STX PO dropped from $3.67 to $2.73 in six straight sessions from June 6 ~ 13. The sharp fall pierced through Fibo 23.6% through 61.8% at the back of increasing volume. MACD histrogram support was broken (see arrow), RSI has not reached oversold yet. CMF shows strong distribution. The chart is definitely looking bearish at this time but broad market performance can always influance individual stock's performance. Broad market is overdue for a technical rebound so STX PO may benefit from it and rebound along with the broad market on Monday or Tuesday. Immediate resistance ( if rebound takes place ) is to fill the gap at $2.95 ( FIbo 61.8% ). Support is at $2.63 which is an important trendline support. If this support is taken up, STX PO may run a risk to tumble down to $2.32. Short term & mid term view of STX PO are bearish ( weekly chart has just now been turned bearish ). Contra play to make a quick gain out of short lifted rebound is okay but be sure to cut loss at $2.6. For a long position beyond contra, it is safer to enter after confirmation that the counter survives the $2.63 support. Notice there is a sideway to uptrend channel. If the counter didn't break the channel and u-turn from the channel support, it has a potential to hit channel resistance at $4 or beyond ( may take months though and subject to broad market sentiment ).
Wow, another leg down today but losses were pared in the afternoon by bargain hunting lifted the index. The downtrend channel has been widened as a result of the futher downside today. RSI support gained by 1% between 5/26 & 6/10, CMF shows sign of accumulation. The candlestick today looks like a hammer ( not exactly, but close to ) in star position. I know I have said this on Tuesday but didn't come true but it is time for the index to bounce back up to the top of the channel.
HSI nose dived 1026 points today dragging the entire Asian market into red. Again, I fail to understand why HSI reacted this way. The effect on the sharp plunge in Dow on Friday should have been diluted due to HK holiday on Monday. ( Updated: China government raised interest rate by 1% over the weekend has significant impact on the HSI' fall )
STI closed at the support of 3,033 I have identified yesterday. Next support, 2947. The closing today is touching the downtrend channel support. If we look at STI alone putting aside other market, we are due to bounce back to test the channel resistance.
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STI Chart:
Capitaland update: Uptrend channel has finally broken today ! I will not be looking at this counter anymore from now on.( Updated: anyway, the D-triangle breakdown target is $5.12. When the price reached there, it will form a double bottom with previous low at Jan 22. It may u-turn from there ) .
Straits Times Index – Perspectives (PhilipCapital)
Synopsis The S&P 500 Index is being used as a proxy for the STI. Our study has shown that the STI and S&P 500 are well correlated. The higher liquidity of the S&P 500 gives us a clearer picture of technical price formation versus the relatively illiquid Straits Times Index which experiences opening gaps a lot more frequently. The S&P 500 being greater in market capitalization and trading volume has been ‘leading’ the smaller Straits Times Index and gives a clearer indication of the Straits Times Index’s direction.
S&P
STI
During the first quarter of the year, both indices consolidated at the same time starting from mid January to mid March 2008, forming convergence bottoms – Price traded lower while the RSI (indicator of momentum) moved higher – signaling that momentum was likely to push prices upward. As a result, we have since seen the market rally off from the bottom formed in Q1. Please draw your attention to the similarity in timing and price action of the consolidations for both the indices – the first down leg was seen in January followed by a long consolidation in February the first half of March before pushing down another leg toward the end of March. Both Leg 1s show the market rejecting the price level in the form of long tailed candles and both Leg 2s show minor consolidations – these are indicators of the indices trading in tandem. The current rally we are seeing rose from a bottom that took 3 months to form and it is thus unlikely that it will end in 3 months – generally the time taken for the market to rally is longer than the time taken for it to consolidate. However, the current rally has lasted for 3 months straight and we are currently due for a technical correction. The intermediate trend is still up, but the short term is currently trending down – a ‘healthy correction’.
