Moving nowhere for a while

The market seems to have establish some kind of support level as of now. For the Dow Jones, basically it tested the level of around 12740 twice and this level will act as the support for now. It closed with a rally on the latest closing with significant volume and that is good.

Dow Jones Industrial Average:


For the Straits Times Index, there was a upside gap 3 closings ago and this gap was tested sucessfully in the sense that it did not close below the gap and dat is bullish. One thing that puzzle me was that though DJIA rallied up on the latest closing, STI failed to close up higher. But as of now, STI has established a support level with the tested upside gap.

Straits Times Index:


In my humble opinion, i reckon selling pressure or the momentum have eased off already. STI fails to move up cos there is no buying pressure as the sentiment is still mixed. So what can change the sentiment of the market and that is, to convince people to be buyers again ? That will depend on the outcome of the next Fed meeting which will be coming soon in Dec. That outcome will be reflected in the charts by the index moving north and that is if the Fed cut their rates. Hopefully, if they cut their rates, buying momentum will resume and i can start to ride the trend again.

Another formation failure

Bio-treat formed a confirmed double tops and it should be going down south. But today it rallied up and broke it's previous support line. Another stark reminder of formations do fail and one should have a cut loss principle in place. There is much more to technical analysis den just formations.

Bio Treat:

STI forming a channel resistance breakout

Actually the above title is not surprising. Like what i mentioned in my previous posts, if Dow Jones fails to break it's channel resistance, there is no way STI will break theirs. So DJIA has broke out of it's channel resistance so thus, it is only natural for STI to broke out of their channel resistance.

Today's closing was quite good. Opening was by the retailers since STI increase quite significantly at the opening and only increase slightly towards the end of the day. Volume done was quite significant though not that heavy. Whether this will translate to the next bull run, i am not sure though the breakout of the channel resistance is quite a piece of good news. Next technical signal for uptrend of the index will be to look out for a higher high and a higher low to be formed before i will go long.

My opinion is that since all bad news have been released and has been discounted in the charts, this shld be the end of the correction unless more new bad news is being released. However, time and time again, opinions can be wrong and the market is always right so i will just follow the market. It is almost impossible to try to catch the bottom so i am in no hurry to catch the bottom. I will be keeping my fingers crossed. We shall see whether a higher high and a higher low will be formed in the next 2 weeks.

Straits Times Index:

Additional opinion on the Dow Jones

I took another look at the weekly chart of the Dow Jones Industrial Average today again. The weekly chart is more important den the daily chart technically. It seems to me that there is a chance that this correction may be over.

Dow Jones seems to be supported on the previous resistance now. On the latest closing, it tested this previous resistance turn support level with a hammer like candlestick so i am slightly more bullish now. Let's see whether this support will hold.

Dow Jones Industrial Average Weekly:

Another likely technical rebound for STI

The closing on Friday for the Dow Jones was interesting to some extent. There were 2 important technical factors that can be gleamed from the chart. The first would be that DJIA form a breakout of the channel resistance. DJIA has been trending in this downward channel for the past month and a breakout of the channel resistance seems to be a piece of bullish news.

However, if one takes another look at the volume, u can see that the volume was extremely light. For this closing alone, volume does not confirms index action thus the rally was not a 'true' rally.

If we looked at the previous drop in Aug, we can see that there was a hammer formed with an extremely long tail. I browsed through the CNA forum and some of them shared that on that day itself, there was panic selling so the index dip til a very low level. The funds took advantage of this and decides to load in at a cheap price and that explains the very long tail and the heavy volume. So right now, i guess this is not happening. I am not suggesting that history will repeat itself but if this happens again, it can serve as another sign that a bottom has been reached.

Since the volume was very weak for the latest closing, i will wait for another closing to be sure.

Dow Jones Industrial Average:


I think there is no doubt that STI will rally on monday. That is because DJIA rallied on friday albeit with extremely light volume thus STI will follow the DJIA. The threads in the CNA forum are always a good indicator to gauge the market sentiment. I noticed that the market sentiment for the retailers are bullish thus the rally on monday for the STI will be led by the retailers on the opening. STI may break it's channel resistance too on Mon. Whether the funds will start to buy in, i guess we gotta observe further.

Straits Times Index:


My CFD account is finally ready and i can short counters now but it may be too late. The next best opportunity will be that DJIA fails to hold it's previous support level in Aug. This will cause the STI to break it's support of 61.8% fibbonacci retracement level. Once a index or counter break this retracement level, there is a high probability that it will do a 100% retracement. But i think that this is not likely to happen. It seems to me that all the bad news are being released already and have been discounted in the index so i dun think the chances of this happening will be great. Monday will tell us whether the breakout of the channel resistance was valid. If it is not valid, both DJIA and STI may tank and this may be a good chance to short.

Bio Treat formed a double tops on Friday and it was confirmed with a gap down and a shaven black candlestick. I think it should decline even more in subsequent closings but i guess it will take quite some time.

Bio Treat:

Downtrend of the market continues

It is noted that there were 5 attempts for the Dow Jones to break the current downtrend channel resistance but all attempts were futile. The downtrend is still continuing. DJIA is going to reach a pivotal point soon where it will test it's previous support level on 16th Aug. Den we shall see whether DJIA will rebound off this level.

I think i kind of given up hope on technical indicators. Or rather, maybe they dun work well for this situation. There were positive divergences signs on the technical indicators i used. A/D line is showing bullish divergence in the long term and RSI refuse to head south despite the drop in index action. But i have been seeing this for quite some time already but the index still refuse to head north. Now we have the MACD lines piercing the previous support level and this implies selling momentum is still going on.

Dow Jones Industrial Average:


The chart of the Straits Times Index mirrors the DJIA. If DJIA fails to break it's channel resistance, u can see STI has no chance of breaking it's own channel resistance too. Currently it is supported on the 61.8% fibbonacci retracement. I drew the retracement wrongly but the level of the lines for the fibbonacci retracement levels are still correct. If it falls below 61.8%, it is likely STI will retrace all the way. It is noted that the RSI is way too oversold already but RSI can remained well oversold in a trending market as it does not work well in a trending market.

Straits Times Index:


So my conclusion is the downtrend is still continuing. All depends on DJIA. Currently, it can't even break it's channel resistance so i reckon the bull is still sleeping in the market and hiding somewhere.

I decided to review the 2 counters that i posted last week.

Bio-treat did not took off as expected since the market sentiment is still bearish. Now it is back at it's previous support level.

Bio-Treat:


Asia-env is showing a lot of strength. Everytime it tries to head south, there will be buying coming in and this can be seen in the tails being formed in the numerous candlesticks. Notice how it can rally up despite the current bearish market sentiment. Price action confirms all 3 bullish divergences in technical indicators.

Asia-Env:


AdvSCT formed a rising bearish wedge and it was confirmed when it broke the support trendline. I tot the chart is quite nice so i gonna put it up. After all, it is not everyday that i get see a wedge formation.

AdvSCT:


One of the gurus in the channelnewsasia rallyartist's thread shared with us a great insight into reits. I am gonna just post it below.

something to share about investing in reits. reits is a long term investment instructment. as the price get rammed down, the yield becomes more attractive. in STI market, the average yield is 5% for reits, which is pretty much better than CPF special account interest rate and of course FD rate. note long term i mean time frame of at least 10years. in general reits are defensive stocks as they are backed by the phsyical asset they own. the "correct" way of investing in reits is buy a portion first, get the dividends and reinvest back the dividend to buy more of the reits at lower price. STI market has been very nice to reits investors as many just treat reits like normal stock, play it up and play it down and this has given reits investor always the opporuntiy to buy at lower price. average down on reits is nothing wrong.

as you compared the current price of reits now and perhaps 6mths ago, 6mths ago, it was like only a handful of them are giving a yield of at least 5%, perhaps like 40% of the total reits only. at current price, it is like 70% - 80% of the reits now are able to fetch you at least 5% in term of yield.

some ask what to do in stock market when bear market starts, if you are vested in reits, those good one, in bear market you will be still getting dividends. this is the good thing as compared to normal stocks whereby come bad times, companies no earning, where have dividend for you; exception of defensive stocks like sph.

similarly for funds, come bad times, they will be vested in defensive stocks with good dividends so that they have something to give to their clients.

i suppose many need to tune their mindset to "real" investment in order to survive a bear market if it really comes. in bear market, even you holding lot of cash also no use, put in the banks, what type of rate you can get ? might as well dump into defensive stocks and get the better dividends as compared to putting in bank for that peanut interest.

i also need to stress is that for reits, price appreciation is not a primary factor but rather the dividend yield is.

