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: