sti and the dow

dow jones is at its resistance, with 2 days of high volume trading, slight spinning top double and indicators on negative ROC. expect the dow to move downwards tonight, and continue for the next week. 7100 is the initial level to look out for, followed by 6516 if the downtrend persists.

sti showed a spinning top pattern, at a crucial support/resistance level. no abnormalities in volume indicating consolidation, and i expect sti to carry on its move upwards if monday shows strong buying pressure. level to look out for is 1635, this is where sti is going if its going up.

just to point out that intraday volatility for indexes may give false trading signals. thus, it is prudent to widen your stop losses.

what will happen next?

as i have mentioned in my earlier post, the market seems to have some more room for a downwards move. this is the path of least resistance. right now upon analysing STI, it is clear that it is being driven down heavily on fundamentals, primarily the weakened banking stocks. and so what is next for the market?

investors would be please with the current market climate. right now, investors should be keeping high levels of cash and liquid assets, or safe yields. my suggestion would be a 1-2 year government bond just to get a higher return on your cash. banks do not offer much except for their timed deposits. 1-2 years? yup. isn't that a little too long? yup, i'll explain why later on.

now, speculators like me will expect further shorting opportunities after a slight technical rebound. STI is currently nearing its 52-week low and is exhibiting slight buying pressure. monday might see the continuation of the rebound up to 1570, depending on on how the market opens and reacts within the first hour of trading. high chance of it testing 1470 if the market gaps up and shows strong selling pressure.

now, what will happen once peace and order has been restored? the market will go into a consolidation phase, just like the scene of a war movie where the dust settles. during this period, individuals are starting to gain confidence in the market. this would be led by bold investors who are ready with cash on hand to grab up bargains. the market will move sideways, probably in a channel.

you may ask, how come the prices still go down in an uptrending market? well, profit taking will set in and traders will lock in their profits once a targeted price has been reached. and to those of you who says technical analysis is bullshit, well think again. the market is made up of individuals who react based on history. like previous highs and lows.

once confidence in the market is fully restored, we can see another slow bull run to the next top, and an even further top when greed drives prices way beyond what they are supposed to be. like if i sell you an apple for $5 per apple.

where is the bottom?

lets hit some boring topics for the day.

i've been observing the market patterns these few days and the only conclusion i can get from it is that investors are in a state of confusion. from the looks of it, STI is heading downwards, and this is primarily due to the banking stocks such as DBS, OCBC and UOB. i could still remember a few months ago when someone told me, "hey, DBS is quite cheap now, only at 8 dollars plus, i think it may be good if i buy in some."

and my typical response was, "the end is not over, this isn't the real bottom."

people would ask me how i would know such an absurd fact. honestly, i am only speculating. that is my job. but if i were to give a rational presentation of my speculation, i would not make sense for a market recovery when most of the world's financial situation hasn't been solved yet.

i'm not an investor honestly. but i do look at the overall picture. i look at how the market operates. just like a doctor, i study the inner workings of the markets.

now, selling has set it. however, we have to cautiously tread this volatile market. the final wave, in my opinion, is now. but instead of a violent wave of selling, we are seeing a different last wave. this would be a slow but painful death. a high likelihood that this retracement will take the market back to the pre-bullish period of 2002/2003.

we'll wait awhile till DBS touches 6.25 to 6.50. currently, it is at 6.91.

this week's TA

i know its abit late but i didn't really have over the weekends to do my analysis. i just had too much fun :)

anyways something different this week, i'll be focusing on 2 indices which i trade on, STI and HSI.

today STI opened 50 points higher, but slowly declined as the trades goes on. last week's trading session saw great movements and volatility within the day, gapping up and down and ranging over 50 points on certain days. one thing to note, because of the recent turmoil in the financial markets, the indices tend to follow suit. thursday and friday saw a slight correction after the 3 day slump, thanks to the US Federal Reserves. good thing for me, this would hopefully give the index some momentum to carry on moving downwards.

looking at RSI, it shows a divergence, having a slight downwards slope at the end of the trading week (even though there was a huge correction), stochastics are moving out of the oversold regions after crossing signal and MACD can't really show me anything clear cut yet.

my opinion on the movement this week: if the index today doesn't manage to sustain a positive movement, the trading week may be bearish. looking at the divergence from RSI, the index doesn't seem to have the momentum for a bullish move, hence, expect the bear to come this week.

now for our favourite index: HSI. same thing as STI, the index opened higher than friday's close, but moved downwards as the trading session moved on. last week, the index had huge movements, its 5 day EMA moving further downwards from its 10 day EMA, but the correction on thursday and friday gave the index some momentum to carry its move downwards this week.