I opened my CFD account today and i am ready to short soon. But in view of my impending exams, think i wun be exercising this right so soon. Gotta concentrate on my exams !

Oscillating like a wave

Dow Jones rebounded off it's channel resistance for the latest closing. The weak rally on friday failed to breach the channel resistance line. Furthermore, it tested the 200d MA but failed to close above it. Now i guess Dow Jones will rebound off it's channel support line in a few days time but as of now, it is still quite far away from the channel support so Dow should decline further in the next few days.

Dow Jones Industrial Average:


As what i mentioned in my last few posts, the chart of the Straits Times Index look almost like the Dow Jones, except that it seems to be lagging a bit. So if Dow Jones rebounded off it's channel resistance, chances are that STI will decline in the next few days until it touches the channel support. As of now, we can see from the chart that the STI has rebounded off it's channel resistance.

Straits Times Index:



It's a good time to be go short indeed. I notice most of the china stocks have breach their support and are falling like there is no tomorrow. I guess it's time for me to enquire more about CFDs and open an account to take advantage of the situation.

End of technical rebound

Dow Jones bounced off it's channel resistance yesterday night. This means that the rebound is only a technical rebound and not the start of a bull run. Next possible action is that the Dow will head back towards the channel support. Since Dow closed badly, i believe STI should also rebound off it's channel resistance today.

It feel almost eerie that the simple concept of trendlines work so well at times. I drew the blue line connecting the previous 2 tops of this current downtrend. It's such a strange thing that the Dow Jone rebounded off this line after it touches it as if that Uncle Dow knows that it must rebound off this line dat i have drawn :p

Dow Jones Industrial Average:

Technical rebound has arrived

I wanted to post yesterday night but i had problems putting up the charts with Blogger yet again so i din post. But i guess it was good in some ways as i can blog about the technical rebound for the latest closing of the Dow Jones.

The Dow Jones rallied strongly last time with by rebounding off it's channel support with a long white shaven candlestick with heavy volume. The technical rebound which i have been expecting has arrived finally. The technical indicators have already suggested that a rebound will take place soon since the MACD histograms and lines have touched the prior levels and the RSI seems to be showing bullish divergence as it has been trending sideways while the index suffered a huge drop.

Dow Jones Industrial Average:


For the Straits Times Index, it should be supported at it's current level due to the confluence of the 200d MA and the fibbonacci retracement level of 50%. These are some of the strongest supports that are used in technical analysis. Furthermore, the MACD histogram have now touched the prior correction level.

Straits Times Index:


Even though the technical rebound is here, this may not spell the end of the correction. Both the Dow Jones and the STI may rebound off their channel resistance so we gotta see what will happen subsequently. Only a higher high and a higher low in index action can confirm that a uptrend is back in place.

Currently i am looking at a few counters. These are asia env and bio treat. These counters are not likely to rally up a lot since they are not in play. What attracts me is that despite the 3 dowm gaps that the STI has suffered for the past few days, these counters dun seem to display a gap down and is still maintaining a sideway trend. Furthermore, they are showing bullish divergences with their technical indicators and are now both supported by trendlines or their previous support level.

Asia Env:


Bio Treat:

Uncle Dow is falling down

The last friday closing for the Dow Jones took me by surprise. Before that, there was a hammer candlestick formed on the trendline and the 200d MA. The hammer tested both of these and it managed to close above it so technically speaking, i believe that was the bottom of the correction. However, the Dow Jones closed with a huge black candlestick and it closed below the 200d MA. The 200d MA, as i said in my previous post is an very important moving average line as it determines whether the major trend of the market is up or down. The last time, it dip below the 200d MA was in Nov 2005 and that was like 2 years ago.

The next support level for the Dow Jones should be around 13800 and that was the level which the previous correction at around 22nd of Oct had fallen to. Short-term wise, we should see a technical rebound in the next few days but bear in mind, that the market is still downtrending. It can be seen from the blue line that the Dow Jones is now forming a downtrending channel and it is right at the support level or the lower trendline that of the channel. Thus the Dow Jones should bounce off this trendline going by the chart.

RSI is showing bullish divergence. I have drawn the lowest level of which the MACD lines have fallen to in the previous correction in Aug as a gauge to judge when will this correction ends. If the MACD line touches around this level, it can act as a technical signal that the correction should be ending soon. For the MACD histogram, i have also done the same thing. If the technical indicators are conflicting each other, i will just look at the index action and volume since all technical indicators are derived from these two factors.

Dow Jones Industrial Average:


Nothing much for the Straits Times Index. Basically, it follows the Dow Jones closely. As we all know now, the Dow Jones close badly on Friday so i doubt when we open later, we will rebound back.

Currently, STI seems to be supported on the 100d EMA and it closed with a gap down. STI is also showing RSI bullish divergence. I also done the same thing for the MACD lines and histogram as i did for the Dow Jones chart. I noticed that the charts for the STI and the Dow Jones are very similar except the STI seems to be lagging by the Dow Jones.

Straits Times Index:


Meiban Gp had a breakout with relatively heavy volume. It opened with no gap down despite of the fact that STI and a whole lot of other counters opened with a gap down. What was impressive was that near the closing, a married deal of 870 lots was done and that pushes up the price. Furthermore, there was no heavy selling towards the closing. I actually think that this is a potential counter but given the current bearish market sentiment now, i will be giving it a miss. Besides, my exams is drawing near and i should be looking at my engineering notes instead of the charts :)

Meiban Gp:

STI saved by a holiday ?

The Straits Times Index was indeed saved by the Deepavali holiday. Dow Jones closed with a huge black candlestick. Given the volatility and the sentiment of the local market now, STI would not be spared from a drop if it had open on holiday.

Looking at the Dow Jones, the long black candlestick seems to be supported on a trendline which was drawn from around one year plus ago and one which has been tested thrice so far. Close to the trendline, there is a red line beneath it which is the 200d MA. The 200d MA which acts as a strong support or resistance, is a gauge on whether the market is a major bear market or a bull market. Any close beneath it will signify that the market is in a major or at least a intermediate bear sentiment. Furthemore, we can see that a higher high and a higher low has been formed and this means that currently, Dow Jones is in a short-term bear market.

In my opinion, due to the confluence of these technical factors, i.e the support of the trendline and the 200d MA which are close to one another, Dow Jones will be supported around the 13200 region. Any break below this will be disastrous. I dun have the volume displayed in ChartNexus for the past 2 closings so i'm unable to tell whether this drop was significant or not.

Dow Jones Industrial Average:


For the Straits Times Index, i said long ago that there was a possibility that the index may retrace back to do a double bottoms. I guess it is happening now though it was faster den i expected. Currently, STI is supported on the 50d EMA and RSI has hit it's prior correction oversold level so STI should hold around the level of around 3630. Given the current market sentiment now, it is hard to gauge whether this support will hold around 3630 since STI is now driven mainly by the Dow Jones and the HSI. This situation now for STI is more of a "see how it goes before taking any action" kind of situation.

Straits Times Index:


On a personal note, i dun have a good feeling about the market sentiment now. It is like the market is slowly dying instead of dying a sudden death as in the case of a major correction. Counters are slowly dipping back to their previous support levels. I just have this nagging feeling that something big is gonna happen soon.

There were some interesting reads on the CNA rallyartist thread. One of the gurus, ccloh noted something is happening for the counters Wilmar, IndoArgi and GoldenAgri which are linked together. These 3 stocks are in play now and they often rally together. Below as what he observed:

"suspecting these ang mos are trying to swtich their fund out from defensive counters temporary to help pump up the price for those 3 counters. why i suspect that. as the name mentioned defensive stocks, their price range won't move much even fund are selling. once they pump up the price of the 3 of them, sell with a gain, they can always come back to buy back those defensive stocks practically at not much the price they are being sold. why they need to do that ? the ang mos are having their backyard caught in the fire with the subprime, they dont have excess fund to pump in and obviously they want to get some "profit" from here to fight the fire back at home."

