All bets are off?

It started off as a really dull morning. My office is in the process of shifting to a new location and we have packed 90% our our equipment. Practically we are just waiting for the time to pass while "pretending to work".

STI on the other hand was not as dull as my morning. I was expecting a possibility of rebound yesterday because STI hit the lower envelop of the wedge the day before. While the strength of the move yesterday was not expected, it was still restricted to move within the envelop.


Fig 1 STI Daily Chart

With the move yesterday, I was expecting a limited height of 2,836 today (where the envelop is). To my surprise, STI gapped up and started off at 2,834 and hover around this point the whole morning. For a few attempts, it has broken 2,836 and stayed above this point. By evening time, it moved even higher to 2,844 before restreating to close at 2,841. So what does all these move make for STI? Is it like my teacher always said, "all bets are off"?

While it broke my heart by breaking the wedge *boohoo*, it nevertheless reminds me that charting is not an exact science, that is why you might be in euphoria when it is exactly where you expect it to be.

This reminds me of the same incident on STI some where 2004. It was in a congestion band with the formation of an upward trending wedge. I was expecting it to come down before moving higher. It however projected itself towards the apex and cause the wedge to fail before climbing up and top at around 3,800 area. I missed the move at that point of time, partially also because I was not so bother with the stock market, I got my baby boy to care for.

Is STI doing the same thing this time? It did break the upper envelop indicating a possible wedge failure. The candelstick pattern on the other hand created a different possibility. Early morning, I was expecting it to be range bound between 2,832 to 2,839. Sadly ( well, not really that sad ), it went higher to 2,844. Even so, it formed a potential evening star. The formation is not complete and requires tomorrow to confirm. If tomorrow is a down day with move similar to yesterday, the evening star would be complete, it would then signifies a reversal of STI. Tomorrow being the eve of a long weekend, this at least brings the possibility of such scenario much higher.

Looking at the indicators, both RSI and Stochastic are pointing BACK up, but weakness is seen on RSI. This could well indicate a stagnation rather than retreat, but we shall see. After all, tomorrow is only 10 hours away. My bet is STI retreating, gap down. If it inch further up, then the title really applies, all bets are off, for now.