Roller-coaster week

It's been a roller-coaster week. From the short-lived china stocks rally to a sudden fall in the index. Den i saw the Straits Times Index affected by the Hang Seng Index and the next day, STI seems to be unaffected by HSI again.

Dow Jones has tested near the level of 14118 thrice already and a close above this level with high volume will be very significant.

Dow Jones Industrial Average Chart:


I added in the Hang Seng index cos it seems that the movement of it will affect the movement of STI too. Currently it seems to be supported on the previous upside gap.

Hang Seng Index Chart:


The Straits Times Index seems to be resisted by a resistive trendline that was drawn dating back to June this year. Currently, as what i mentioned in the previous post, the tweezer bottoms combined with the upside gap is proving to be a strong level of support. We can observed that the RSI seems to be resisted by a horizontal line that i drawn for many times already. The main things to watch out for is a close above 3858 which will indicate a new high and a break of the resistive trendline. This close should be accompanied by high volume since in technical analysis, any increasing price or index action should be accompanied by increasing volume. And the last thing to watch out for is for the RSI to break the horizontal resistance level.

One should be cautious in a market like this since we are nearing the peak of a bull market. I been seeing a lot of bearish divergences in the technical indicators for the various indices. We will never know exactly when the bear market will hit upon us. My fren told me recently that he overheard a student trading stocks while attending tutorials in school and that he overheard quite a lot of students are trading too. One of the signs of a overheated market when everyone who dun trade in stocks starts to trade stocks and that's when we see all the uncles and aunties with students speculating in the market though i'm a student too :) But speculation in the market has not reach the previous peak level as indicated by the strong interest in penny stocks previously so maybe there's still some way to go.

Straits Times Index Chart: