Mimosa Trading Diary

As evident by the much fewer posts I have made lately, I have been very busy engaging in a project.

Contrary to the pessimists who have called for a market top for weeks, STI closed 1 point above the last significant high of 2,739 ( October 15 ). What is interesting is that one of my trading systems has shown a buy signal yesterday and the signal was triggered today:

SGX did not give us the confirmation we need for the reversal. The doji at star position spotted yesterday was near ideal but market decides otherwise. SGX has been viewed as the barometer or leading indicator of the Straits Times Index. It has been traded below 50 days simple moving average for a while and right now refused to confirm the doji star and touching the down trendline. We need to watch carefully will it be breaking the down trendline in the near future. If the down trendline is broken, it is wise to stay defensive in line with the Elliot Wave count.



ST Eng did break out of the bull flag today.

I agreed there is a buy trigger at $1.08 today, targets $1.17. If able to break $1.20, can look forward to $1.28 ~ $1.30.

Something new show up in my Elliot Wave chart today. The numbers 3, 4 & 5 are the target ( if my chart is correct ) :



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The below is from UOB Kayhian. They have moved their research report link to the client area only assessable by clients. So I thought it is useful to post a copy here:

Reversal in progress - UOB Kayhian
The pullback in equity markets should not come as a surprise to investors. We had been warning for some time that equity markets were showing clear signs of top formation. For the US, we had stated the DJIA was expected to trace out in a rising wedge formation and suggested a move towards 10,000 as the final 5th wave of the wedge formation. That has materialised and the index has also broken out of the wedge formation. There is an early indication that the uptrend from Mar 09 has now ended. Pullbacks from rising wedge formations should be swift and we estimate significant support at about 9300- 9340, a 38% retracement zone.
We had also opined that the FSSTI was likely to head towards 2,730 in an anemic breakout and then swiftly retrace. That has also materialised with the index heading to 2,739 and swiftly retracing. We now expect the index to head towards 2,480-2,500 before a minor rebound sets in.

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I will post my own analysis & view separately !

The long term up trendline is still intact but we are getting too close to the trendline for comfort. Chances are the pull back from 10,157 on Oct 20 to Friday intra-day low of 9,664 is a healthy retracement but if the up trendline breaks then we can expect 9,400 next.

Straits Times Index:
On October 15, STI broke the resistance at 2,707 and hit a high of 2,739. Unfortunately, it has immediately fallen back to the trading range. Similar as Dow, October monthly candle was a Doji signaling indecision.

Dow retested the resistance at 9,937 but fall back quickly from the intra-day high of 9,978 to close at 9,885. The failure to close beyond the last significant high could signal a near term weakness. The long legged spinning top candle seems to suggest a 'rejection' to rally higher.

I could be wrong but this is how I interpret from the chart !

My mobile phone continued to be flooded with SMS on penny stock calls. The latest was Beng Kuang ....

The STI chart is not as clear as the DJIA chart. But I continued to suspect there is a probable Ascending Triangle being developed, which has a bullish implication. Has the long awaited retracement of 38% or so compromised by the sideways consolidation? Before I am certain of which way the market is going, I remain defensive in my action.

The local market continued to move sideways and dominated by penny stocks. The top active counters become more and more niche lately! Ying Li, Ramba, ZWO, EcoWise, Seroja....etc. are among stocks that steal the limelight. I am not sure about you, but I have not heard of them before. I am apprehensive to chase them ( despite that these are the counters recommended by my remisier in the daily SMS ) because I worry as soon as I enter the party is over and I will be stuck with them forever. But if you are fine with that, these are the counters you can make some quick money. Just browse through the top volume counters each day and pick anyone that you have not heard before but are climbing, no need technical analysis !

DJIA is near resistance now. We need to watch closely how it reacts to the last significant high at 9,937. Failing to break beyond may cause the index to retrace back to 9.635 and 9.450. If it is able to break 9.937 decisively, we may look forward to 10,800 before year end.



For STI, many chartists have expressed concern that the sideways movement appears to have shown a series of lower peaks & troughs ( lower high, lower low ). I shared the same concern but on the other hand I noticed the Kagi chart seems to provide a glimpse of light! Kagi is showing an impending breakout ( buy signal ) should STI is able to edge up slightly more.

In my post dated Sept 21 ( here ), I speculated that a probable H&S is forming. Since then, I did not look at this counter until today. I am shocked to see that prices filled up nicely the channel lines I have drawn!

This is the exact same chart I used on Sept 25. As predicted, Dow has finally touched the thick black trendline after losing 302 points in 4 straight sessions. Friday's closing was supported by the thick black trendline with a long legged doji at star position. I believed in the near term, it may bounce back to 9,650. Intermediate term still look bearish to me.

[Update] I have retracted my post on TechOil&Gas because it seems the trigger will never take place. Now that 40SMA was penetrated. The swing trade setup is destory.

Counters Update:
Mapletree logistic - breakout from the flag today but the breakout was not strong and volume was low.

The charts below were done for a friend Sandra on her request. I thought since I have them, I might as well post them here along with my commentary by verbatim:







CDL Trust:
The trend is still strong but there is some warning signs for the near term move. RSI shows clear sign of bearish divergence, Parabolic SAR is accelerating and will catch up with prices soon. Near term upside is limited, cap at $1.6. Then there should be some pull back … and after that should retest $1.6 and $1.78.

I am reluctant to post the chart below, which suggest that there might be an Ascending Triangle forming. An A-Triangle is usually a continuation pattern that has bullish implication. Volume wise it is definitely not perfect textbook model so this may cast doubt on the potency. If, however, it is valid. The breakout target based on the pattern shown is 2,950.
The reason I am reluctant to post the chart is because I have been bearish about the market based on Elliot Wave count. I have been anticipating for a moderate correction to 2,250. So there is a conflict right now on which signal to believe - the Wave Theory or Classical Technical Analysis.
I will be watching closely on how STI is to resolve the major resistance at 2,700. This will give us clue on which way it is taking ! For now, I am bearish bias and tends to think that the A-Triangle is not real ( because many of the bluechips, such as Yanlord / Capland...etc. are showing bearish signs anyway ).

Capitaland has violated the up trendline on last Friday. The closing was supported by the 100 days moving average and the last significant low at $3.65. The trendline was violated by $0.05 or 1.4% of the stock price, not large enough to call it a decisive breakdown. Furthermore, $3.65 has been traded actively ( ie: with higher than usual daily volume ) and served as a strong support the past two weeks. OBOS indicators are showing sign of oversold. So perhaps it is too early to conclude the breaking of the up trendline on last Friday will immediately bring prices down to the next two supports. We may need to apply the two days rule to watch it for one more day and see if it bounce off from $3.65....
PS: Turtle System sell short trigger at $3.62 ( source, HC )

I received a few e-mails today asking me why my blog is locked suddenly where access is "by invitation only". I thought maybe I should make a short note here:
With CFTe level II exam just around the corner. I wanted to take a short break from blogging so that I can concentrate in my preparation. I will be flooding my blog with academic stuff such as the two posts below which are essay I have prepared as answers for the papers. Since these are my own works not related to the market, I thought I should keep it to myself for now. I will resume blogging at a later stage, so do check back....