STI

I have been pondering on one question lately. Every time I see the STI on Newspaper, there is this up-ward wedge clearly visible. Yet the wedge is not found on my chart. Well, I have finally found it after some cleaning up of the lines I have drawn.


Fig 1 STI Daily chart

It was hiding inside the triangle that I have drawn earlier. It seems now that I am having more confirmation of an STI retreat. The wedge itself tells me that STI should be moving towards 2,533 minimum objective. The recent ramming of STI thus a correction of a downward movement. It is taking a breather before trending down. Its daily moves are filled with Doji patterns. It is a sign of market uncertainties.

Best I would give at this moment would be a resistance at 2,686, which is not far from now.

Zooming out of the chart, it is exhibiting a reversal behaviour. For certain, the latest high is 2,707, which is higher than the previous one. IT then fall below the previous peak, a description fitting the non-failure swing profile.

The only way which convincde me of a break down of my prediction would be STI crossing 2,707. While that is so, I am still putting 2,809 as the objective

A thought....

I was keipo-ing on ChannelNewsAsia.com Market Forum when I come across this thread "What are your paper losses/gains for those still holdings?". I feedback that I was out of the market a week ago because of bearish feelings. However, as I read on, I have found many feedback with tremendeous losses. One forumer triggered my nerve by saying that he gauged the losses (which was too painful to bare) and he did not need the money immediately, so he held on to the stock.

I was really at a lost of words because many players in the market do not have stop losses and so I feedback my frank opinion and stating that there is a high chance probability of a reversal rather than a simple correction. Seriously, in my own opinion, it is very true.

The result? I was shot back with a claim that stating of "chance" and "probability" only means such observation is rubbish and that fundamentalists have the last say. Obviously the guy who said this is a fundamentalist believer and he has no idea that what he is in is all about probability and chance. He also read too much of Straits Times.

I wonder how many of us read the Straits Time daily and noted how they describe the market performance and for what reason it does so? It was entertaining at first but it is getting boring. How can the sentiments be up because of one event on one day and went down due to another. Especially when these events are really quite insignificant. further more, do all these reports of exceuses gives any indication of market direction for the very day it is published? All I can say is that 80% of its report on market performance is useless data.

Actually, the most important factor in trading is not what technique you use, but what system you have created for trading. It does not matter if you are using Technical or Fundamental Analysis, as long as the system you adopt works for you, protect you and earn you money. Both techniques have been around for many years and definitely they have merits to survive that long. However, they are used in very different environmet. TA for trading (short term) and FA for investments (long term). Your world would like to go up-side down if you do other wise.

One final thing. Many people write off TA not because it did not work, it did not work for them. TA is an art and it is not as straight forward as spotting a pattern or blindly follow indicators using text book references.You really need to appreciate its complexity before it let you see its secrets. Many simply give up because they are in doubt that TA can delivers, they are skeptical if TA can delivers. When it went wrong for them (it always does for beginners), they label it as unreliable.

As for me, I have stuck to TA all these years and I believe it works. I still remember what my teacher said about TA, "it is not the market which is wrong, it is you who are wrong".

Wing Tai

Wing Tai is one of the first counter that I came to know of when I first started trading. However, it did not attract me until a few years later (2001-2003). I was still learning to trade and did not make much out of it. For one thing, this is one long living index stock would is quite affordable at bottom of the market, compare to many other counters.

Wing Tai was on my watch list but I did not take action until recently partially because its gain in percentage is not as good as the lower priced stocks. Nvertheless, it caught my attention and I kind of caught the last wave but still got my hand burnt a little bit.

I enter the counter right before the final leg and managed to catch the wave. Unfortunate, I had a miss in monitoring (for a few hours) and the stock plunged on a surprise from 1.90 to 1.70 on the very day. It was way beyond my stop loss but I still executed the action at 1.74. Now what is next for Wing Tai?


Fig 1 Wing Tai Weekly Chart

Base on the latest up-date, Wing Tai is on continuous down trend on weekly indication. The counter is nearing the trendline and about to test its potency. Both RSI and Stochastic is moving south with divergence to confirm. Having their position at above 50% tells that there are possibly more to go. I do not see any pattern forming for a measurement but base on its 21 weeks moving average, the support level at this moment is 1.54 while 89 weeks moving average at about 1.50. If there is a pattern forming, the neckline is likely at 1.56. I do not see any up-side for the time being.

A short break, and there are good and bad news on STI

It has been a while since I last up-dated my blog. In fact I have a pause since last wednesday. It was my youngest brother and the last of my family having his wedding, and he chose Hari Raya period to do so. I travelled back to my home land to attend his wedding, deliver a big Ang Pow and of course help out.

The wedding took 2 days because he could not book the banquet on 20th Sept 2009. So we have the day event on 20th while the dinner set on 21st. It was a grand event since my parents are business people. We have datok-datok and Datin-datin attending the dinner. Well, I wish them a happy marriage from here, though I still have one question in mind. How is it that my brother choose a girl with so much resemblance to my mother in attitude?

Another reason that I have not done any up-date was simply because there was no need to. What I have last entered still valid and the market went side way. I am still amazed that the newspapers still trying to support the theory that the market is recovering ( of course they may be right ). I personally believe (copy from Miss Teen USA, she really have a problem answering why only 5% of Americans can find USA on world map) there is limited up-side and there is a strong tendency for a correction. The market simply lacks wood to burn.



Fig 1 STI weekly chart

My last review indicated STI broken the Daily trendline but still supported (barely) by the weekly trendline. Well, base on what I see in fig 1, not any more. It has now broken the weekly trendline. Minimum a correction soon, if not a full retracement, assuming this is only the first wave and we are coming down with second. As far as I can see, the technical set up do suggest a bottom formation still in progress. Some analyst made known that the economy might be having a "W" shape recovery rather than a "V" or "U". "U" is out of the question because the shpe now looks more like "V".

Purely on technical term, let's not talk about alphabets, but reversal pattern. STI could really be doing a double bottom reversal and the shape would take more than a year to complete. Worse case would be a tripple bottom or head and shoulders ( taking not that it might not have bottomed which is still waiting for it at 1,300).

If I keep thinking of a bearish tendency, then what's the good news? Referring back at the chart, I wonder if anyone notice the crossing of 21 weeks moving average against 89 weeks? It is so far the only positive sign I see. However, this also normally means a correction ( some how base on my experience, the chart always correct to touch one of the moving average when a golden cross is made). So with this golden cross,should we still consider a bullish market?

What a day!

After many years of on and off trading from the market, I have learned to spread my portfolio to spread the risk, and noting that about 70% of a chance that I would get a wrong counter for trade, I would normally pick 4 to 5 counters to played with, all the time setting stop loss level for exit strategy. I know, some times it is quite hard to even think about exiting because of stop loss. I have learned from hard lessons that a bigger consequence if I do not follow the stop loss strategy.

On my last entry, I noted a triangle formation for STI chart. STI broke through and went up the next day. If I recall correctly it was Thursday when this happened. I was happy because finally STI is on its way to 2,809! I was not that happy when I saw the chart that night.

Fig 1 STI Daily chart

The chart showed that STI gap up and formed a shooting star. This is a bearish indication. The next day (Friday) was not better neither, it opened wth another gap up from the previous day's close. However, the index retreated throughout the day and closing lower than previous day's close. I guess it qualified to be a confirmation for a bearish tendency

I was into position on 4 counters till this morning. While I have indicated warnings on all my counters which was recorded in my homework, I did not count on the market volatility since this morning. STI fell a total of 24 points gapped down! All my counters were in red. By 11:00AM, 2 of my stocks reached the stop loss level and I have to bailed out immediately, loss were however manageable.

I was still hopeful on Wing Tai which chart I read still green on my record. It fell from SGD1.90 but was still holding on SGD1.85 the last I looked at 2:30PM. I guess it was possible that this counter would still hold above my stop loss level. By the time re check on this counter again by 4pm,I was shock...well shock was not really the word for it since I did not find it so serious. The counter reached a low of SGD1.74, well below my stop loss at SGD1.80. I took immediate action and exited the trade. Good thing is that my money on this counter was also small and the loss is managable.

But still, what a day, I would normally won't find a single day when all my counters hitting stop loss level. So what about STI. The last I mentioned abou this index, it was doing a false break on daily but held on by weekly. This time round it broke the prudent trendline both daily and weekly. My indicators Stochastic and RSI both turned south on daily and weekly (with divergence down). So my 2,809 is likely not in sight as yet. My guess now is that a huge correction is coming and STI retreats to a gentler slope. Its support level fall back to 2,592.

Cosco the laggard

I went for a dinner the other evening at a new restaurant around Block 72 of Pipit Road. It was a small eatery called Hippo Family Restaurant. It was named after the owner's son's favourite toy. The food is good and the price I guess is reasonable, considering SGD3.50 for fried noodles, rice and stuff while SGD4.50 for a single dish. Of course with this price one should not expect how big a plate it is. Still the taste is up to my standard for such a price. The restaurant was a crowd attraction since it opened.

While striking a conversation with the owner's wife, happened to be Chinese national, she mentioned to me that she worked in Cosco for the past 8 years. This got me interested into this counter. Turned out this counter is quite a popular topic on ChannelNewsAsia.com market forum.