stochastics are moving out of the oversold regions, while RSI is slightly positive in terms of gradient. and again, MACD can't really tell me anything much right now as i can't relate them to the previous 2 indicators.

since today seems bearish for the index, and if it manages to stay in the red, the week's outlook may be bearish, continuing its momentum from last week's session.

well, that's all folks. i'm still abit sleepy, if anything don't make sense, please comment. thank you!

back bear back

finally back after a long reprieve. gosh school is such a boring place because of the assignments and tests. if there were no assignments nor tests, i'd definitely enjoy going to school.

lets look at some short term technical outlook for this week. the past week had seen the market being trampled on by the bear due to various economic and environmental reasons. what's in store for this week? we'll just have to wait and see. but before we wait, we shall analyse the market's current direction and project next week's movement. ready? lets go.

for the case of SGX, i doubt next week's picture would be a pretty one unless something happens along the way which may change its course of direction. current stochastics shows a negative picture, indicating further downward movements while RSI remains below the 40% mark. MACD is already almost cutting the signal line (or has it already had a piece of the cake?) and is showing that yes down is the way to go. a technical picture from the charts shows that a support of 5.50 is likely after friday's close of 5.95. this would all depend on tomorrow. a negative session might carry the momentum further downwards through the week.

next up, Capitaland. current indicators show that it would be a good to short. with stochastics cutting the signal line negatively and RSI levels looms just above the 20% mark, the prices are weak. MACD is painting a sell portrait while it starts to cut the signal line again. a 3.80 may be calling? we'll just have to wait and see. technical charts shows that it may enter a short term consolidation before carrying on its momentum. moving down is the most likely option for the prices after the near term consolidation but the already weak prices may get hit even harder.

HSI has been pretty powerful these few days with its huge movements into the red. RSI is showing a slight diversion, making the near term outlook harder to foresee. however, sticking to current indicators, the downtrend is already present. stochastics and MACD are showing a likelihood of carrying the index downwards for the week. the index may consolidate tomorrow, but a sustained open below 20,000 would indicate the rather obvious.

STI took a hard hit as most of the companies took a blow. moving down 3%-4% over the past week is a huge feat, making me wonder where it would fit in on monday. in terms of a technical picture, indicators show signs of a continued downtrend even if it opens above friday's close. support at 2,600? indeed it was supposed to be but friday's session brought it a tad prematurely. if the movement sustains below this support level, then we could see a continuation of the trend for the week or so.

well thats all for me, my eyes are dead with the lack of sleep. enjoy the market week ahead and have an eventful trading session!

technical analysis

time again for another round of analysis. this would serve as a continuation of last week's analysis. let's first look at SGX's performance.

the stock closed in on friday at 6.68, just as i thought it would. the week saw a downtrending trading session, from 6.92 down to 6.68. currently the market may show a sign of a temporary recovery as H1 earnings are going to be reported (even though the earnings may be below expectations, an slightly higher than what was negatively expected could trigger a hiccup).

as we can see from this stock, share prices have been on a steady decline without any stoppages for consolidation or a correction, hence, most people would expect a slight correction coming up soon. however, in my opinion, since the market is still relatively quite, the steady downtrend is just an indication of how weak and 'lifeless' the market is and as far as anticipating a correction, i'm not too sure.

currently stochastics are still hovering in the oversold regions, where the last 2 trading days pushed the stochastics above the signal line with a green trading session. now with this, i would refer to RSI readings, but at the moment, the momentum of the stock is still weak, and i would need a convincing move above the 30% or 50% mark spark a long signal. as far as the MACD goes, i can't really get a clear indication from the readings as of late. however, if upcoming trading sessions shows a positive divergence, then i better keep my eyes peeled for an upturn.

my verdict: next week looks rather uncertain. i'm not sure whether there would be an upwards correction of the prices, but from the looks of it, prices may continue to fall. here are 2 scenarios. first, if share prices presents a lower open, and ends the day in the red, then just be prepared for a steady downtrend. second, if prices open higher and ends the day in the green, then keep eyes peeled for a correction. however, in my opinion, if prices continue to fall, it may fall down to the 6.50 level, where it should nestle and find strong support.

