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: