Missed out on formation on the STI

Yup, I realized there is a reverse head and shoulders formation forming for the Straits Times Index while browsing at other blogs. I have marked out the shoulders and heads with the arrows. However, do bear in mind that it still have not break out from the trendline yet.

Straits Times Index:

Back from a long respite

I took a break from blogging due to some personal reasons and besides I'm in midst of my examinations with another week to go. It's been a really long time since I posted anything. Guess I needed a break to consolidate my thoughts and to plan for the future with a longer time frame.

There has been a lot of interesting movements in the charts. I must admit that this period is a very hard time to do any trading as one is prone to whipsaws. 12800 was the crucial level for the Dow Jones. After it broke the 12800 resistance with a shaven white candlestick and coupled with heavy volume, it seem poised for a strong run upwards. Alas, it fell back below the 12800 and a whipsaw happened. And the strange thing that happened after this was that it tested the 12800 successfully with a hammer. Thus it is not an easy time now.

So what do I see now for the Dow Jones ? My opinion is that the trend up is weak given the declining volume. Besides that, there is a bearish divergence on the MACD histogram and there seems to be some divergence too on the RSI though I did not label it. The nearest resistance would be the 200 DMA.

On a side note, the chart seems to display a valid confirmed double bottoms formation that has breakout successfully. I do notice this formation is rather prone to failure and whipsaws and this is what is happening now. Let's just observe to see how DJIA test the 200 DMA.

During my break, I went to take a look at the DJIA past history spanning the past one to two decades. A fall from the peak of around 14000 to 11600 seems to be a lot. But compared to the past history, this fall seems to be only a small blip on the chart. Currently, it has only decline 24% from the peak. Fundamentally, we may be in a bear market due to the subprime issue which cannot be solved within a few months. But technically, the market is not reflecting it with such a short decline of 24% only for the DJIA and nowhere we have seen the signs of a bear market. I would prefer to label it as a transition market. I do have my nagging fear that the next selling wave is coming soon. Well, what I am saying is just my speculation and I can be wrong :)

Dow Jones Industrial Average:


There is something interesting on the chart of the Straits Times Index. These days, I placed less emphasis on the STI now. The 3 indicators are showing 4 bearish divergences signals and these signals are of the strongest kind since the index made a new high but yet all 3 indicators showed a new low. So far in the all charting I did, I have never encountered such a situation before. Well, it looks nice on the chart though :) Will these 4 bearish divergences signal predict the next selling wave ? It can only tell us the probability of the next wave is rather high but it does not indicate when will this wave arrives. Let's see whether these bearish divergences will work well !

Straits Times Index:

Weekend review for DJIA and STI

This coming week will be a pivotal week for the Dow Jones as it is very near to a major resistance level. Such major resistance or support level offers a good reward to risk ratios for taking up positions. Major resistance level for the Dow Jones is around 12760 and volume has been declining for this current uptrend. Another bonus is that the A/D line and the MACD histograms are showing divergences. I will be watching the 12760 level closely to be tested successfully as a resistance level.

Anyway, i drew the vertical lines to show the divergences in the indicators more clearly. It can be seen that as price made a higher level. these indicators did not manage to breach their highs.

Dow Jones Industrial Average:


For the Straits Times Index, it is not converging well with the Dow Jones. It broke through it's prior resistance level though it seems to be done with declining volume. Currently there are no divergences in the STI and there is a continuation gap acting as a support at around 3064. My opinion on the STI is rather unclear now though.

Straits Times Index:

Signs of healthy retracement

Three days of black candlestick coupled with declining volume and one day of white candlestick with heavy volume is a technical sign of a healthy retracement. It will be prudent to keep a lookout once the Dow Jones is near major resistance which should be happening very soon.

Dow Jones Industrial Average: