is concerned, the STI has turned to bullish zone yesterday in the mechanical chart. Key resistance 2,910.

iOCBC published a nice technical analysis on STI. I share the same technical view as them. ( click iOCBC )

Weekly Technical Update - STI

2012-01-15T21:15:00.000+08:00

Straits Times Index

The STI has rallied to the resistance at 2,790 while the Stochastic is overbought. At the backdrop of S&P downgraded the credit ratings of 9 European countries and DJIA fell by 48.96 points on Friday. We expect a likely pause here, but renewed rally should ultimately return to test the 2910 in the coming weeks.

STI - Buy Signal From K39 The Last Stochastic

2012-01-11T21:26:00.001+08:00

The STI breakout from the downtrend resistance line earlier this week. A buy signal was generated on the "K39 - the last Stochastic technique" Immediate resistance 2,790. Notwithstanding the buy signal and the rally, the larger trend of STI remain bearish unless it is able to break the resistance at 2,910 which is where the 200MA is.

NOL finally breakout from the congestion zone with high volume.

Market Updates

2012-01-05T20:30:00.000+08:00

The STI closed with an inverted hammer today while Stochastic is overbought. This may signal the end of the New Year rally.

NOL did attempt to breakout on Wednesday but it was not able to hold on to the initial gain. In other word, it was a false breakout or a bull trap. However, the counter is currently in the bullish phase of my mechanical chart ( see below ). So it is too early to rule out that the buy signal was wrong.

SembCorp has weakened as expected upon touching the downtrend line. The short call was valid.

Biosensor has been trending up very strongly but today closed with a long tail and RSI bearish divergence. Some pull back is expected, a good entry will be $1.2 ~ $1.4 ( to be assessed as market unfold, see note below ).

Note : Do note that the market is very dynamic whereas the posts made here are static. It is impossible to attain 100% accuracy as I am not a fortune teller. Anyone reading this blog is expected to pay attention to the market action the next day(s) and decide what to filter....

Weekly Technical Update - The STI

2012-01-03T21:00:00.000+08:00

The STI rose 42.01 points or 1.59% to 2,688.36 on the first trading day of 2012. This is in accordance with our view on December 29 where we stated the market is likely to stage a mini rally until January 5~6.

The rally today occurred within the downtrend channel. The bulls need a sustained violation of the downtrend resistance line for further rally to the next resistance at 2,795. Failure to surpass the downtrend resistance line calls for a pull back to 2,520.

Depending on how the market pan out. Breakout from the downtrend resistance is a sign of strength, candidate to long is NOL. Reversal from the downtrend resistance is a sign of weakness, candidate to short is SembCorp.

NOL - Long only if market shows sign of strength:

SembCorp - Short only if market shows sign of weakness:

2011 Roundup

2011-12-31T23:30:00.000+08:00

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!

Window Dressing Time

2011-12-29T23:00:00.000+08:00

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

Merry Christmas!

2011-12-22T18:15:00.001+08:00

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 !

Intra-day Update ( 10:00am )

2011-12-19T10:08:00.000+08:00

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.

Weekly Technical Update - The STI

2011-12-17T22:00:00.000+08:00

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 !! ~~~~~~~~~~~~~~~~~~~~~~~

UOB ( $15.83 ) - Short Setup

2011-12-14T19:00:00.000+08:00

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.

Weekly Technical Update - The STI

2011-12-11T00:00:00.000+08:00

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.

CityDev:

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.

Gold - Symmetrical Triangle

2011-12-09T10:50:00.000+08:00

GOLD:

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.

STOCK MARKET:

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.

Updated Charts - DJIA, S&P500

2011-12-06T14:18:00.001+08:00

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.

SembMar - Attempt To Breakout

2011-12-05T22:00:00.000+08:00

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.

Weekly Technical Update - DJIA, S&P500, STI

2011-12-03T17:30:00.000+08:00

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.

S&P500

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.

A Day To Take Profit

2011-12-01T09:46:00.001+08:00

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.

Biosensors ( $1.34 ) - Flag Formation

2011-11-29T11:03:00.001+08:00

A bull flag could have been formed pending breakout on the direction of the prevailing trend. If breakout does occur, the price target is $1.6.

I agree the duration of the downtrend channel is more than the usual 1~3 weeks. In this case 4 weeks, which is slightly too long. Let see if it still pan out as a bull flag although not textbook fashion.

One thing about this blog is that there is seldom hindsight view. Most of the charts or analysis posted are usually predictive in nature. So it is not possible to score 10/10 in every opportunity spotted.

STI Analysis ( Nov 28 ~ Dec 2 )

2011-11-26T17:00:00.000+08:00

The Straits Times Index is facing two possible scenarios:

1. An Inverted Head & Shoulder Pattern ( Bullish ):

2. Trapped Within a Large Downtrend Channel ( Bearish ):

Within the next 1~2 weeks, we will know which of the two scenarios will come true. What we need to watch is whether prices will rebound from here and break above downtrend line 1 - this is the first foray toward an Inverted Head & Shoulders Pattern. On the other hand, if prices continue to dip ( most likely after a short-lived rebound since the market is quite oversold now ), this will indicate the market is opting for scenario 2.

SembCorp - Possible Symmetrical Triangle

2011-11-22T21:38:00.001+08:00

If successfully breakout, target will be $ 4.8.

Low Risk Buying Opportunity

2011-11-21T14:01:00.001+08:00

Intraday Update ( 2:00pm )

The STI hits an intraday low of 2,693, close enough to the trendline violation target of 2,690. Stochastic is in oversold region. Although we cannot rule out downside risk due to influence from other markets, the risk/reward ratio justify some trades which are low risk at this level. Stop loss at 2,670. In the event if 2,670 is breached, the likelihood is that the index will revisit 2,520.

Genting ( $ 1.51 )

Stochastic has reached oversold, this counter presents us with low risk opportunity for accumulation . Stop loss < $1.41.
.

STI Analysis ( Nov 21 ~ 25 )

2011-11-19T20:38:00.001+08:00

The Straits Times Index retreated toward the target of trendline violation. Strong support is found at 2,670~2,690 but chances is it may not reach there. Stochastic has entered oversold level, there should be buying opportunity next week.

In the US, both DJIA and S&P500 have broken out of the symmetrical triangles from the wrong side. This is bearish and may signal further downside after the short term oversold situation is corrected.

STI Analysis ( Nov 14 ~ 18 )

2011-11-13T15:00:00.000+08:00

Reference the daily chart below:

1. Trendline 1 is a short-term uptrend line. It was violated decisively on Thursday. The trendline violation target is 2,690.

The above hypothesis is, however, not infallible because trendline 1 can always be redrawn to accommodate the sharp plunge of Thursday ( see trendline 1" ).

