in the next few days, expect some sideways action in the market. looking at the STI, it is possible that it may move back up to 2330, to where the last support turned resistance was. alternatively, watch out for tomorrow's trading action. a bearish move would signal a further downwards move to levels of about back to 2220. currently STI on my chart hit its 20 EMA, and closed down.
if it goes red, go for it.
as perfect as it may seem, 2210 was really the support level i have pointed out. intraday levels was established. STI closed at 2226 today. we can expect 2210 to be tested again tomorrow, and it should head for the next support level once this level is broken.
enjoy :)
today was a perfect example of exhaustion. initial gap up in the STI triggered intra day selling, which followed by a flurry of buying. from then on, STI began tumbling to close about 17 points below its opening. what does this mean?
the resistance was perfectly establish, intraday, at around 2303, a little short of my initial estimates of 2310. nonetheless, we can expect to see a further down move on the STI in the coming days. this is starting to get purely exciting. of course, there is always a possibility of the market going back up. just keep that trigger on the short side and look for potential selling signals.
july will be a trying month for equities. we may see a further retracement from the peak of 2400 not only to 2200, but even lower. that will be established later.
now why is this so? like i've mentioned before, the rally cannot last. when the fundamentals of the companies are still weak and posting losses, it is not possible for STI to keep charging upwards. now we will see the equities market moving back to value.
based on the daily chart of STI with a 20 day bollinger band applied, the support was established prematurely at 2237. STI closed last friday around about 2270, which gives us a handsome profit of at least 130 points on the STI on the short side. those who were apt to notice the support levels like i've mentioned would have taken at most about 170 points on the short side from 2400. but where do we go from here?
firstly, the 27 day EMA is definitely going flat, possibly indicating a turnaround. we need to verify the downtrend when the 10 day EMA cuts it. STI may hover around this values for the days to come. however, if STI reacts correctly, we can see another day or two of green. possibly look out for exhaustion on the second day, a 2 day rise followed by gapping up and closing down. that should be at levels of around 2310 or so. from there we would need to establish the next targeted support level through the bollinger bands, possibly testing the 2237 support again. we would need the 20 day EMA to turn to establish out next target.
in the mean time, for longer term investors, it sure is a good time to sweep the floor for some bargains. of course, bit by bit :)
first resistance to watch out for STI would be around 2200. just to take note, 10EMA cutting down 20EMA.
bolinger band is a good tool to use to determine correction points in a trending market. however, i prefer using envelopes over bolinger bands as bolinger bands tends to stretch once the market gets volatile.
anyways, the market today closed above its opening. a sign to watch out. this may slow down the decline or even reverse it. it is anyone's guess. but in my opinion, the reason for strong buying pressure today would be due to eager buyers buying at a weak support at 2265, and short term traders covering their short positions. we may not see another super slide unless something critical hits the financial scene. however, if the market still wavers, then some slight medium term profit taking may set it, coupled with short sellers driving the market down to further its correction.
just a note, the equity market as seen great gains for the past few months, and the correction is highly likely. however, with the underlying economy still being bruised, share prices will most likely readjust itself back to its underlying value.
a few signs that i look for from the STI graph.
1) round top signalling slowing of upwards momentum.
2) failure to break 2420 resistance level.
3) breaking of the 2330 support level, and subsequently, breaking on the 10 day EMA.
some patterns i observed on the STI. there is always a retracement just above the 61.8% mark on the fibonacci retracement levels. this applies to the upwards move on 9 march, 1 april, 30 april, and 18 may. currently, the STI is hovering at a critical level where it always retraces to. what do we have to look out for?
firstly, tomorrow's trading bias. a further down move below opening and a move to the 61.8% retracement line would signal a short. this would also mean that it would be a short if the 20 day EMA is broken.
levels to look out for: the lowest that i set would be around 2100 (the support level on 18 may), 2190 to 2200 is a possible support level. keep a watch on how STI behaves.
i don't usually do fundamental analysis but i guess its good to analyse the underlying factors at what drives the markets once in a while. i'll be giving my opinions on the happenings around the world, and the possible outcome in the near future. for those who are unsure about investment opportunities, maybe it would be worth a read.
1) monetary policy in the US
central bank is increasing money supply, eventually, prices are going to increase due to inflation. however, the effects of inflation are not yet seen, or are not that drastic as of yet. inflation may be imminent, if the monetary policy keeps up.
2) shift of government investments
other governments around the world are aware of this situation and are pulling part of their investments out of the US treasury bonds. this is because the US dollar value has slid more than 11% compared to other currencies. bonds are essentially affected by currency values. as a result, they will have to invest in other instruments to ensure that part of their US investments in the US treasury bonds are hedged against the currency slide. instruments we are looking at are mainly commodities.
3) why commodities
commodities are priced in US dollar, and if inflation does set in, the value of the US dollar is going to slide further. as a result, the prices of commodities has to go up, hence a good hedging tool. besides, countries like china (a rising power) will want to acquire resources that they control so that they can be self reliant. with their recent purchase attempts, it shows that china has been strategically investing in its future growth.
4) where is the potential
the potential is definitely in commodities, as well as crude oil. the demand for oil will begin to increase once the economic crisis is over, and speculators are already pushing prices up bit by bit. i guess they are pretty much looking to push it up to $80 per barrell, and possibly $100. also, the potential also lies in asian economies, mainly hong kong, china, india, probably singapore.the money flow is now coming to the east asian region, so it is a good location for an investment.
there are still other factors that points to why we should look into these areas. definitely, when the recovery comes in around 4 years or so, the market leaders will definitely come from asia, and most likely, china.
for more investment opportunities, feel free to contact me :: es_mc2@hotmail.com
STI yesterday triggered a long signal with an upwards hammer on the 10 EMA. the positive close today finished a 3 day bullish candlestick pattern. other indicators such as RSI and stochastic confirms the upwards move. target still remains at 2480. other than that, just watch if the market starts to go crazy. nothing is 100% sure, except if it had already happened.
huge pullback on STI today as the market plunged over 60 points. currently, STI is at its 10 EMA and indicators are pointing down. lets do some analysis. current trend: uptrend because 10 EMA is still above 27 EMA (my own indication). from the past few weeks, STI has bounced up from 10 EMA up to the upper limit of the 20 EMA envelope, hence there is a possibility of the uptrend continuing and the STI to reach further up. alternatively, bearish engulfing could indicate a further downwards move, so be weary.
if a downside is to be seen, 2285 will be the mark. as for upside, hard to say, probably 2480. all depends on tomorrow's opening and how the market progresses within 10-20 minutes. that should give some direction.
just an indication when the S&P closes in the opposite direction of the DOW. yesterday S&P closed in the red while the DOW closed in the green. however, both closed below their respective opens. but with the S&P being a broader indicator of US stocks, we can roughly pick out some signs that may tell us something. further down move may be seen, contrary to my bullish stint on the STI.
just have to watch out as STI may be shaky on the upside on monday, and from tuesday onwards it should be clearer.
been awhile since i've posted any updates. as before, STI did break out from the wedge and is staying up. it has been on an upwards charge, bouncing off 10 EMA and back up again. from what i can see, next week should see a further upwards move if STI is able to maintain its momentum. another 100 points perhaps? my guess is 2480. it could be anybody's guess. let's just watch.
nothing else i can say except for go with the flow. if the market says up, we go up. we will have to wait for a possible retracement. possible. just watch for it.