One thread started in January 2007 and lasted 1,000 over pages. I did a brief follow up on the thread and noted that the thraed starter predicted Cosco to move since January 2007, yet it was only until mid 2007 that Cosco started to ramp. Another thread has the thread starter complaint that Cosco was a total disappointment because it had not even moved after all these while.



Fig 1 Cosco since 2000

I also noted that this counter has been in bottom formation since October last year. Back tracking further, the whole life of Cosco seems to be a turn off for traders(noting the flat performance since 2001-2006, then 1st half of 2007). So it seems like Cosco is a real laggard and boring but if it moves, it rockets.

So what has Cosco been doing lately?



Fig 2 Cosco Daily chart

Like always, it dragged its feet since October last year until recently (May 2009) that it started to have some movement and eventually a tringle. The problem now is that it is dragging its feet and very reluctant to break out as demonstrated the last few days, it kept dropping back into the triangle.

Today is of no exception, it broke out to 1.33 and then returned back to 1.30, below the triangle envelop. I can't really blame this guy because it just happened to meet the Gann Grid Resistance today forcing it to retreat. the worst thing is that this guy now formed a shooting star indicate a down tendency, a confirmation is required tomorrow (opening lower is part of the indicator).

The break out point as read the last few days were SGD1.301. My RSI and Stochastic is not helping neither, one says up one says reversal. So tomorrow is a day of monitor for this counter.

Nikkei225 and politics

I was on the Channel News Asia Forum today when I came across this thread with the starter trying to draw parallel between Nikkei 225 and the result of the recent election.

The writer wrote that the Nikei fell as a result of the opposition being voted into power and warned that Singapore's market might react the same way if such a change also happen to the political system of Singapore.

I counter argued that the same happened when PAP was voted into power in 2005 ( or somewhere there), so did it signify that the market did not agree with the result? In true fact, the market will fall no matter who win because the price has already factored in the result.

Unfortunately the only thing this guy (I think nick name BigCanonKing) reverted to searching for spelling and grammer mistake to intimidate his opponents rather than involve in genuine debate on the matter. It does show how much wisdom he has.

So now the question is: Does the market approve of the new ruling party? Going back to March 2009, there was a by-election in Japan and the opposition won, and the market reacted. It was because the event was a news and market was not prepared for it.



Fig 1 Nikkei 225 Weekly chart

Referring to the chart, one can easily see a gap up of about 2,000 points on Nikkei. This happened right after the news broke out on Sunday that the opposition won the by-election. To summarize, the market has not factored in this event.

What about the general election that happened over the last weekend? Seriously if we looked at the chart, nothing happened. If I recall correctly, major markets in Asia were having their free fall, yet, Nikkei 225 barely move, in fact there was a gain on the index. It went even higher today before retreating. I estimate that the market is not reacting because it is watch the move of the new ruling party before it makes its next move.

Nevertheless, the RSI and Stochastic on Nikkei indicated that a correction is in order soon. In addition, the index is meeting the downward trendline and at this moment, I think it has not enough momentum to break through.

What I wish to see is that Nikkei break its multi-years bear market and for once reverse its fortune, at least lives of the people there would be better. Let's hope that this new government brings live once again to Japan.

Star on the evening sky of New Toyo

My last romance with New Toyo was not that great, I exit base on a possible Tri-star formation, the counter then start gliding up after the formation, which meant that my judgement on the counter was wrong. It prompted me to enter again at a slightly higher cost, this time I thought I was on the right track. The counter did move up to a high of 0.24 before retreating to 0.235 last Friday.



Fig 1 New Toyo Daily Chart

I was not very happy though, because the counter has now formed a Doji Star with gap up, it is more convincing than the Tri-star formation. The only hopeful thing ( the one thing I have learned that I should not do (from the book "the Way of the Turtle")) is that it breaks upward. Unfortunately, it did not happened, the counter opened gapped down, I exited because it triggered my stop loss. It went futher down by another 0.005 and closed at 0.225. This confirms the formation and now officially an evening star.

The indicators on daily basis further supports its downward slide. Both RSI and Stochastic are reversing downward. The likely support for this counter would be 0.21.

So how much am I right this time? I am not sure, which is why this is on the record in this blog, and we shall see.......

STI bull coming to an end?

When I restart my chart reading "career", I wanted to make some changes to my techniques and focus on weekly more to look at a bigger picture. I do not want to focus too much on details because I have found that I would be looking at the tree and miss the forest. As time progresses it seems like the movements is leading me back to the daily charts, because no matter what, I need to monitor the reversal. The thing is that if there are changes coming, it starts in the daily chart.



Fig 1 STI Daily chart

The recent movement of STI has prompted me for a close monitoring as I have blogged earlier. I was relieved that the confirmation of the Doji star did not come last Thursday. However, probably these stars are omen in a way because by today there is a new formation, Engulf. This is right after another Doji Star followed by a 75 points bar on STI. Okay, all is not yet lost because Engulf still requires a confirmation which is tomorrow.