2. Trendline 2 is a valid downtrend line. It is valid because it has been touched 3 times ( a trendline that has been touched twice is only tentative trendline ). Successful breakout from this level strengthen the confident we are already riding a new uptrend since Oct 6.

3. Trendline 3 is a major resistance, some people consider this the neckline of an inverted head and shoulders pattern. I am not certain if such a pattern is valid. However, a break above this level does have significant meaning. It marks a new higher high in the new uptrend which is an important evidence confirming the uptrend we are riding is here to stay.

Olam International ( $2.62 )

2011-11-09T20:00:00.000+08:00

Based on my trend following mechanical trading system, a fresh buy signal has been generated today. The trigger for this buy signal is at $2.65.

Based on classical technical analysis, prices have risen to a point where it is now facing resistance from an important downtrend line confluence by the 200MA. A decisive breakout from $2.70 is required for a trend change.

Trading Plan:

Entry : $ 2.65 ~ $ 2.70 ( 50% at $2.65, 50% at >$2.70 )

Target : $ 3.00

Stop loss : $2.45

No position should be taken without trigger being hit.

K39 - The Last Stochastic Technique

2011-11-07T00:00:00.000+08:00

Most people are already familiar with the use of Stochastic as a momentum indicator. However, few may have heard of "K39 - The Last Stochastic Technique". This setup consists of two indicators:

1. Stochastic Oscillator, setting: %K=39 and %D=0
2. OBV and its M30 ( M30 = 30 SMA of the OBV )

A buy signal is generated when :
1. K39 line crosses the 50% line from below;
2. OBV line must be above the M30 line.
See green arrows in the chart.

A sell signal is generated when:
1. K39 line crosses the 50% line from above;
2. OBV line must be below the M30 line.
See red arrows in the chart.

For details, please refer to the website of StockChart.com ( click HERE ).

Although K39 is a trend following indicator, it does generate very early and reliable signals ( see examples below ):

I have been familiar with this indicator for 2~3 years now but haven't been too serious about it. I will try to pay more attention to it from now on and will post here counters with fresh buy signals.

STI Technical Analysis

2011-11-05T18:00:00.000+08:00

Last Friday, STI closed with an inverted hammer after touching Fibonacci 50% resistance and a downtrend line.This may signal some degree of selling pressure early next week. Once selling exhausted, we may see STI overcome both these two levels later in the week and generate a mechanical buy signal. Dow Jones is already in the bullish zone, it is a matter of time STI will follow.

Straits Times Index Technical Analysis

2011-10-29T21:48:00.000+08:00

We begin our focus on the hourly chart. There are two signs suggesting the index may need a pause before deciding to advance further or to reverse from here. The two signs are RSI divergence and ADX over-extending as shown in the chart below. In the event if the index heed these two signs and spark off profit taking, 2.860 and 2,790 are key supports.

On the daily chart, the bulls have reclaimed 50% of its loss ground since the successive draw-down began on Aug 1. The next key barrier is 2,960, which is Fibonacci 61.8% retracement. A sustained violation of this level will likely generate the first trend following buy signal in the mechanical chart below (after several months) and head toward 3,080. Failure to surpass 2,960 calls for a deeper pull back or possibly a reversal.

Many people have warned that the rally from Oct 5 is a bull trap ( they said it many weeks ago ). However, I am unable to find evidence supporting this suggestion. Based on calendar effect, November / December are generally good months. I am cautiously optimistic that the odds favor the bulls.

Market View

2011-10-22T15:11:00.001+08:00

The Market :

The current market continues to be volatile and difficult to predict. This can be seen from the mechanical chart below where "Sell Short Exit" signal and "Buy Exit" signal whipsaw from each other 3 days apart. Prices are now trading within a congestion zone between Fibo 23.6% and 38.2%. An upside breakout (from Fibo 38.2%) will see 2,860 as target whereas a downside breakout (from Fibo 23.6%) will bring the index to 2,640.

The Weekly Chart shows a nice hammer followed by a bullish candle, the mid term prospect suggests the likelihood for STI to hit 2,860 even if it needs to first touch 2,640 ( based on Elliott Wave count).

SembMar Recap :

In my post dated August 19 ( see here ), I stated that SembMar will find strong support at $3.00 before a sustained rebound can be found. The counter traded in the exact manner. It hits $3.05 on Oct 4 and thereafter rallied to $4.09 on Oct 17. Honestly, when I made the commentary back then, I have no clue this will be the outcome. I was merely making the observation from the chart. This is a good example where Technical Analysis works, not that I am good.

On Blog Leave

2011-09-25T18:15:00.002+08:00

I will be traveling to the United States for business and won't be updating this blog until October 10!

Trading Ideas - Olam

2011-09-13T08:55:00.005+08:00

The STI fell 2.89% to 2743 Monday on concern over Greece. The Dow has been down as many as 167 points but a report that China was to buy Italian govt debt and make other investments in Italy sparked a huge rally in the last 90min for the index to close up 68 points.

Locally, after falling 1.11% on Friday and 2.89% on Monday, STI may rebound. Should a rebound occurs, Olam could be a counter for trading play :

Noble - Short Setup

2011-09-11T19:18:00.009+08:00

The Dow fell 303.68 points, or 2.7%, Friday to 10,992.13, leaving it with a weekly drop of 2.2%. Asian market is likely to gap down on Monday and faced strong selling pressure.

Although it is going to be the shortist's world where you can short any counter, it is safer to choose stocks that has a proper setup to short since many stocks have already plunged on Friday when STI loss 31.8 points or 1.11%. Noble looks set to be a good candidate because the stock touched the 40MA with a doji and reversed. This has been the pattern the past three occasions where the stock retreated after touching the 40MA ( see red arrows ).

IndoAgri did attempt to breakout on Friday but failed to closed higher. As a matter of fact, the closing candle was a shooting star which has bearish implication. This could be another candidate to short too.

PS : It is vital to stay vigilant while shorting since the STI has already plummeted by 1.11% on Friday ahead of the 303 points fall in Dow. The bulls may fight back at some points during the day.

IndoAgri - Possible Breakout ?

2011-09-08T21:28:00.004+08:00

IndoAgri is approaching the long term downtrend line. Breakout denotes sign of strength and will sought $1.5, $1.6 and $1.7 as targets. Failure to surpass $1.45 calls for a pull back to $1.20.

The Market
STI closed with a hanging man candlestick in evening star position. There is bearish implication from this closing.

Intra-Day View

2011-09-06T11:30:00.001+08:00

Noble
Time to cover the short and take profit !
Last Friday : $1.59. Today : $ 1.45. Difference : $ $1.59 - $ 1.45 = $ 0.14

The Market
The major trend is still down and bearish. However, if the STI can maintain at the current level ( 11:30am at 2,745, -27 points ) till the closing without any further violent sell down in the afternoon. We will have a nice doji during closing and this will imply we may have a short-lived rebound the next 1~2 days.

Noble

2011-09-02T08:40:00.003+08:00

Noble closed with a shooting star candlestick yesterday after touching the 40MA, a perfect setup for short! Although the market looks in favor of the short side, we should remain vigilant of any sign of a bear trap.

CityIndex

2011-09-01T20:36:00.005+08:00

CityIndex Problem

For the past two weeks, I have observed a pattern in Cosco and Yangzijiang. That is, they both move in tandem of each others. If Yangzijiang is trading at $1.10 while Cosco at $1.05, the laggard ( Cosco ) will catch up very quickly and trade at the same price.

This morning, I spotted such a scenario again. While Yangzijiang was trading at $1.17, Cosco was still at $1.13. There was a spread of 4 cents where I can profit from.

I immediately placed a trade via CityIndex for 20 lots of Cosco at $1.145. As soon as I placed the order, I tried to look up for the order from the Active Order tab but no open order was found. After struggling for a while, I called CityIndex. I was shocked when they told me other than keying in the buy order for 20 lots, I have keyed in another order to sell the same 20 lots at the same price I bought them. I wonder how can it be possible? The trade history below shows the buy and sell orders were 3 seconds apart. How could it be possible that I can keyed in two orders consecutively with 3 seconds apart!?

At the end of it, a trade that I could have made $400 in one minute ( because Cosco did rally up to $1.165 as I was talking to CityIndex ) ended up losing $21.70 in commission. I think I am going to cancel the CityIndex account and park my fund elsewhere!

=== Updated on Sept 2, 2011===
The same problem happened again the next day. Having gone through what I had gone through once before, I was extra careful and cannot be wrong this time. I have decided that enough is enough, I will move away from CityIndex!

Beacons of Light in Choppy Waters

2011-08-28T13:45:00.000+08:00

The Dow continued its triple digits wild swing but trade within the range of a symmetrical triangle. Breakout above the upper border of the symmetrical triangle will rally to key barrier at 12,000 ( H&S neckline + 200MA ). Breakout below the lower border calls for a pull back to 10,600.

The Straits Times Index mimics the volatility of Dow swinging between positive and negative every other days. We found beacons of light in the chopping waters out of technical indicators include RSI, MACD and Parabolic SAR. Unless affected by the performance of Wall Streets, we may see STI staging a short term rebound to 2.890.

Trading Ideas !

IndoAgri - Parabolic SAR buy trigger soon
Noble - Parabolic SAR buy trigger soon
Both are meant for long trades aiming at 10 cents ~ 15 cents of gain. Tight stops are necessary since the long term trends are still bearish ( these are counter-trend trades ).
GOLD 10US$ - This is Gold ETF and can be traded in multiple of 10 lots. It is tracking the movement of Gold which has been in a strong uptrend ( This is trend trade, buy on dip )

Random Thoughts

2011-08-24T19:55:00.008+08:00

Despite the market volatility, I have made many trades in August. So far, all of them have been profitable ( the profits are quite small though since all of the trades were intra-day ) except two trades:

1. August 18 : Yangzijiang ( Long Trade ) - My stop loss was triggered (entry 1.115, stop loss 1.09)
2. August 19 : SGX/Wilmar ( Short Trade ) - Exited at cost because prices didn't dip much, lose $150 in commission

I have learn several things from these trades:

1. This market is all about "tikum", not technical analysis. If you have made a correct bet on how the market may behave the next day and buy ( or short ) today, you win. If you bet it wrongly, you lose. The market is not giving you a chance to make money if you enter the very day itself ( ie: if you didn't short or bought the day before ) because it will either gap up or gap down. There is no meat left when you jump in ( this is especially true for shorting ).

2. The market not only required us to "tikum" but it has been very tricky too. Within the same day, the market can move up and down to cross the zero mark 3~4 times!

3. Brokerage commission is very crucial. Take the 2nd losing trade ( SGX/Wilmar ) for example, even with cost in cost out, my losses are $150 ( Poems CFD DMA ). I have resolved that I should focus on my CityIndex CFD account where the commission is $10.70 flat per trade regardless of trade size.

There is no change in my market view per the last post. I suspect we are heading toward the first down leg of 2008 bear market. I will be watching for sign of recovery but for now what I see is lower high, lower low ( which is a bear trend ).

Market Commenary

2011-08-20T20:45:00.002+08:00

Dow Jones Industrial Average

The Dow lost 172.93 or 1.6 percent on Friday and closed at 10,817.65. It was down 4 percent for the week or 15 percent since July 21, some 4 weeks 1 day.

After a brief rebound last week, the Dow has reversed and is now retesting the support at 10,588 ( which is the Head & Shoulder break down target ). There are two scenarios :

1. The Dow survives the support level at 10,588 and form a small double bottom. When this happens, we may see a more sustained rebound since the Dow is quite oversold;

2. The support level at 10,588 is penetrated decisively. When this happens, we will see 9,600 which is a Fibo 50% support level

It is not easy to predict the market direction as it is behaving like a wild monkey jumping up and down. We shall see how it is going to unfold itself. Bottom line, 10,588 has become the most important defense.

Straits Times Index

The STI is mirroring the movement of the US market. There is not much point analyzing it independently. That said, we shall watch whether the last significant low at 2,720 is taken. If it does, we will be looking at 2,600 ( Fibo 38.2% ) as the next target ( This level is coincide with the magnitude of the 2008 first leg plunge depicted by the vertical golden color line ).

SembMar

2011-08-19T22:18:00.005+08:00

SembMar has become one of the weakest stocks lately. During sell down, it is usually one of the top losers. During rebound, the gain is usually quite minimum.
The vertical golden color line is how much the stock prices have fallen in 2008 before it found a sustained support. When we super-imposed this line into the chart, it coincides with a key support level at $3.00, which is also Fibo 61.8%. Therefore, $3.00 could be where SembMar may find a strong support before a sustained rebound.

STA Diploma Exam

2011-08-16T10:43:00.005+08:00

Congratulations! Mr Paul Truscott

Market Wizards LLP would like to congratulate Mr Paul Truscott from Western Australia who has been awarded not only a distinction grade in the April 2011 STA Diploma Examination but also become the recipient of the prestigious Bronwen Wood Memorial Award.

Anyone planning to sit for the IFTA CFTe II ( Certified Financial Technicians ) or STA Diploma examination may obtain help from Market Wizards main website:

http://www.marketwizards.com.sg

Dow Jones Market Analysis

2011-08-13T20:30:00.014+08:00

Dow Jones Industrial Average

It was a roller coaster week for the Dow, a wild volatility not seen in history!

Monday -634 points
Tuesday +429 points
Wednesday -519 points
Thursday +423 points
Friday +125 points

Technically, the Dow appears to have found short term support from the H&S chart pattern target and rebounded from there. Parabolic SAR buy phase has been triggered. We may see Dow trying to retest the neckline ( 12,000 ) in the near future. However, my intuition tells me, the rebounds may be short term. Dow may eventually head down to 9,500 by year end after a series of rebounds.

Locally, resistance for STI are 2,913 (Fibo 38.2%), 2,974 (Fibo 50%) and 3,034 (Fibo 61.8%).

I think it is ok to turn long temporarily to ride on the short term rebounds, but remember going long in a bear market is counter-trend trade so tight stop is necessary. Kep Corp, Kepland, NOL, Noble, Olam are all showing signs for rebounds. NOL, in particular, is looking very appealing ( see chart below ). Yangzijiang, on the other hand, may be a bargain.

DJIA - Head and Shoulder Target Met

2011-08-09T17:03:00.002+08:00

Market Jittery Reminds Of 2008

2011-08-06T16:29:00.007+08:00

The Straits Times Index

It was a big joke that a perfect symmetrical triangle breakout has turned into a bull trap. If time can be rewound, I will be trapped again. There is no way to avoid it because the setup was valid. It has nothing to do with whether one has interpreted it correctly or wrongly. The only thing I could have done differently to avoid it is not to be so subjective. I have been bearish on Dow but bullish on STI. If only I can be not so naive to think that STI can still be bullish while Dow is bearish, I would not have fallen into this bull trap.

From the next chart onward, I will remove the symmetrical triangle.

Dow Jones Industrial Index

The DJIA lost 10.4% in 10 out of 11 losing streak, a consecutive fall unseen since 1978. The sharp plunge by 512 points on Thursday is the biggest single-day fall since 1 December 2008, the height of the financial crisis, when the Dow plunged 679.95 points in one of the market's worst days ever.

Technically, RSI has dipped into oversold at 23.2 - a level not seen over the past two years. We may see a technical rebound bringing the index back to the neckline of the Head and Shoulder chart pattern before selling resume.

Below is an Elliott Wave chart taken from ElliottWavePredictions.com suggesting the Dow will eventually fall to 9750 by year end. I am unable to validate the chart due to my limited knowledge on Elliott Wave. However, judging at the way Dow has plummeted. I foresee that the market is trying to tell us something. This was exactly what has happened in 2007 October where the onset of the financial crisis was known only after the stock market has plummeted by 11 months till the collapse of Lehmen Brother in 2008 September.

On a much longer time frame chart, I have posted the below quite some time back. The Dow has been tracing a large Head and Shoulder chart pattern in the monthly chart. Since the left shoulder takes several years to complete, the right shoulder is expected to take many years to complete too.

DJIA - Head and Shoulder Chart Pattern

2011-08-05T09:24:00.006+08:00

By now, it is clear that I was completely wrong on my bullish view of STI but on the other hand I was completely right on my bearish view for DJIA. I guess when STI and DJIA show an obvious divergence, I should have taken DJIA instead of STI.

Judging at the way the Dow has tumbled, I think the world is heading for a storm similar to the 2008 financial crisis.

STI Update

2011-08-03T20:43:00.008+08:00

STI dips back into the symmetrical triangle after the initial breakout. Technically, this is bearish as it implies we may have encountered a bull trap. However, it is too early to dismiss the bullishness we have seen in STI unless the Head and Shoulder chart pattern for Dow Jones is true.

The volatility today is a gift sent by God. I have personally profited from two intra-day trades on Biosensor and Yangzijiang. After taken profit from these two intra-day trades, I went on to pick up some SembMar to keep overnight in anticipation for a rebound tomorrow. There is no specific reason why I picked SembMar, I guess I like the long tail ( hammer ).

STI closed with a doji today at star position. This is usually followed by a technical rebound. I hope it remains true this time.

DJIA Updated

2011-08-03T08:52:00.005+08:00

DJIA broke the 200 MA and the suspected Head and shoulder chart pattern (H&S) neckline yesterday. This is a bearish sign and may indicate the suspected H&S chart pattern to be valid. However, RSI has reached the support level of the previous two troughs. I believe a technical rebound is imminent. What is important is the move after the rebound. If selling persist, chances is the H&S pattern is valid and the target will be realized.

I will post the STI update later....

Point and Figure Charting Method

2011-08-01T20:00:00.004+08:00

I have often mentioned about Point and Figure charts in this blog. In case anyone interested, you may follow the link below to download an article I have written. This article was one of the two I have prepared for the INVEST magazine for publishing. They have chosen to publish the other article I wrote called "Profit Through Swing Trade" instead of this one. Since I have written, I thought might as well to share it.

Here is the link : Point and Figure Charting Method

Market View - What is in the pot for August?

2011-07-31T00:00:00.007+08:00

I understand some traders are bearish about the month of August. Their rationale are based on:

1. Calendar effect - Historically, August is one of the worst performing months in a year
2. US debt ceiling deadline - If US is unable to raise the debt ceiling by Aug 2, it will has an adverse effect on the stock market

Technically, there is no evidence suggesting August should be bearish. On the contrary, STI has been very bullish and resilient. However, item 2 above is a valid concern. Therefore, it may be wise to stay at the sidelines until August 2.

The Straits Times Index :

Based on Point and Figure chart, STI is quite bullish. In fact, another 20 points up will generate a fresh strong buy signal. However, Dow Jones is very uncertain. It may jeopardize the performance of STI :

STI Point and Figure Chart:

Dow Jones Industrial Average :

The DJIA appears to be tracing a Head and Shoulder chart pattern. We need to watch whether the neckline will be broken. When it occurs, we will be looking at 10,750. The validity of H&S pattern rely heavily on volume. Unfortunately, volume is not available in my MetaStock. Therefore, please take this with a pinch of salt.

DJIA Daily Chart :

Yahoo Finance expected the stock market to tumble by 30% if US is unable to resolve the debt ceiling crisis which will result to a downgrade of credit rating from the current AAA.

IndoAgri Update

2011-07-30T16:13:00.004+08:00

On June 28, I have identified a bullish divergence in IndoAgri. This bullish divergence, along with a mini double bottom formed between June 17 and July 18 provided the basis of a bullish reversal. The counter breakout from a horizontal resistance on Friday and is now facing resistance from a major downtrend line.

The bulls need a sustained violation of the major downtrend line in order to advance to $1.775 and $2.00. Failure to surpass this downtrend line calls for a retest of the double bottom low at $1.51.

Parabolic SAR buy phase has been triggered in the Weekly Chart. The odd favors that IndoAgri is likely to overcome the downtrend line and continue to advance. Position traders may consider to start their accumulation.

Yangzijiang Update

2011-07-29T20:14:00.008+08:00

Since my last post dated July 19, Yangzijiang has gained 13 cents.

Daily Chart:
Prices are now facing resistance from the downtrend line. Stochastic is over bought. We may see some short term retracement if it is unable to overcome the resistance.

Weekly Chart :
Parabolic SAR buy phase triggered ( Bullish )

Monthly Chart :
A hammer candlestick in star position, a typical sign for bullish reversal

Conclusion:

This counter is still trading below the 200 MA and thus considered a bearish stock. However, the weekly and monthly charts are shedding light for bullish reversal. The daily chart signals a possible pull back, ideal for position trader to start accumulation.

DJIA - Updated Chart

2011-07-28T20:03:00.003+08:00

Following my last post dated July 25 Monday where a bearish divergence was spotted, DJIA lost 379 points in the next 3 sessions and is now sitting at Support 1. It is hard to predict whether Support 1 will hold because RSI is not oversold yet. We need to watch how the market unfold. If Support 1 is taken, the index will sough support from Support 2.

Biosensors

2011-07-26T19:37:00.003+08:00

The Market
All eyes are watching on whether US will raise the debt ceiling by the deadline on August 2nd. If they don't, their credit rating will fall and it will likely trigger a new round of financial crisis. Technically, STI has turned bullish but external factor such as this will affect the index performance in the upcoming months.

Biosensors
A symmetrical triangle is in the making. If it is able to breakout successfully, it has the potential of hitting $1.60 as the target.

DJIA - Bearish Divergence

2011-07-25T18:21:00.003+08:00

The Dow Jones Industrial Average is showing a bearish divergence between the underlying prices and RSI. This may be a sign of further downside lying ahead....

STI - Bullish Breakout

2011-07-24T12:25:00.006+08:00

Finally! STI has managed to breakout from the major downtrend line, which is also the upper boarder of a symmetrical triangle. The upside target is 3,650. It is likely to see some profit takings in the upcoming sessions, a good time to buy on dip.

On the mechanical long term chart, the index has turned bullish too :

The Point and Figure chart is showing the same bullish sentiment with a target of 3,700 as previously stated :

Note : In regard to the target, I have mentioned many times here. It should not be taken as a straight target that will be fulfilled without any interruption of the bears. Market is going to move up and down before reaching the target eventually ( it may take months ).

Yangzijiang

2011-07-19T20:00:00.003+08:00

A long green candlestick may be the early sign of a bullish reversal :

Wilmar

2011-07-19T19:12:00.004+08:00

Wilmar has become a hot stock again recently!

China has removed price limits on edible oils according to an unidentified official from the National Development and Reform Commission's price department. If this news is true, it is viewed as a positive to Wilmar as it allows Wilmar to raise its cooking oil prices and improves profit margins for this division.

Technically, this counter has begun to trend again after making a double bottom on Mar 15 and May 6. There has been many buy calls the past few days, which are fine. However, for those who have not bought yet. You may wait for pull back and buy on dip.

There are two signs suggesting that there might be a pull back in the near future :
1. A shooting star candlestick with extremely long tail - a sign of rejection
2. A bearish divergence between the underlying prices and RSI

Recent prices have traveled too far and too fast away from the 20/40 MA. It may pull back to hug the two MAs again in the near future.

Noble - Head & Shoulder Chart Pattern

2011-07-15T19:57:00.007+08:00

Noble caught my attention today as the share price plummeted by 4.8% to S$1.78. I pull out the chart and immediately realized the counter is currently undergone a textbook fashion Head and Shoulder ( H&S ) chart pattern breakdown. The price target for the H&S pattern is S$1.54.

Golden Agri - Symmetrical Triangle

2011-07-14T11:49:00.006+08:00

I visited a blog which shows a chart depicting Golden Agri breakout from a symmetrical triangle. At the first glance, I was excited and agreed with the suggestion. However, when I open up my own chart and take a closer look. I realized the so called symmetrical triangle only has two-touch on the upper trendline ( see below ):

I feel a more valid way to trace the symmetrical triangle is to have three-touch on both the upper and lower trendline as shown below. Based on my tracing, there is no breakout yet. As a matter of fact, I am not certain if the breakout (when it occurs) will be from the upside or downside! Symmetrical triangles are usually continuation pattern. The prior trend was a downtrend. The upside volume appears to be lighter than the downside volume. Instead of calling for a buy too soon, I would prefer to wait for the actual breakout to occur.

Market View - July 11 ~ 15

2011-07-10T00:00:00.006+08:00

THE STRAITS TIMES INDEX

Weekly Chart :

A hanging man candlestick was formed last week. Although not as bearish as a shooting star, a hanging man candle in evening star position does signals indecision between the bulls and bears, and foreshadow possible selling pressure in the upcoming weeks.

Daily Chart :

The index failed to breach the major downtrend line last week after retested it for the 5th times. Unless it is able to breakout from the major downtrend line ASAP, the symmetrical triangle will be invalidated due to the time to apex will soon be exceeding 3/4.
If a breakout does occur, the implication is extremely bullish as it signifies the validity of the symmetrical triangle.

Point and Figure Chart :

Levels to watch:
3,170 - Double-tops buy signal, the first foray to turn bullish
3,190 - Multiple-tops strong buy signal. Once this level is triggered, a vertical count target of 3,700** will be activated.
3,110 - Double-bottom sell signal ( to close long positions, not to open new shorts ), indicates the bullishness we saw maybe false ( we are in a bull trap )

** Point and Figure target derived from "count" ( vertical count or horizontal count ) provides an indication instead of absolute target. It will be naive to think that prices shall move in a straight line heading toward the target with no retracement in between.

The Straits Times Index

2011-07-03T12:01:00.010+08:00

On the daily bar chart, STI closed exactly at the 200 MA on Friday. It is crucial to observe how STI react to this major chart point early next week. If it is able to break above the 200 MA, we can look forward for a retest of the ( thick black ) major downtrend line in the chart. This major downtrend line has been intact since December 2010 and has withstood 4 tests before. The bulls need a sustained violation of this major trendline to turn the market sentiment from bearish to bullish. Failure to overcome the 200 MA will likely see the index pull back to the 100 MA level, which is 3,095.

On the Point and Figure chart, STI has successfully breached the Bearish Resistance Line on Friday. In other word, the index is now above the Bullish Support Line or simply it has turned bullish. However, no fresh buy signal was generated yet. A fresh buy signal will be generated if ( and only if ) STI managed to hit 3,190.

Buy signal generated above the Bullish Support Line is considered strong and is meant to open new long. Buy signal generated below the Bearish Resistance Line is considered weak and is meant to close short position.

On last Thursday, a weak triple-top buy signal was generated ( below the Bearish Resistance Line ). The vertical count target was 3,210. Remember, this weak buy signal only tell us to close the short position. To initiate new long, wait for the strong buy signal when it is triggered at 3,190.

3,190 is where STI will overcome the major downtrend line mentioned above in the bar chart analysis. So both the Point and Figure Chart and Bar Chart analysis tally with each other. Point and Figure Chart is always known to be unambitious versus line, bar and candlestick charts!

IndoAgri - Is the worst over?

2011-06-28T21:01:00.002+08:00

The market is still bearish and so does IndoAgri. However, a bullish divergence between the underlying prices and RSI signals a possible bottom for this counter.

Resistance : $1.75 and $1.95
Stop loss : $ 1.50

Straits Times Index

2011-06-06T19:46:00.009+08:00

Comparing to S&P500 and DJIA, the STI is more resilient. Instead of a correction, it has chosen to consolidate sideways since early May. The sideways movement resemble a symmetrical triangle. By default, a symmetrical triangle has the tendency of resuming the prevailing trend after the sideways action. A breakout from the upper boarder confirms the s-triangle while a breakout from the lower boarder invalidate the formation.

The dotted lines in the chart denotes the respective support and resistance.

It is worth noting that currently the prices are trading below 100MA and 200MA, which has bearish implication.

In the event if prices break below 3,060, it will turn bearish according to Point and Figure chart. When that occur, the index is looking set to retest 2,920.

Dow Jones Industrial Average

2011-06-06T18:31:00.006+08:00

DJIA saw continued weakness throughout May extending to early June. Latest prices violated 100MA, touched supported 1 before it closes at Fibo 23.6%. If support 1 holds, the correction may end. Failing which, prices will head down to support 2 ( 11,500 ).

S&P500

2011-06-06T18:20:00.003+08:00

S&P500 has been in correction mode since early May. The correction was foreshadowed by a bearish divergence between the underlying prices and RSI. Latest prices not only violated the uptrend line but also the 100MA. Key support at 1250, a support level from March low confluence by 200MA.

SembMar - Is it a good buy now?

2011-04-26T10:37:00.003+08:00

Sembmar drops $0.30 today due to XD. Is it a good buy? I have some reservation for two reasons:
1. The peak on April 21 failed to breach the peak on April 8;
2. There is a bearish divergence on RSI and the underlying prices
I suspect SembMar may face some headwind in the near future.

Market View

2011-04-25T19:36:00.003+08:00

On the daily and weekly charts, the Straits Times Index has shown a bearish divergence between the RSI and underlying prices. This has foreshadowed some near term weaknesses ahead. However, the longer term perspective remains bullish. As a matter of fact, the index has just turned bullish with a fresh mechanical buy signal ( referred to longer term ).

KepCorp Revisited

2011-04-21T12:10:00.006+08:00

[ Intrad Day 12:15pm ]

On March 29, I made a post in regard to the formation of a symmetrical triangle in KepCorp and gave a price target of $13.5. At that time, KepCorp was trading at $12.00. The target seems far fetched. Today, KepCorp is much nearer to the target where it is trading at $12.90 currently. A new breakout from a flag today is likely to take KepCorp to a new high.

Golden Agri

2011-04-21T08:44:00.007+08:00

In response to the question from Style, Golden Agri has turned bullish. I see higher high and higher low in the chart.
In the mechanical chart, we have 'long ribbon' and 'blue candle'. Once we see a 'green arrow', it is time to go long. I will monitor this and will update the chart the moment buy signal surfaced. Of course, it look safe to preempt the trade if you wish to take advantage of lower price before buy signal surfaced (stop loss at .66).

Dow Jones Industrial Average

2011-04-19T20:04:00.005+08:00

The Dow Jones Industrial Average ( DJIA ) is showing bearish divergence in RSI for both the daily chart and weekly chart. It looks like DJIA will be facing some severe headwind soon! Key support 11,500.

Market Update

2011-04-19T19:37:00.007+08:00

STI retested 3,120 and found support at 20 SMA confluence by a Fibonacci level. The index closed with a doji candlestick at star position. Typically, a snapshot like this in the chart denotes bullish reversal ( provided if Wall Street overnight does not weigh down sentiment ).

By the way, I have uploaded the PDF of the article I have written in the INVEST magazine. Please follow the link below to read the article:

"Profit Through Swing Trade Tactic"

Short Term Bearish, Long Term Bullish

2011-04-18T20:16:00.005+08:00

Short Term :

STI is facing some selling pressure in the near term and may retest the support level at 3,120.

Long Term :

On the Point and Figure chart, a price objective is able to be determined:

[ 26 x 10 x 3 ] + 2920 = 3,700

This is a very ambitious target where I do not know whether to believe it or not. On the safe side, I will just take it as that the long term view of STI is bullish but I will not hold 3,700 as the absolute target. Furthermore, Point and Figure charting method does not provide time frame for the price target. So the 3,700 price objective could be after many whipsaw of up and down.

SembMar - Swing Trade Setup

2011-04-14T09:34:00.006+08:00

[ End Of Day Update ]

The entry at $5.88 was triggered. Prices rallied to $5.92 but closed below the trigger price at $5.85. If you have taken the trade, you should remain to be in the trade since no stop loss was triggered.

[ Intra-day Update - 9;30am ]

SembMar is up 2 cents despite the index is down 11 points. Yesterday closing was a doji at star position touching the 20 SMA. CCI was < -100 in oversold zone. There is a Swing Trade Setup pending for trigger. The trigger is at $5.88. Target being the last significant high. The setup will be invalidated if prices break below yesterday's low.

Profit Through Swing Trade Tactic

2011-04-13T21:39:00.004+08:00

I am pleased to share with you an article I have contributed in the latest issue of the INVEST magazine, a bi-monthly investment magazine published by SPH. Please click on the image below to access the article in Page 27, 28 and 29. The hard copy, cost $5, will hit the newsstand this Friday.

Certified Financial Technician

2011-04-12T21:07:00.001+08:00

The Certified Financial Technician ( CFTe ) is an accreditation program administrated by the International Federation of Technical Analysts ( IFTA ).

There are two levels to the Certified Financial Technician examination namely CFTe I and CFTe II.

CFTe I is a multiple choice exam consists of 120 questions in a 2-hour sitting. CFTe II, which is the same as STA Diploma, is an essay style of exam consists of three parts ( Part 1: Chart Analysis, Part 2: One Long Essay, Part 3: Two Short Essay ) to be taken in a 3-hour sitting.

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Market View

2011-04-11T19:19:00.003+08:00

There is no change in my market view - bullish but overbought. The pull back today is long overdue serves to correct the overbought situation. After shedding 26 points, the index is still overbought. I won't be surprise there maybe more downside ahead. On the mechanical chart, the index has returned to the bullish zone. So buy on dip !

MIDAS

2011-04-04T21:37:00.006+08:00

Style has requested for the view of another counter MIDAS and here you go :

Although MIDAS has bottomed in Oct 2008, the rate of accent of the uptrend has been rather flat and there is a lot of sideways actions while trending gradually. Currently, prices are still below the 200MA and thus it is considered bearish. Latest prices have, however, found support for the 3rd time from the uptrend line. There is a good likelihood that prices will rebound from the trend line to retest the 200MA ( take note of the bullish divergence in RSI and a small invert head and shoulder pattern, both suggest short-term strength ).

To sum up, there is a fairly good chance where prices may advance to retest recent highs in the near-term. However, this is not a counter I will consider to add new position for mid to long-term trade because the uptrend line is too flat and there is too much sideways actions.

For trading purpose, it may be better off to look at the following counters ( except Synear and ChinaXLX, they are there because they are my pillow stocks ) :

Yangzijiang

2011-04-04T19:43:00.004+08:00

This post is in response to the question from "Style" who has posted the question in the comment of my last post :

Yangzijiang ( YZJ ) has reclaimed much of its lost ground since March 16. The counter is turning bullish. However, technical buy signal has not been generated yet and will probably be generated when prices breach $1.90. Traders who are trend follower will forever faced the dilemma of missing the bottom if they wait for the technical buy signal or if they enter ahead of the buy signal may end up catching the falling knife. It is a tough decision that one need to be made based on risk appetite. Perhaps buy 50% in anticipation of the buy signal and another 50% when the buy signal surfaced? Another consideration is the investment time horizon. If you intend to hold for 3~6 months then minor fluctuation of $0.05 ~ $0.10 is not so important. If you are a swing trader aiming to reap a small profit, timing become very critical...

My view on STI and many counters including YZJ is that they are currently quite overbought. Some profit taking may be on the card. Since the market is generally bullish based on Point and Figure buy signal, buy on dip can be considered.

Buy On Dip

2011-04-03T09:20:00.017+08:00

The Straits Times Index

Many traders were caught unprepared by the strong market move since March 21 signaled only by a bullish divergence in RSI from the chart ( we caught the bullish divergence in our post March 20 Sunday ). Initially, they thought the rally was not sustainable and did not participate. Then as the days go by, they worried their late participation may result them in joining a party that is ending soon. If this is your dilemma too, you will be pleased to know the party has not even started yet. The market has just begun to turn bullish and more upside is expected (after some near-term profit taking sessions) based on a strong buy signal generated in the Point and Figure chart below :

Unfortunately, a price objective cannot be determined until the market pull back by at least 30 points where a new column of "0" is fixing the current column of "X" ( these are Point and Figure jargon ).

On the daily candlestick chart, Friday closing has faced resistance at 3,120. Stochastic is very overbought. Volume is getting lighter the last three sessions as prices continued to edge higher. All these are signs of short-term weakness signaling the possibility of a few profit taking sessions ahead.

At the backdrop of a fresh and strong Point and Figure buy signal and that the index has regained control of the 200 MA. Profit taking sessions become good opportunity to buy the dip.

KepCorp Update:

A breakout from the symmetrical triangle did occur. What we may see is a few sessions of profit taking bringing the prices back to touch the upper trendline of the symmetrical triangle. As long as the prices do not dip back into the symmetrical triangle, this will provide a 2nd chance for late comers to take advantage of the triangle pattern with a long term target of $13.50.

KepCorp - Possible Symmetrical Triangle

2011-03-29T20:29:00.002+08:00

A possible symmetrically triangle in the making? Look up for possible upside breakout with a price target of S$ 13.50.

STI Approaching Resistance

2011-03-23T20:24:00.009+08:00

Despite the good showing the past three days, STI cannot be considered out of the wood until it is able to clear the three trendlines ( A, B and C ) as shown in the chart below. Trendline A is the most important, it is the key resistance at 3,040. A reversal from this level signifies the downtrend is still intact. A break above this level denotes sign of strength. Once trendline A is cleared, STI needs to also clear trendline B which is a downtrend line. When both trendlines A and B are overcome, the uptrend has resumed. Let's see how the market is resolving itself -- Posted from Penang.

IndoAgri

IndoAgri is attempting to break the downtrend line. If successful, it will mark a turn around of sentiment to bullish !

Straits Times Index / SembMar

2011-03-20T10:09:00.005+08:00

On the daily chart, there is early sign of a bullish divergence between the price action and RSI oscillator suggesting the index may have found near term support at 2,919. Immediate resistance is 3,040.

In the unlikely event if 2,910 is taken, the index will sought for 2,770 and 2,650 as the next two major supports. However, this seems to be quite unlikely in the upcoming week. What come after next week will need to be re-evaluated later.

SembMar

The latest closing on Friday ($5.30) is touching the uptrend line. If the uptrend line is intact, prices will rebound to $5.58. If the uptrend line is breached, the next two supports are $5.00 and $4.75.

On the monthly chart, a long tail inverted hammer is in the making ( the month has not ended yet so it is subjected to change ). If the long tail inverted hammer is intact by month end, the mid ~ long term move of the counter will be bearish.

To sum up, we may see SembMar rebounding from $5.30 to head toward $5.58 but thereafter the next 3~6 months move could be bearish ( heading toward $4.27 ~ $5.00 ).

STI Technical Analysis

2011-03-13T16:29:00.008+08:00

Last week, we mentioned the key support and resistance were 3,040 and 3,120. At the end of the week, both levels were tested. On March 9, STI rose to 3,113 which was closed enough to our resistance level at 3,120. On March 11, STI dipped to a low of 3,024 but closed at 3,043. The index was supported by the crucial support level at 3,040.

Should 3,040 give way in the upcoming week, the index will likely to head down to 2,910. This level coincides with a descending triangle price objective. This descending triangle is, however, not a textbook perfect version because the time to breakout was less than 50% so I am really apprehensive on whether to consider it a valid chart pattern :

Regardless, 3040 will still be the most crucial support level to watch. Once the index dips below 3,020, a new Point and Figure sell signal will be generated bringing the price target to 2,910 anyway.

Below is the view of Colins Twiggs from Incrediblecharts :
http://www.incrediblecharts.com/tradingdiary/2011-03-14_markets.php#singapore

STI Key Support and Resistance

2011-03-06T17:45:00.003+08:00

On the candlestick chart, the last two candles ( Thursday and Friday ) were inverted hammer with long tail - a sign of rejection. It looks like STI will be under some selling pressure to retest 3,040 earlier next week.

On the Point and Figure chart, there is an upside target of 3,120, which is coincide with the candlestick chart key resistance.

To sum up, key resistance 3,120. Key support 3,040.

Market View

2011-03-01T19:55:00.003+08:00

STI rose 57 points today. The endorsement given by the bull is resounding. The index has now regained control of 200 MA and broke above 3,040 decisively. It is time to buy on dip during profit taking and look toward 3,120 as the next major resistance.

Where does STI heading ?

2011-02-27T21:29:00.003+08:00

Now that the Point and Figure target at 2,975 was met. It is no longer so straight forward as before to tell which way the market is heading. There are conflicting technical signals such as RSI is in oversold region suggesting selling may have exhausted. But on the other hand, prices are still trading below the 200 MA and Parabolic SAR is still in sell phase in the monthly chart.

What we really need to do is to watch how prices are reacting to the resistance at 3,040. This level is currently confluence with the 200 MA. A decisive break above this level may signal the end of correction. Whereas, a U-Turn from here could mean market may retest 3,000, 2,975 and then 2920.

STI - Point and FigureTarget Met

2011-02-24T19:26:00.004+08:00

I was wronged yesterday in presuming the Point and Figure target was met. The target was met today instead. Note that this target ( 2,975 ) denotes the "Minimum" price objective. It may go beyond. So it is quite possible that we will be looking at 2,920 with rebounds in between.

STI - Quick Update from Bangkok

2011-02-23T22:04:00.005+08:00

STI hits a low of 2,988 today before closing slightly above 3,000. 2,988 was closed enough to be considered as the Point and Figure target at 2,975 being met, I guessed. Apparently, 3,000 should provide a good support for the time being based on how the bull was fighting back today at the backdrop of high volume. RSI is extremely oversold couple with a hammer candlestick ( not quite a hammer but well, close enough ). I suspect we are heading for a rebound ! Thereafter, we will need to reassess on whether it will return to retest 3,000.
IndoAgri was the most notable stock today that hit a low of 2.2 but closed 1 cent higher at 2.31. If I were to be in town, I would have caught it at 2.25.
--- MarketWizards posted from Bangkok

STI Plunged 51 Points, What's next?

2011-02-22T18:32:00.005+08:00

STI plunged by 51 points today. According to the news, it was due to the unrest situation in Libya and high crude oil prices. It is interesting that the fundamentalist always need to attach a reason to the price action whereas such action has had traces from the price chart since one month ago. Anyone care to scroll down this blog would have found a price target of 2,975 and subsequently 2,920 since January 23~25. At that time, the unrest in Libya has not surfaced yet and crude oil prices wasn't a great concern. So is Libya and crude oil the real reasons or are we attaching these reasons to the price action?

Back to the market, STI broke the 200 days moving average ( MA ) today. The last time it has broken the 200 MA was May 2010. 200 MA is deemed as the divider between the bull and bear. Obviously, when prices are trading below the 200 MA, the bear is having fun.

There is no change in the market view. We are still looking at a minimum target of 2,975 based on Point and Figure chart and 2,920 based on candlestick chart. RSI is once again in oversold zone, it is possible that we see some rebounds before retesting the targets.

Finally, Dow is very overbought both in the daily and weekly chart. STI / HSI have been falling over the past weeks but Dow was lifted by hot money. When the hot money no longer able to lift the index, it is their turn to plunge and that may trigger STI / HSI to plunge some more to hit our target.

Point and Figure Chart - New sell signal was generated

Golden Agri

2011-02-19T10:05:00.007+08:00

Golden Agri lost 18 cents ( or 27% ) since January 5, 2011. The counter is currently bearish and there is no buy signal yet. However, the latest closing at $0.65 is touching two support levels confluence by two trendlines. RSI has reached oversold position.

Buying at support has the advantage of being early in reaping maximum profit provided if the support holds. However, if the support fails. You will end up at the wrong side of the trend. A safer approach is to wait for proper buy signal but that is often late. So perhaps buying 50% at support and another 50% against buy signal may be a compromise...

BSX Breakout ( NYSE Stock )

2011-02-19T09:59:00.008+08:00

BSX breakout from a short term downtrend line as well as a small congestion zone as shown in the chart. I managed to cash in 30 cents of profit from this breakout!

I continue to think that this is a mid-cap stock which heeds technical signal quite well, making it a 'tradable' stock. For US stock, you may buy as little as 1 share ( literally 1 share, not 1 lot which is 1000 shares ). So despite it is priced at USD7+, one may just buy 100 shares or 500 shares which is pretty affordable.

Market View

2011-02-15T19:13:00.006+08:00

Both the Point and Figure chart and Candlestick chart are showing 3,040 as an important defense.

On the Point and Figure chart, 3040 will generate a new sell signal driving the minimum price objective of 2,975 closer.

On the Candlestick chart, 3040 is an important resistance turned support confluence with the 200 MA. Once this level is taken, the next support is likely to be 2,920.

A break above 3,120 may invalidate the current bearish view.

STI - Parabolic SAR Sell Phase Triggered

2011-02-10T18:59:00.012+08:00

The market is definitely not looking pretty. It does not require a technical analyst to point out this...

Two fresh Point and Figure sell signals were triggered today. Plus, Parabolic sell phase in the MONTHLY chart was triggered too. However, I maintain that the market will not move in a straight line so we may see some sunny days ahead ( perhaps until the Singapore Budget Day ). Thereafter, market may resume to be under selling pressure. The minimum downside target remains 2,975.

Actually, this Point and Figure target was forecasted in my post January 23 to 25.

I have loaded up some counters today in anticipation for rebound play. I will, however, make sure these are nimble trades and will get out if I am wrong.

STI - Point and Figure Sell Signal Triggered

2011-02-09T11:28:00.007+08:00

Point and Figure sell signal triggered today at 3,165. The target for this sell signal is 2,975 by mean of vertical count. But it will probably take time to achieve and in between there will be technical rebound. During the rebound, there will be illusion as if all is well. But after the rebound, prices may continue to trend toward the Point and Figure target ( in other words, this target is a mid-term target ).

That said ( ie: with the target being 2,975 ), it does not imply one cannot profit from a nimble trade during the rebound. As a matter of fact, STI is quite likely to stage a strong technical rebound after three straight sessions of fall.

On the candlestick chart, current support is 3,120. Next support 3,040.

I am beginning to look at STI from a different perspective. Can it be a Descending Triangle is in the making?