I guess this is something no amount of charting can tell u about. This is done by using 'tester' lots. This thread has been an interesting and an informative read for me and i have learn stuff through it :)

OSIM creeping up slowly

I spotted this counter in my watchlist. It has been closing at it's high for the past 2 days with volume picking up. And furthermore, it has been able to close strongly despite the drop in STI today.

Osim:

Volume not confirming STI's drop

A basic tenet of technical analysis is that volume must confirm price action. If the price goes up, the volume must increase otherwise, chances are that this increase in price is likely to be short-lived and vice versa. The drop in the Straits Times Index was not accompanied by heavy volume. If it was accompanied by heavy volume, it is likely to be panic selling.

We can see that STI has landed at the level of around 3630 and that was the level of the previous drop. Thus this drop is now currently acting as a support for STI. Furthermore, the close of STI is at the 50d EMA so technically speaking, i believe STI will not drop further. The closing of the Dow Jones later must also be taken in consideration since STI is following the Dow Jones closely. In my previous post, i believe Dow Jones will not drop further as it is now supported on the 100d EMA. Thus my outlook for the market is neutral now.

For the counters, i noticed there were a lot of black candlesticks formed but their volume was not heavy so it's ok. Another interesting thing was that ChinaMilk seems to be defying the trend by gaping up and closing higher but it does not appeal to me on the chart.

Straits Times Index:

Weekend review of stock market

For the latest closing, we see the Dow Jones forming a huge black candlestick with heavy volume and that is bearish. To be honest, from the technical analysis point of view, it seems to me that there was no technical signs that the Dow Jones is going to suffer such a huge drop. There was no bearish divergence or any breaks in trendline. The only consolation was that since the Straits Times Index takes it's sentiment for the opening from the Dow Jones, we can always use the performance of the Dow Jones to roughly gauge the performance of the STI.

Dow Jones was supported by the 100d EMA on the previous dip. This time round, it has closed slightly above the 100d EMA while testing it. There is a chance that it will be supported on the 100d EMA this time round.

Dow Jones Industrial Average:


Straits Times Index suffered a drop and open on a gap down due to the poor closing of the Dow Jones. This is a sign that the sentiment of the STI is still quite linked to the Dow Jones. STI was supported on the 50d EMA on the previous drop so there is a chance that the 50d EMA may act as a support. But there is still a small distance between the closing and the 50d EMA. Another possibility is that the STI may form a double bottoms.

Straits Times Index:


Last friday was a good day to filter out potential stocks. This is because both the STI and the Dow Jones perform badly that day. If we can find counters that defy the index and still move upwards, those counters are very bullish indeed since they can ignore the sentiment of the market. Some of the counters i spotted includes Lian Beng, AdvSCT and Straits Asia and CH offshore.

Currently i am looking at CH offshore. I was tempted to buy on friday but i decided to be disciplined and wait til near the closing to see if a breakout above $1.01 was confirmed. $1.01 is a strong resistance level and has been tested numerous times but all attempts failed to close above it. A close above $1.01 will be very bullish.

CH offshore:

Uptrend continues

The outcome of the Fed meeting was that the interest rate was cut. This resulted in the Dow Jones heading north by quite a significant amount. But to my surprise, STI did not gap up and closed with a black candlestick. Perhaps, the market had factored in the cut already so it did not went up strongly.

Some charts and their price action caught my attention today. Lian Beng was in the top volume list throughout and it broke a trendline with significant volume. Furthermore, there was another bullish technical signal and that appeared in the form of the MACD lines having a crossover. The chart reminds me of China Hong though since both charts are very similar.

Lian Beng:


CH offshore tested the $1.01 resistance today and failed to close above it. The $1.01 is a strong resistance line which has been tested a lot of times but it failed to close above this. Going by the short-term channel, it broke above the channel with very high volume and that is bullish. Furthermore, there is a MACD line crossover and that is bullish too. I am now waiting for a close above it with high volume.

CH offshore: