Weak rebound

As expected from TA, Dow found support at the level which i suggested 3 days ago. Today i took a look at the STI and well, it is not looking that great bah. The market closed higher but with lighter volume. The next resistance level for the STI is the 50d EMA so if it fails to break it, things will be looking very bearish. Saw a lot of charts testing their gaps today but almost all failed to fill up their gaps.

Anyway i saw the summary of 'The Edge' which is an investment issue on a trading forum and it recommend a hold on Frasers Centerpoint Trust with a target price of $1.67. I open my chart on this counter and to my dismay, i saw a confirmed double tops with a break of it's neckline with heavy volume and it broke with a gap too. I think anyone can tell that this is one stock which u should not hold. Always take such recommendation with a pinch of salt.

Support that Dow can find

Dow closed badly on friday with very heavy volume. I believe Dow will find support near the 100d EMA and the 200d MA due to a confluence of technical indicators appearing near there.

100d EMA:

1. 13527 was tested a few times in the previous few weeks and acted as a good support
2. The region of 13530 coincide with a fibbo retracement of 38.2%
3. 100d EMA appearing near that region too

200d EMA:

1. 132740 coincides with a fibbo retracement of 61.8%
2. 200d EMA appearing near that region

Bloodshed

Today STI gapped down by a really huge amount. Can literally see one huge hole with blood gapping out in the chart. The market attempted to push the price back as it can be seen with a small white candle and high volume but i feel that the gap is way too wide. Currently it is supported on the 100d EMA and i expect it to at least rally back to the 50d EMA and less likely, perhaps to the resistive trendline. It's a very classic scenario where the general public is still quite optimistic and sees the plunge as a opportunity to load in on more counters since stocks will definitely be cheaper to buy at this price as this can be seen as a climb back to the 50d EMA or the resistive trendline. But this rally will fail to break it's resistance since by now, the 'smart money' would have left or probably have left the market long ago and leave the public hanging to their plunging stocks.

Well if it plunge even further den this, the market is definitely looking way too pessimistic. Well putting into what i have learn so far and using a bit of unorthodox method, i can forecast an important area of support. The next support area below this will be a 100% retracement of this current intermediate trend and by Dow theory, this may confirm the end of this trend since this trend fails to make a higher high and a higher low.

Some reasons i believe this support area will be crucial :

1. 3288 was a level of support before in this trend. Can be seen by the 1st retracement of this uptrend.
2. 3312 coincides with a fibonacci retracement of 50% which is a crucial support level seen on many charts.
3. 3300 coincides with the 200d MA which is a important moving average to determine whether the major trend is up or down. Of course, i did something unorthodox by extrapolating the 200d MA with a straight line and u can see there is a straight thin red line which was drawn by me. :D It makes sense since the 200d MA hardly fluctuate.

Thus i conclude around the region of 3300 will be an important support area. I am assuming that the time period for this to happen will take around 1 month plus. Not sure what can happen since i am not God but just something for me to apply my knowledge unto the current situation now.

The start of something new .. perhaps

Today might be a significant day. This intermediate trend has been weak and i have observing it ever since it started. Reasons which i think that this trend is weak is cos

1. Volume during rallies often dun confirm price action. Can be seen by the OBV which is trending downwards.
2. Bearish divergence spotted on the MACD suggesting the momentum for this trend has been decreasing.

This time, the index failed to touch the resistive trendline and today it broke a important support trendline which has been tested for a few times already. Most importantly, it broke a trendline with high volume, forming a bearish engulfing pattern. Since the support trendline was tested a few times, there is a high chance that this support trendline will convert to a resistive trendline so there might be a rally back to this trendline. Tink i can stop monitoring individual counters and try to see where the STI can find support on the chart. Maybe this break of trendline might be a whipsaw ? We shall see ...

Back from holiday trip

Market sentiments aside which is not looking healthy though, just some charts to keep for future reference

Allcoreit : Spotted these a few days ago but never really scrutinize closely and i was too "chart-formation crazy" that time to have tink it will bounce off around that area. A lot of factors to suggest support area of $1.11.