S&P
STI
The Short-Term Trend Divergence Top The S&P formed a divergence top in the middle of May: Price spiked higher (forming a rejection candle, circled in white), while the RSI (indicating momentum) moved lower. I.E.: The market made an attempt to move higher, but there was a lack of momentum to follow through, resulting in prices moving lower with momentum and giving rise to the current correction. Given the high level of correlation the STI followed suit and declined together with the S&P 500. Both markets are currently trading around the 38.2% Fibonacci retracement level at the time of this report. Our Assessment Watch the 50% (S&P: 1371, STI: 3010), 61.8% (S&P: 1327, STI: 2947) and 75% (S&P: 1314; STI: 2878) retracement levels on the charts. Look for the market to consolidate around those levels before building a base for another push higher and the continuation of the intermediate trend. Summary The market took 3 months to consolidate during the first quarter of 2008. With a 3 month long consolidation as a base, it is unlikely that the current rally would end in merely 3 months. The intermediate term trend has a high probability of still being in place, however, in the short term, the market will likely face a correction to the 50% to 61.8%, or perhaps even 75% Fibonacci level of the most recent rally. We are looking for the market to decline and consolidate around those levels before the intermediate trend continues and pushes to higher ground. The "stop-loss" for this analysis would be if the market trades below the most recent consolidation lows: approximately 1260 for the S&P and 2746 for the STI, in which case the intermediate uptrend would be invalidated.
As at 12:00 noon, STI was downed by 32 points taking cue from HSI which is currently downed by 818 points. Ah Seng ( HSI ) was busy eating dumpling yesterday and did not open shop. Today, they could have negated Friday's plunge as Dow has rebounded 70 points last night. This was the case for STI on Aug 9, 2007. Our National Day holiday has saved us from the heavy plunge of Dow on Aug 9. I don't know why Ah Seng is so unforgiven !?
As pointed out on June 3, STI was heading for a classical bearish pattern of "lower high", "lower low". The last "lower low" at 3,085 as mentioned on June 3 was taken up today. A downtrend channel is now formed. Support 3,034, 2947.
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If Dow rebound tonight, which I still think it will, tomorrow STI may also reclaim some of its -62 points of losses it has incurred today. But this is only technical rebound, and not trend reversal.
The sharp plunge in Dow by 394 points on June 6, 2008 was the heaviest since Feb 27, 2007. Back then, Dow plunged by 416 points. The next day, STI responded by a gap down of -156 points. So my wild guess of -65 to -75 points in the last post maybe too conservative! Be prepared, it can be that bloody & that ugly ! Anyway, this has nothing to do with TA. Just pure comparison.
Another significant plunge in Dow was on Aug 9, 2007, downed by 387 points. But STI was spared due to National Day.
Okay, I know this is 马后豹，I admit. But if you look at the chart for Dow, you would agree there was clue for the sharp plunge last night ( but no one would expect the plunge was so nasty though ). There was a perfect MA double top pattern formed on May 2 ~ 19 and what we see now is a breakdown from the double top. Earlier this year, there was a similar double top ( Jan 2 ~ Feb 28 ) breakdown took place on March 6. I have to admit I was caught completely off guard of the sharp plunge last night because I do not normally look at Dow chart unless there is major event like this that caught my attention. .
What next for Dow? After the massive selloff on Friday, Dow closed exactly at Fibo 61.8% ( between May 16 top & March 10 bottom ). I believe this level should provide some supports to the index. The closing on Friday ( 12,209 ) has exceeded the double top breakdown target so I think the selloff was a little overdone. RSI is slightly in the oversold region. So technical rebound is in the cards ( it may take place after a pause day with a doji or hammer candlestick, or on Monday itself ). Note that the technical rebound I refered to is different from trend reversal ( that's not what I meant ). After the rebound, it is possible the index will trend down further.
Inthemoneystocks.com is more neutrual than me, they think the market can go either ways ( up or down but big swing ). Chances is a little bid more downside before any upswing will happen. Overall, they think the market will be very choppy with downward bias in the near term ( which is what I would agree, see my post on June 3 ).
Locally, needless to say, Asian bourses will be blood shed on Monday ( HSI is closed )! While triple digits plunge in Dow was not uncommon these days but -394 points is quite something. The last similar plunge was -387 points on Aug 9, 2007. I guess STI will gap down by 65 ~ 75 points on Monday morning and may hit an intra-day low of -90 or so. Hopefully lossess can be pared later to form a hammer candlestick ( this is only what I hope, not TA ). So, it looks like what I have mentioned on June 3 will comes true. 3,085 will be taken up and a new "lower low" will be formed !
Quoting what the ang mo in InTheMoneyStocks.com said, this market is for the 'Day Traders' (intra-day in, intra-day out), and not for the Swing Traders (those who would keep their positions for weeks).
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PS: 马后豹 is a term extracted from a phenomenon of Chinese Chess players. It refers to an attitude where we all may have experienced - 'oh, I knew it' or 'I should have known'. But whatever you claimed 'you knew', you only say it aftermath.
CapitaLand - Testing support ( by iOCBC ) 6 June 2008
- CapitaLand has been trading within an uptrend channel since Jan 08. It is currently close to testing the support at the lower band of the channel. - But as the stochastic indicator has slipped into the oversold region, it suggests that a rebound is in the cards. - We have also observed a positive divergence form on the stochastic indicator over the last 2 weeks, raising the probability of a rebound from current levels. - Price ascension from here would face intermediate resistance at the 50- and 200-day moving averages around S$6.60 - 6.80. Subsequent resistance is set around S$7.00 - 7.20, which were key price reversal levels over the last 12 months. - Support is set around S$5.40 - 5.60, a consolidation and reversal region between Jan and Mar 08.
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Mimosa: Credit Suisse raised the weighting of Capitaland on Wednesday, June 4. This could have caused the counter to jump 21 cents on that day. The move has salvaged Capland from breaking down from the D-Triangle I have spotted on June 3. Maybe the analysts at CS also saw the same chart pattern and decided to do something to change it :)
To me, the channel is still intact as it didn't break below $6.10.
RSI positive divergence spotted between mid Dec ~ mid April. Prices have tested .855 three times before since early April and today managed to break it briefly at .86 and closed at .855. May have a chance to break .855 this time!
The recent movement of STI casted some concerns to me. Since May 7 till now, prices are moving in "lower high", "lower low" pattern ( bearish pattern ). It will be interesting to watch if prices will hit below 3,085 which will be a new low ( bearish ). Or will it go up and break the trendline "A" ( bullish ) as I hoped for....
Capitaland rallied from $6.25 to $6.55 since I last wrote. Today, it was beatened up along with the broad market and hit an intra-day low of $6.16. While the sideways to uptrend channel has not been broken yet, several worrying signs have been spotted which may affect the health of this channel:
1. There seem to be a decesending triangle ( lines C, D ) developed within the channel ( lines A, B );
2. Parabolic SAR sell phrase has been triggered. Prices may be consolidating in the near term;
3. Momentum in the weekly chart has weakened
BNP Paribas & Kim Eng keep Capland at Buy with target of $7.67 & $7.47 respectively ( TP is usually for 12 months ). Today's closing at $6.25 could be a good bargain ( bottom fish ) if prices will bounce back from here. But the above observations are worth paying attention to just in case they will eventually destory the channel. The channel is considered broken when prices penetrate below $6.10.
STI reclaimed 107 points last week on the back of rising volume. What to look up for next is whether the index will break above an important trendline labeled "A" in the chart developed since October 18, 2007. If it is able to break the trendline resistance successfully, the index will be heading up to the next resistance at 3,335 which is Fibo 50%. Support is at 3,030 ( Fibo 23.8% ).
While the weekly chart is still bullish, price momentum appears to be softening. The monthly candle for May was a doji at evening star position. This may signal a pause or even retracement in the monthly chart in the coming one ~ two months.
