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Glimpse Of Light Not Diminished Yet
The glimpse of light for a possible rebound did not diminish by the poor sentiment this afternoon. Despite a black candle today, RSI continued to climb. Unlike candlestick, clues derived from technical indicators take longer time to realise and are able to weather through minor jittery ( not storm though ).
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Cosco ( $2.13 ) - Technical buy based on MACD buy signal supported by early sign of 7DMA / 14DMA crossover and Parabolic buy phrase. ADX is showing sign where the downtrend has exhausted.
Labels: Market Direction
Rebound On The Card?
A small bullish divergence in RSI has been spotted ( prices edged lower but RSI supported at higher level ). However, the bullish divergence is so tiny that at most it may warrant for a few days of sustained rebound similar to the one spotted in mid July reclaiming about 150 points of loss ground. It is unlikely to be a full bloom reversal. After the rebound, don't forget the rice bag still has a hole punctured at the bottom. .
. Do take this observation with a pinch of salt as it may be whipsaw.
Labels: Market Direction
Market Status Quo
I have been looking at the chart every nights but I have been unable to make up a new post. Basically, my view on the market remain unchanged. I do not have anything new to say. A major long term uptrend trendline ( A ) was broken couple with a major support at 2,745 ( B ) was taken. The situation is like a rice bag with a hole punctured at the base. The rice is going to leak as evident by the index breaking 2,700 briefly today hitting an intra-day low of 2,690 ( Oct 31, 2006 low ). Next two supports remained at 2,660 & 2,450. On Aug 20, UOB Kayhian has taken a stance that the market is heading toward 2,560. .
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I have been monitoring on two things very closely:
1. The development of lines B & C which seem to me like a D-triangle. If the chart pattern is valid, it is going to be very serious. STI may potentially fall to 1,625.
2. I have been looking up for bullish divergence from various indicators like OBV, RSI, MFI....etc. Bullish divergence means while the prices are trending lower, the indictors are trending higher signaling a reversal is pending. Unfortunately, there is no sign as of today. Once I am able to identify such bullish divergence, that will be a good point to bargain hunt for the impending reversal.
I have more or less given up on candlestick on STI due to our limited liquidity. Furthermore, in a bear market, only bearish candlestick formation works well but not the opposite.
The support levels identified here are levels with which selling will face resistance. They are not my targets where STI will definitely heads there.
Labels: Market Direction
STI Rebound From Oversold
STI was grossly oversold yesterday after it has broken the key support of 2,745 and thus the rebound today ( despite Dow lost 130+ overnight ). The closing candlestick today is a bullish engulfing sitting at the bottom of the linear regression trendline ( which is similiar to the Andrew Pitchfork ). Going by theory again, Dr Alan Andrews believed that market price action would gravitate towards the median line 80% of the time, with wild fluctuations or changes in sentiment accounting for the remaining 20%.
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Labels: Market Direction, Trading Digest
Crucial Support Taken!
2,745 was finally taken up today. More downside can be expected moving forward. Subsequent supports are at 2,660, 2,450, 2,320 & 2,280. However, the market will not move in a straight line. There will be technical rebounds taking the index back up to 2,800, 2900 or even 3,000 but beware of bear trap! I have reiterated many times 2,745 is a very important support. Once broken, the future is not looking good. Just look at Cosco as an example. Once $2.90 was breached, it has tumbled by almost a dollar and hits $1.97 today! So the next few days could be up days for STI but don't get carried away.
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No sign bearish forces getting out of market's way - AM Fraser
Further signs of capitulation with new year’s low seen today at 2732 after key 2750-2800 support broke
The STI had tried hard to defend 2750 which was tested in January and March (lows of 2746) but failed today in an ominous sign that the half way mark (at 2500) from the start of the 5-year bull market at 1170 in March 2003 to 3831 could be the next major support.
There has been strong resistance to break the 38.2% fibonacci retracement area around 2800 convincingly and although it has not strayed too far from this key support so far this year, today’s failure implies that the risks of testing the 2500-2600 area are getting higher.
While Asian markets like China have already crashed 62.7% (Shanghai CI down from last Oct peak of 6124 to 2285 today) the STI is only down 28.7% from 3831 to 2732 today, helped by Wall Street which has kept its peak to low correction to only 23.7% (Dow peak at 14198 last Oct to low of 10828 in mid-July). This goes to show the local market has not decoupled.
Past major market downturns would often see the STI at 3, 4 or even 5 year lows but despite the near one-year correction this time, we are still at less than 2 year low.
The last low at 2744 was in Nov 2006 as the market then was in the midst of continuing its strong bull run after a midyear correction when it fell from the May high of 2600 (old STI at 2666) to 2250.
Now that we are back to nearer the levels prevailing at end-2006 the key support to watch out for is 2600 with 2700 acting only as psychological buffer.
The confidence in 2600 goes all the way back to the Jan 2000 then record high of 2583 on the old STI (equivalent to 2615 on new index).
But the problem lies now in identifying when the bearish forces get out of the way. The PM said last night that he expects 2009 to be a year of slow growth (how much less than 4%?) Since he had described the revised 4-5% forecast this year as “not bad”, market could read it that 2009 would be worse than this year in terms of GDP growth. After all he had warned of a bumpy year ahead ie till Aug 2009.
If that is so the stock market being a leading indicator 6 to 9 months going forward may only reverse direction in 1q09 at the earliest – still 5-6 months away - provided first signs of economic recovery appear in 9-12 month time.
We have seen the STI down for 10 months now, wiping out over 1100 points from 3831 to 2732 today and if we think that 2600 would be the bottom if not near the final bottom then there is only another 100 over points away. Even if 2500 it would only be another 200 points down. It may be better to think again.
Surely it is hard to see longer term investors starting to bargain hunt now when much of next year could be gloomier than now.
Labels: Market Direction
Another Major Meltdown Possible?
I am getting increasingly concerned on why STI is unable to shake off the downtrend while Dow has already been traded in an uptrend channel?
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FTSE STI Index
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Dow Jones Industrial Index
.What is even more disturbing is that
STI has been hoovering at around 50 points above a curial support of 2,745. I have been mentioning about this number for months now. If this level is breached,
STI may potentially head south with plenty of downside possibility.
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STI and
HSI seem to be forming a bearish D-Triangle. If the chart pattern turns out to be true. The downside risk, in theory, can be as much as -1155 points or in other word the index may plunge to 1,625 ( over time, not overnight ). This is scary !!
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.The sub-prime credit crunch problem is like peeling an onion, layer ( of new casualty unveiled ) after layer. Bear Stearns, Citibank, Indymac, Fannie Mae, Fraddie Mac, UBS...etc. have all run into problems. Our government leaders have stated the present situation will rollover to next year.
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Some textbook* stuff on seasonality and calendar effects:
President's Third Year
Since 1939, the third year of a presidential term is always an up year for the Dow. In fact, going back 84 years, the only big down year in the third year of a presidential term was 1931.
Presidential Election Cycle
Wars, recessions, and bear markets tend to start in the first two years, while prosperity and bull markets tend to happen in the second two years. Since 1833, the last two years of a president's term produced a cumulative net gain the Dow of 717.5% while the first two years produced 227.6%
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So going by this, it looks like we must wait till 2010 to see the bull's back.
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What I have stated in this post is not about tomorrow's market or next week's market. It is about the next 6 months, 12 months to 18 months. There are obviously still something to worry about. Maybe wise to continue to stay at the sideline or play defensive until the dark cloud is cleared. In regard to the big D-Triangle, I hope it will be invalidated. Otherwise, it will be too brutal!
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* Reference: Technical Analysis For Dummies by Barbara Rockefeller, page 51. By the way, this is an excellent book!
Labels: Trading Digest
SGX & Starhub Launch New Information Service
StarHub and Singapore Exchange have announced that they are partnering to provide a new information service called Financial Information.
It will be available to 511,000 cable TV households in Singapore via their TV screens from tomorrow.
The new service on StarHub Digital Cable's Interactive TV, will enable viewers to access live stock prices and other financial information on SGX.
Information will be divided into categories such as the Mainboard, Catalist, Sectors by Industry, Products and Top 20 summaries by multi-industries.
Available on Interactive TV Channel 800, it will be accessible by all StarHub viewers using the digital set-top box, High Definition set-top box or HubStation, at no additional cost
Labels: Market News
Market Outlook ( Aug 11 ~ 15 )
Dow ended the week of Aug 4 ~ 9 with a gain of 408 points while STI lost 99 points. So STI is seriously lagging behind Dow. On the chart, Dow has formed an uptrend channel. Daily chart has turned bullish while weekly chart has a bit more to go ( 12,000 ) before it will turned bullish. I think this is achievable by next week if nothing major happen on the flip side.
.As far as STI is concerned, there is nothing from the chart provides clear direction or signaling a reversal. BUT, knowing STI always take its cue from Dow. I am almost certain that STI will play catch up game next week given that Dow is bullish & traded within an uptrend channel.
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Labels: Market Direction
STI - Head & Shoulder Chart Pattern Confirmed
One week has gone by since I mentioned in my post dated
Aug 2 that STI maybe forming a Head & Shoulder chart pattern. The pattern is now confirmed a valid one. Not only valid, but a typical text book model !