Capitaland shocked me with a rebound over the last 3 days of the week, closing on friday at 5.79 from a low of 5.57 on tuesday. i guess my verdict on the stock fell short on wednesday when the share prices shot upwards. i believe that it was a much needed correction before prices can continue downwards.

as it stands, stochastics shot way above the signal line and has cut above the 50% mark, a potentially good long signal. however, i would wait for my RSI reading to cross above the 50% mark before going long (currently just hovering below the halfway mark). the positive divergence on the low closing of 27th june and 1st july may have sparked the 3 day uptrend during the week. however, looking at the current readings, a sustained move above the signal line may indicate further uptrending for days to come.

personally i am still rather bearish about this stock at the moment, but something tells me to shed the bear skin and put the bull horns on. so far i have arrived at a number of conclusions regarding this stock.

my verdict: currently, it is the end of the downtrend (for the moment) and i would advise others to wait till the dust cloud settles and a clear trend presents itself before jumping on the bandwagon. a higher open tomorrow with a close in the green may signal an upward move. if the prices were to move upwards, i'd probably give an estimate of about 0.30 to 0.40 depending on market sentiments. it may move up to its resistance at about 6.20 and may drop back down to 5.70 mark. and when this happen, try and watch out for a reverse HNS. if tomorrow's session presents a lower open and ends off in the red, then be cautious over the next couple of days to establish a clear direction. i believe that the 5.50 level is still open for testing if the momentum carries the stock downwards. as of now, i won't be surprised if the prices were to move up for the next couple of days.

that's all folks, has been a busy week so far. enjoy and have a good trading week.

quick update on stocks

ok before i got off for a 3-day retreat out in no man's land, i'll get going with an updated on my 2 favourite stocks.

SGX closed off this week in the red and has a consistent downtrend for the past 2 weeks. nothing much can be said at the point of time, but the only thing that can be said is that it is a good time to put the puts into action. follow the trend until it faces a reversal. currently, a near term reversal seems unlikely, and this coming week will be downward trending.

my best guess would be that by the end of this coming trade week, the prices may close near the 7.00 mark. investor strength is weak and confidence doesn't seem to be at a high. my call: long over puts, or go short over mother share (for risk loving junkies).

now with Capitaland, the same applies. nothing much can be said. however, a close below 5.80 may signal a further downtrend to come for the week. and from what we've seen so far, a near term reversal may not be coming in pretty soon. so we shall just follow the downtrend and ride it till it runs out of steam.

the trade week may see the prices drop down to the 5.50 mark, or below. my call: long over puts or short over mother share (again, for risk loving junkies).

i just want to clear the air of mystery over short-selling. the main reason why people are so averse to the idea of shorting stocks is because of the relatively short cover period as deemed by SGX. usually, the position must be covered by the end of the day, and if not covered within 3 working days, SGX will cover your position at 2 ticks higher. however, shorting is nothing but the reverse of any long position for an intra-day traders. i guess we as singaporeans are still risk averse and finds the idea of shorting a taboo. personally, i've made money from all my short positions.

anyways, cheers and have a good trade week!

outlook of this week's trade

both SGX and Capitaland didn't put up much of a show today, closing lower than the previous close. Capitaland dipped 3.1% to close at 6.35 while SGX dipped 0.2% to close at 8.02.

for Capitaland, 6.50 may prove to be quite a resistance that needs a great deal of strength just to sustain a breakout. the close up on last friday didn't have enough steam to carry the prices up, hence a fall of 3.1% is seen today. currently, there are no possible trend that can be seen except for a high chance of a retreat to support at 6.20, or a consolidation phase between 6.50 and 6.20.

SGX on the other hand seems to be very weak nowadays, with price difference between previous close and the days close not being too far apart. this is kind of rare to be seen from a somewhat volatile stock in my opinion. currently at the 8.02 levels, i feel that it would still linger around the 8.00 support levels. a breaking of support at this level would indicate further downside for the stock, however, nothing much can be said about how the prices may move in the weeks to come. traders who strongly believe that 8.00 is where strong support comes in may choose to buy, however, there are no signs of any upward trend at the moment.

and yet, i would say another bleak weak for the stocks today. i was thankful i didnt go long for Capitaland as my senses told me to hang on and read the telltale signs from today's close.

oh let it be when the upward trend comes, a gold bar would drop on my head, crude oil would gush out of my toilet when i press flush, and grains of rice starts pouring out of my shower head.

more technical analysis

at the close of this week's session, we see, just as i had expected, the two stocks to fall. first of all, lets take a look at SGX.

as a result of the weakening market conditions, SGX stocks continued its downtrend, breaking support levels on one of the days to close below the 8.00 mark. however, it managed a slight come back and ended of the week's session closing at 8.04. from this, we can see that 8.00 is a relatively strong resistance, and further consolidation around this mark may be seen for the week ahead.

