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 !