1. $1.11 was support for previous 2 occasions
2. $1.11 was close to the approximate objective when u minus the height of the head of the "head and shoulders" formation from the neckline
3. It broke the 200d MA before gaping up above it with strong volume.



ChinaPetro : Forming a ascending triangle if u consider only $0.565 and a symmetrical triangle if considering $0.595. It's interesting to me cos the price now happens to lie on a support trendline which was tested at least twice and near the 3 MAs. Noted that the 50d and 100d EMA crossed the 200d EMA a few days back. Seems to be well-supported now.



Gen Int: Break of descending triangle. Price attempted to climb above $0.925 but failed on a few occasions. Seems to be supported on the 100d EMA now.

Weekend review

The market seems to rebound with some strength. A quick look at Dow reveals that it has made a new high. On to the STI side, it gap up from 3605 to close near 3652 with a bullish white belt-line which was a horizontal support level a few days ago and was also another horizontal resistance level even longer ago. This level can prove to be crucial in the near future as it can act as support since it has been tested for many times and that was something off the books that i read :) Overall, i would say STI rebounded with some strength but i am still not that optimistic when i factor in the volume consideration. Volume confirms price action and though volume was higher this time round as compared previous buying in, it was still lower compared to the last day of the sellout. I gotta see how STI breaks the crucial resistance level of 3652.

Some article in the last few pages of the Strait Times ( Not STI !) caught my attention a few days ago. Too lazy to find and repost the article and also to post some facts, but basically it talks about how penny stocks has been hogging the volume list. But i can still remember 2 crucial details about the article. Firstly, the trading volume for the penny stocks are much higher that what has been released to the market. It is like the company only released this amount of shares to the market but the daily trading volume is much higher than this amount of shares. Secondly, the valuation as determined by the prices of the share is much higher than how much the companies are worth and these companies are actually weak fundamentally. This of course leads to the conclusion and that is the market is mainly in the hands of speculators now. They are like your uncles or aunties or even students like me who buy without even knowing what they are buying in and got zlich idea abt the fundamentals of the companies. Well, i am already seeing on msn ppl trading stocks and posting on their target profits. Can't reli predict what will happen next man ..

Well this is like the last days of the bull market. The problem is that people has been calling for a correction a few months back and this bull market still goes on to making new highs. This post i made serve to remind me that it is always good to be cautious. I guess the greed of ppl noes no limit bah.

Spotted 2 potential counters

Pine Agritech : No reversal formation forming. Currently, a low-risk buy in at this level of support. Support of $0.59 has been tested 3 times and the current testing of the level for a 4th time resulted in a morning doji star which is very bullish. Could prove to be a double bottoms in the near future but such formations may not be formed ultimately going by my observations so far.



Noble Grp : Breakout from ascending triangle formation with high volume. OBV has been trending upwards steadily. Notice how there are 2 trendlines forming the bottoms of the ascending triangle but the general concept of the ascending triangle is that everytime the counter drops, the market is willing to buy in at a higher price, causing the counter to rise again thus showing bullishness. Current price maybe too high to buy in since the cut loss has to be set below the trendline so might have to buy on dips but den it might never dip so it is anyone's call.

The news start to sink in finally

Think i should eat back the words that i posted in my last post. The STI level of 3562 only held as support for 3 days before it plunged below that level with increasing volume. It will good to see whether it will rebound or will it plunge further. Ever since this secondary trend was started, bearish divergence has been spotted on the technical indicators that i have chosen. Well i did observe 2 things and that is firstly, price action always comes before news. Saw this on decipher's blog as he observed how property counters ain't moving recently despite STI goes into unchartered waters. I experienced this 1st hand with the construction sector not that long ago when the stocks in this sector started to rally before the release of any fundamental news and i tot that was strange enough already. Must type this again and that is price action always comes before news :)

A rising tide lifts all boats and the opposite is true too. With the indices not heading north, it will always be prudent not to get vested in any counters no matter how good a counter looks technically by itself and be ready to offload to protect profits and cut losses when a correction is in place.

A period of uneasiness

Dow finally attained a new high after trending sideways for the past few weeks which is good news. On the STI, support is established firmly near 3652 after testing it twice for the past 2 days but it is still below the resistive trendline that was drawn from a few years back. We shall see how the STI performs when it test that trendline. Notice how the resistance that was tested for the past few weeks now turn to support. Classic case of resistance turn support.



Nothing reli interesting on my charts. Basically a few ascending triangles and double bottoms in the making but nothing confirmed yet. Saw 3 stocks from the steel industry rally to a new high though. I been monitoring SMRT and spotted some divergence.

SMRT: Prices trending sideways yet OBV trending higher so as of now it is accumulating. Tested the 50d EMA today. Tested near $2.00 for a few times but failed to close above it. A close above $2.00 would be very significant.

Hi-P pattern failure

Dow broke it's resistance of 13707 and close strongly above it. This is significant as the level of 13707 was resisted on 3 previous occasion so a close above it is definitely a good sign. On to the STI, although it ended with a black candle, it managed to close at 3660 which was the previous resistance twice so i reckon this level will hold as support for some time.

Anyway back to the Hi-P chart posting i made, i must say it has been disappointing. Despite a confirmed double bottoms with a strong close above the previous resistance, it fell below this resistance with increasing volume as the price dwindled downwards. A decrease in price with increasing volume is definitely bearish. It has been a learning experience since i could not see definite any technical signs that would lead to such an outcome. Once it broke $0.98, i knew something was definitely wrong already. Now currently finding support at 50d EMA and the trendline but the drop from the point of breakout to the current price is already around 5% so a pull out will have to be made strictly according to the trading rules.



This left me pondering with the question and that is should i buy on dips when it's retrace back to the neckline or buy immediately on the breakout. The thing is that not all breakouts will dip back so if u dun buy on the breakouts, u will miss on riding the uptrend. So far, i observe that dips back to the neckline are quite common since due to the selling by traders or investors who got stuck on the previous resistance level. Well, missing out on riding a uptrend formed by a reversal chart pattern ain't easy especially when u know and u know that chart patterns have a high probability of forming a reversal pattern. But den, there will always be stocks to buy lah so miss one stock can always buy some other stock in the future :)

DMX-Tech : Spotted a breakout of an ascending triangle. By far one of the common patterns seen by me so far. Noted that the 50d EMA crosses above the 100d EMA a few days ago.



Currently looking at steel and property sectors. :)

Eating humble pie

I must say this weekend of mine was really fruitful i guess .. Stumble upon a few other blogs and articles in the papers and learn quite some stuff already. 1st of all i came upon a letter written to the Straits Times by Chua Soon Hock on 6 Jul 2007 in the forum. Should post here for my future reference.

HAVING made a living as a fund manager and trader for the past 25 years, I have seen the general investing public hurt numerous times when they invest aggressively near the peak of a bubble, whether in stocks or property.
Retail investors should adopt a very long-term horizon to benefit from the stock and property markets.

The starting point of major stock investment or purchasing a property for investment is important. Always try to start major investments during a recession, a global market crisis, a banking crisis or when nobody is interested in stocks, like during the Sars period.

The art of investing can be broken down into three quantitative variables of time, price and size. Investors should pick a ‘terrible’ environment/time when prices are distressed and commit big (but definitely without leverage).

The opposite is also true. In a very bullish, ‘good’ environment/time with high prices everywhere, investors should reduce the size of investments and ensure that whatever is outstanding is getting smaller and smaller.

Forget about wanting to liquidate all investments at the top of the market. It is an impossible task.

The basic idea is to invest aggressively (without leverage) near the bottom and get out when markets are euphoric, like now, even if they could go higher and carry on longer.

Global imbalances are currently at an extreme, making the environment ripe for a market crisis like Oct 19, 1987.

Markets (individual share and property) will go up and down over a long period of time, although the general stock index hides this truth as new, strong shares always replace old, declining shares over the years, giving you a misguided view that the index always heads much higher over time.

As Singapore markets become globalised with much foreign participation, Singaporeans would do well to be patient and courageous by investing near the bottom of the down cycle and selling to foreigners near the top of the up cycle and repeating this process.

If you have missed the huge bull market, that’s just too bad. Now is not the time to jump in aggressively as the risks are increasing exponentially.

Bull and bear markets always repeat themselves, just like summer and winter. Be very patient and do your homework.

You do not need to be a genius to make money in the markets. You need common sense, discipline and a clear long-term workable plan, without which the markets are like a hot fire and will burn fingers.

Chua Soon Hock

There has been a lot of news recently in the papers regarding stocks. Tink one or two days ago, an article was written in the New Paper regarding a uncle whom i tink is a retiree who plonked in $20000 into stocks and he has zlich idea on wat is going on in the market. He buy based on discussion with his frens and newspapers report. I been talking with my dad recently regarding the market and consensus is that literally everyone be it uncles or aunties know that the market is really way overbought at this moment but still $$ are plonked into the market. Reminds me of how the last phase of the bull market is described and that everyone in the public is vested. Greed is all around in the market be it in stocks or property sector. Perhaps one last piece of reli solid advice for me and that will be :

Be greedy where there is fear and be fearful when there is greed.

Perhaps at this moment, i am too being slowly consumed by greed. Can't reli help it when u see tat the stuff u been learning reli works in the market. Well, maybe it is a good ting that i can't be vested since i will only have funds after august. Hopefully, the bear market will start den but den i am gona graduate in 2 years time !! Later no job how sia ?? :-/


The second thing was that i stumbled upon another trader's blog at rallyartist.blogspot.com. It's reli a great blog since i learn abt how the BBs can make $$ from the market. Very interesting indeed. Haha ..

But the most important thing was his observation on the STI. He looked at the major trend and realised that even trendlines from a few years before are affecting the prices now since at this stage, prices repeatedly failed to break the trendline formed from a few years ago and that is very significant. There is reli nothing rocket science abt this cos it is just the drawing of trendlines but nonetheless it is someting to watch out for and maybe it's time for me to get the 10 years stocks data :) Just gota be as objective as i can and not let emotions decide my decisions.

Back onto the indices, today STI tested 3672 and failed to break through this crucial resistance, closing with a nearly shaven black candle with a high volume. From a rising bearish wedge to a probable head and shoulders, i wonder what can be nxt ? But as for now, it ain't rosy news. Dow is going to test the crucial resistance of 16383 soon and we shall see how it turns out bah. UOB Sesdaq made a new high today. For as long as i remember, penny stocks has been hogging the top volume list. That reminds me of blues chips and penny stocks take on rotational plays which is someting i learned abt and from now i will oso monitor the UOB Sesdaq too ! :)

Another take on the STI

A very bearish possible Head and Shoulders forming in STI.

Markets showing weakness

Now i guess we are in the phase of rebounding from the correction. The problem is this rebound seems to be weak. Looking at Dow Jones, a higher price today reached yielded a low volume which is a sign of bearishness. For the STI, after rebounding from a morning doji star, it failed to penetrate the previous trendline and it close with the same price with a high volume.





I noticed that the construction stocks i been monitoring are showing weakness. Been noticing Yongnam, Lian Beng and CSC which have given me the greatest gain since a few weeks ago, i spotted all 3 forming a bullish reversal pattern. Spotted dark cloud covers and a doji for them today. Not sure whether it is due to the indices. Maybe if the indices can recover, they will cheong up but not that sure cos i never experience this kind of situation b4.

OSIM appear on my radar too. Today got a surge up with a high volume. Haha, not that sure why but dun have to noe la. Now trading at near 0.7 from a high of 2.1. I will carry on monitoring it. :)

Stockbroking house ?

Dunno whether my eyes playing trick on me or what, i saw 2 days ago that UOB-KayH, Kim Eng and GK Goh broke their recent resistance with high volume. Tot it was too much of a coincidence so din bother much. Current situation is both 3 made new highs. Anyway these 3 stocks are stockbroking houses in SG or is it what how they call it ? Shrugs* .. Should have notice it earlier man .. Post this to remind myself in case the same thing crops up again.