next resistance is coming in at around 8.50 levels if the stock can break out of its consolidation. a few factors may be needed. one would be investor interest. currently we can see a low trade volume over the past week, with a peak at about 12 million shares traded during one of the days. a surge in trading volume, or to better put it, buying volume, would cause a significant mark up in share prices, and help to reverse the downward trend. this is at least till it reaches its 8.50 resistance, where i believe a more significant influence is required to push the prices upwards. secondly, we might need to have a strong sentiment across the board of investors. currently the STI has been fighting the bear for the past couple of trading days, and that SGX is somewhat lagging. However, i do believe that the somewhat bullish feel in the market may be short lived and i'd be cautious about going long at the moment, at least until the consolidation phase is over.

as for trend indicators, the RSI is showing a growing strength, and an upwards gradient. fast stochastics are eagerly cutting above the signal already. however, a sustained positive from the RSI and a confirmation from the slow stochastics would be what i need before going long on the stocks. one thing to also look at is trading volume. historically, surges have been accompanied with a spike in trading volume, about 17 million shares to be traded in a day to indicate a bullish movement in the prices.

eagerly bullish investors may want to keep a close eye on this stock so as to not miss the upward trend. for the bears, you might want to get the bull costumes ready.

next up, we look at Capitaland. the trading week saw the prices testing out its 6.20 resistance level but did not close below that. the few days before the end of the week saw the share prices climbing up, closing on friday above its 6.50 resistance at 6.55. i wouldn't say that the prices are going to continue its uptrend yet, because if 6.50 proves to be a resistance, consolidation may appear at this stage.

next resistance after 6.50 would come in at about 6.80. however, trading volume has been rather week with an average of about less than 10 million shares traded each day during the past week. the stock may not have enough momentum to carry it on upwards in my opinion. however, RSI and stochastics shows the contrary. both stochastics showing a positive cut in the signal line, and RSI is showing a positive gradient and creeping up slowly to the hovering 50% mark.

having retreat below its 50-day EMA, i would feel that the next week may be a good week for the stock. a clear indication of stochastics surging above the 20% mark would certainly indicate a buy signal, and a sustained open above 6.50 would make the week's trading session an interesting one.

in my opinion, a positive open in monday's trading session would indicate a buy signal for me. prices may surge up to the 6.80 mark during the week, but in order to have a convincing surge above that resistance level, an increase in trading volume might be needed, along with a positive investor sentiment with regards to the property, the stock, and the broad market. this is another stock the bulls may want to get their eyes on.

also, do keep up to date with the market happenings. with US likely to hit a recession (according to alan greenspan) and the moody sentiment of the local market, a slight uplift may not necessarily be a sustained one.

some technical analysis

focusing on SGX stocks this week, we see a relatively poor performance, dropping around about 6% to 7% since it opened on tuesday. looking at the 6-month and 3-month chart, the 10-day EMA line has barely cut the 20-day EMA downwards, and quite possibly cutting the 50-day EMA as well. on chart analysis, i can see that support level at 8.50 has been breached as the shares closed at 8.38. next support level would probably come at the 8.00 mark. very strong resistance can be seen at the 9.00 mark as the share prices tested this level on 3 separate occasions.

we can see that the RSI are just kissing the 50% mark, and haven't really made any significant movement downwards. coupled with fast and slow stochastic readings just cutting below the 20% mark, and a weakening MACD histogram, i would probably need a significant indication from my RSI to ring my bell.

relatively bullish and risk-adverse investors might want to wait till the downward trend sees its demise probably after testing the 8.00 support level. eagerly bullish traders might want to get a significant indication from stochastics and RSI. however, in my opinion, the share prices are basically lost and confused (side-trending) and would probably favour the risk-loving intra-day traders.

moving on to Capitaland, as with most of the other stocks this week, the volatile stock closed down about 7% since its open on tuesday. its 10-day EMA already showed a convincing downwards cutting of the 20-day EMA, and by the looks of it, would probably cut the 50-day EMA. this is a relatively good indication for all the bears out there. historically over the past couple of months we can see supports coming at around about 6.50 and 6.80, and resistance at 7.10. last week, it could not sustain a convincing move over its 6.80 resistance after moving down and testing the 6.50 support early this month and hence, has a high chance of testing its 6.20 support.

RSI levels are looming below the 50% mark, showing no direction at the moment, and coupled with fast and slow stochastics below the 20% mark, prices look bleak for this week. for followers of the MACD histogram, it just moved into negative territory, giving more indications that the 6.20 support may be coming.

bullish investors can sleep awhile longer as i cant really foresee any upward movement of this stock this coming week. as for traders, the current price is relatively close to its 6.20 support and my guess is that it might be consolidating around the current price for this coming week.

i guess that if sentiments were to play a huge part for the market next week, both stocks may see a short term upward rise. however, with the gloomy world news circulating nowadays, slowing GDP and all, i'd probably stay as bear.