Accelaration phase?

Fig 1 Weekly STI

Fig 2 Daily STI

It has again been a while since my last up-date. It is now the end of the year and work load in the office is adding up to prepare for the coming year. The top managment is not very optimistic about the coming year and is very caution about the market performance. Everything has been planned conservatively.

On my side? STI has been doing very well for the last 3 to 4 months after the correction. So I would see a drop in the economy ( not the stock market ) between January to March next year but it will be another push upward for another 6 months. STI itself is a 6 months leading indicator of the economy and I believe it. So far it has not yet failed me on this before.

During my busy schedule ( juggling between work and family ), I went on an oversea trip for a seminar. While staying at the hotel, I was amazed that Taiwan itself has 3 to 4 staellite channels dedicated to the stock market, and they are all talking about stocks using technical analysis! So far I have not yet seen anyone using fundamental on any stock yet. so how the shows were quite interesting. The host of the shows are very charismatic and they are like telling people " I told you so.." all the time. Whether accurate or not is another matter.

I also went to their Computer expo and I have found that they have a large range of products supporting users on stock market. There are gadgets with real time up-dates on market performance and stock analysis. Basically, Taiwan is now hot on stock market. So I gather that it will be market down turn soon for Taiwan.

I have again been off STI for a short while, my last up-date mentioned of a limited up gauging from the upper trendline. Well, at least I was right about the up-trend this time. I am a little surprise that it broke through the upper trendline and continues to be supported by the same line. Does it mean that STI is also going into the accelaration mode of 60 degree buying frenzy?

From the charts, it is possible that we are in the 5th of the 3rd wave, moving probably for 0.618 of wave 3 of 3. But my last experience told me that accuracy of fibonacci fluctuates, so may be I will just leave the number aside first.

On weekly basis, the MACD continues to rise supporting an uptrend forecast, however this is also followed by warning of falling volume. So close monitoring is needed.

The daily chart shows the RSI on a divergence to uptrend, this is further sign of STI losing momentum. Therefore, I am now expecting a minor correction to STI coming. For the time being, STI would be supported at 2 levels, 2,670 and 2,585. On the high side, I believe there is a resistance at 3,015 level.

So what should I do? sit on the fence and watch, since my portfolio is presently empty ( due to the birth of my baby ). It is a little late for me to enter now so I will quietly do my home work waiting for the next wave.