Fortunately, it was a pretty small H&S pattern formed with pretty short time frame. The target of 2,790 was almost met with the closed today at 2,807.
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Labels: Market Direction
Capitaland
Many counters under my radar have either broke the trendline or broke below its key support levels. Some have left with no prominent support until $1 ~ $2 away. This is because from August '06 to October '07 it has been a smooth upward sail except two small hiccups on March '07 and Aug 17 '07.
Capitaland is one good example. Today, this counter dipped by 24 cents to close at $4.86 near its intra-day low of $4.85. In my recent post dated Aug 3, I stated 'trading opportunity will arise if it ever hit $5.05'. At that time, Capitaland closed at $5.47. So, is it a good buy at $4.86 which is even cheaper than my last target of $5.05? I think not. $5.05 was a good entry only if it was supported. Since this counter has now pierced through all the major supports, there is always risk that the downside momentum has not been exhausted yet. We should always try to buy near support or after it has u-turned from support. I will be looking at $4.2 if it ever get there, which is based on Fibonacci projection.
TA is not about buying cheap or cheaper. It is about managing your risk through probability. What was a good buy based on a previous analysis will not hold when the prices break below an important trendline or support level. So, $5.05 can be a buy if support hold but it is a sell if support break. Once the support is broken, we will try to identify another support and buy near there.
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Two others counters I was looking at but did not post here were Straits Asia and Biosensors. Both are bucking the trend today!
Labels: Stock Pick
The Power Of Trendline
The Market
So, when Dow was up by 331 points, STI only responded with a humble 26 points rise. When Dow dropped by 40 points, STI responded with 52 points of fall. What kind of market is this?
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The Power Of Trendline:
Cosco - I thought it was a good call that "no chase if the price break below $2.9!". In technical trading, the notion of lower means cheaper is not necessary true because once the price break below a certain level, it is a SELL instead of buy because cheap will become cheaper. Cosco hits an intra-day low of $2.33 today. While you may say this is driven by news but the chart don't lie. Rumor/news are all priced in and they may show up ahead of the news surfaced.
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.SembMar - Another counter breakdown from the trendline support. So don't play play with trendline!
.Labels: Trading Digest
Lacklustre Market
This is not the rebound I have anticipated. I have expected 60 ~ 70 points of strong rebound at the backdrop of the sharp gain of Dow by 331 points. HSI was closed today due to cyclone. This could have an impact on the local bourse because STI often look to HSI for direction. Another possible reason is that traders are asking what next after the 331 points of rally? Maybe tonight Dow will tumble 300 points?
I tend to share the same early view as Kim Eng as I can see a D-triangle taking shape. This is a very difficult market to be able to make money! For those who had taken a long position yesterday in anticipation for a strong rebound today, they are definitely disappointed. In this market, long/short are loser ! I am putting my figures cross that 2,745 will not be breached. Once this is taken, we run the risk of freefall without any prominent support until 2200 ~ 2300.
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August 06, 2008 07:24 ET (11:24 GMT)
DJ Cosco Corp Pres Retires; Cosco Shipping CEO To Replace Him
SINGAPORE (Dow Jones)--China-based Cosco Corp. (F83.SG) said Wednesday that Vice Chairman and President Ji Hai Sheng is retiring effective Thursday.
Jiang Li Jun, chief executive of Cosco Shipping Co. (600428.SH), will replace Ji, the shipbuilder said in a statement.
Labels: Trading Digest
STI, Cosco & Capitaland
The Market ( STI closed: 2,860 ):
Late buying interest & short covering lifted STI from an intra-day low of 2,807 ( -68 points ). The 15 minutes chart ( below ) has turned bullish with MA10 crossing up MA21. Daily chart shows a prominent hammer with a long handle. Although I was wrong once with Cosco yesterday, I am betting ( again based on candlestick alone ) on a rebound with the mercy of uncle Dow. Rebound cap at 2,930.
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.Cosco
The trendline was finally broken today. Not only broken, but violently broken. This is a pretty important trendline since it was traced back to March 2007. In TA, the longer the time frame, the larger the impact. So even if Cosco may rebound along with the broad market ( A rising tide lifts all boats ) as if all is well, I am still cautious of its near term movement.
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.Capitaland
This one looks better! A prominent hammer in star position with a long long handle! With the mercy of uncle Dow, this candlestick pattern suggest a reversal subject to next day confirmation.
Last Friday, Capland closed at $5.47. When I mentioned $5.05 on Sunday, it seems far fetch ( sounds like will take weeks to achieve ). Today, it hits an intra-day low of $5.01. These days, cheap becomes cheaper!
Labels: Market Direction
Kim Eng - Market View
The key Straits Times index appears to be forming a bearish triangle pattern just as the market is entering the crucial phase of the results earnings season. If the downside support of this triangle formation is breached, the STI is likely to head towards the target objective of 2750,which also coincides with the March low of 2746. Interestingly,Singapore's M2 money supply growth rate has slowed considerably from 11.9% in Apr 08to7.5% in Jun 08. Empirical studies show that excess liquidity tends to lead stock market movements by 6-12 months; conversely, the decline in M2 growth could portend further downside risk.
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Cosco Update:
$2.90 was taken this morning despite yesterday closed with a hammer candlestick which is typically a reversal pattern. However, broad market sentiment is bad today ( a rising wave lifts all boats and vice versa ) couple with the fact candlestick alone is not a reliable tool for our market size. I do not think it is safe to enter Cosco although I could be wrong. At least this is not advisable from technical view because a major trendline support has now been broken. Entry at this time may still be able to make money, I am not saying it won't, but the decision is no longer based on technical but gambling.
Labels: Trading Digest
Cosco
DJ News: Cosco 2Q Net Pft S$129M Vs S$80M; Order Book Intact
SINGAPORE (Dow Jones)--Cosco Corp. (F83.SG) Monday posted a 60% rise in second quarter net profit and said its order book for ship building and repair work remains intact. Net profit for the three months ended June 30 was S$128.7 million compared with S$80.4 million a year earlier, the China-based company said in a statement.
The earnings beat a forecast of S$114.4 million from analysts polled by Dow Jones Newswires. Cosco hasn't received any new order cancellations and its backlog of uncompleted work remains healthy, Vice Chairman and President Ji Hai Sheng said at a briefing.
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The Chart:
Take note on the trendline below traced back to March 2007:
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With that in mind, below is a close up shot of the same trendline. Today's intra-day low touches the trendline. It is fortunate that the trendline wasn't broken. The candlestick today is a hammer with a gap down in star position, a perfect candlestick reversal pattern. If nothing goes wrong with the broad market, next few days should see Cosco edge up to test the downtrend resistance & 100 days MA. However, if the price dips below $2.9, it is a SELL based on technical, NOT a buy as you may have thought ( In other word, buy only if the price tomorrow is better than today, very strange isn't it? ). Other than candlestick, there is not much story to tell ( not every chart has a lot to tell ! ).
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Labels: Stock Pick
Capitaland Revisit
Since my last two posts dated June 3 & June 10. Capitland did breakdown from the D-triangle spotted. Prices are trendless & rather voliate lately. It has lost 87 cents in 7 trading sessions to close at $5.47 on Friday. I think opportunity will arise if it ever hit $5.05. Will monitor this again.... Anyway, the reasons for the recent fall from fundamental perspective are due to its 2Q profit dropped by 44% and probably affected by ALZ with which it hold 54% stake.
Labels: Stock Pick
Market View ( Aug 4 ~ 8 )
On the weekly chart, STI finished the week of July 28 ~ Aug 1 with a negligible gain of 6 points. The weekly candlestick was a doji with pretty long upper & lower shadow signaling indecision of the market for the up coming week's movement. However, the doji was sitting within a larger white candle for the previous week ( July 21 ~ 25 ). Both candles combined ( July 21 ~ Aug 1 ) formed a bearish Harami which is bearish for the week of Aug 4 ~ 8.
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.On the daily chart, a possible Head & Shoulder ( H&S ) chart pattern was spotted. However, a chart pattern is not valid until it has taken place. So a key level to watch is whether the index will violate the neckline at 2,885. Should the index break below this level violently, the H&S pattern is confirmed and thus more downside can be expected. Should this takes place, I am looking at -95 points or so or 2,790. On the other hand, if the index u-turn from the shaded area, the H&S pattern will be invalidated. TA predicts, it does not dictate. The above is just a scenario, it does not need to happen.
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.Again, this is the TA view of STI. But these days, the market heeds Wall Streets' movement much more than our own movement. So I am not sure whether it makes any sense to even look so hard on our very own STI chart !
Somehow, the above observation is very different from the pool of traders at Shareinvestor.com. 73%** traders there have voted the market to be bullish next week. Anyway, TA can be wrong and in fact it can be wrong quite often. The idea of applying TA is that if you are wrong, you cut it ( loss ) fast but if you are correct you make it big. Overall, your winning trades out-number the losing trades and the gain from the wining trade is higher than the loss in losing trade.
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** Figure as of 2:30pm Aug 2, Saturday.
Labels: Market Direction