The RSI and Stochastic on both daily and weekly though is not helping, they are very persuasive to ask STI to go down. This will mean that the fate of STI is very much like HSI, testing its trend support.

The trend support on weekly basis is still at 2,576 while a possible resistance at 2,692. on daily basis the trend support remains at 2,581, coinciding with the 21 days moving average. It is also possible that STI is working on a triangle formation? Like my teacher said, it is like a flower slowly unfolding itself in front of you. So? Wait and see......

SSEC reversal

It was a few weeks ago that I first chance upon SSEC due to the Forum "hot topic". I have last predicted a fall of maximum of around 500 from its top of probably 3,478
to a level of 2,939. This is base onFibonacci calculation of a 4th wave retracement which is 0.382 of wave 1 to 3. It went further than my expectation to a level of 2,761.



Fig 1 SSEC Weekly Chart

At the end of last week, SSEC seems to have ended its downward trend. In fact it created a hammer after a gap down. This is a good sign because it signifies a reversal. However, we should not be too happy yet because we still need a confirmation, which is this week.

The signs are good today with opening higher thanthe previous closing. Yet, we have to wait till the end of the week for a full confirmation. Should it be a long candle bar, if that is so, the hammer would then be a morning star, which gives much confirmation that SSEC would be up the next week.

Creative.....

I was watching Creative today while at work (my bosses better not read this). While my chart reading last night gave me some indications on condition for entry and stop loss. However, its move today gave me a headache because it first hit my stop loss level then hit the entry signal. So I am now having a conflict on whether the stock can be entered.



Fig 1 Creative Daily chart

Last night, Creative seems to be on a verge of completing a downward wedge with an objective of around SGD6.80. So a condition of entry was placed at the point of break through of SGD5.70, at the same time, a stop loss was placed at SGD5.50 since the previous low was SGD5.56. This seems safe enough.

Ironically, it went all the way to SGD5.50 and then SGD5.75. At the end of the day, this chip has done a spinning top, indicating an uncertainty on its direction. I think a parts integration process (NLP) is in order. The support on daily basis is SGD5.46 base on 21 days MA. Both RSI and Stochastic at bottom but no indication of entry yet.



Fig 2. Creative Weekly Chart

When I read the weekly chart however, there is a strong suggestion that I should still stay out of this stock. a Doji star confirmation still fresh at hand with support on declines on both RSI and Stochastic. End of the day, I have to make a decision to sit on the fence for this stock, regardless if it goes up or down next.

Dow Jones Industry Average (DJIA) re-visit

I was browsing through the CNA forum after closing and noted a prediction that DJIA will bleed tonight (Singapore is night when DJIA opens), so it raised my eyebrow that I have to take a look.



Fig 1 DJIA Weekly chart

Seeing the weekly chart, I think DJIA should be in the red for quite a while, both RSI and Stochastic is in agreement that its time for DJIA to correct itself. Probably the good thing is that the Gann Gridline for DJIA is much more gentle, thus there is a support around 8,700 region. This is re-enforced by a minor trendline.

As for Candle Stick pattern, its really difficult to tell. I can't really say that its an evening star because there is no gap, neither can it be a three inside down pattern because the harami is incomplete (day 2 partially pertuding out of day 1). Nevertheless, it is cramped between 2 bearish patterns, so it should still be down for me.

Prediction on STI Daily

I am relatively free from the stock market today since I have sold my last stock yesterday. Even so, I spied on the few stocks that I have dumped. My instinct is at least good for 1 day prediction.

While my stocks went lower, the index did a partial retracement of 20 points at the end of the day, penetrating the previous low. The question is whether it would be good enough to qualify for a reversal?



Fig 1 STI Daily

Fig 1 shows a thrusting pattern on Candle Stick, right after an evening star. This pattern is normally an indication of continuation rather than reversal, so tomorrow's performance will be a crucial confirmation, however, judging from its earlier Evening Star pattern, it is likely to continue its way down.

There are a few levels of support for STI on daily structure. Its trend support is 2,508, while the 21 days Moving Average at 2,552. At present the Stochastic is reversing down, possibly a second bottom or creating a divergence. RSI on the other hand is only half way down, I am not too sure of its direction because it seems to be congesting.



Fig 2 STI weekly chart

Since the lower time frame is governed by the higher time frame, it is always a requirement to at least check one time frame higher. On the weekly STI, its upward thrust is limited by the Gann Fan resistance at 2,604 while its trend support is only 2,485. Seems to me that position of STI is rather shaky at the moment. Its RSI and Stochastic are already trending downward. So does this mean a reversal downward?

The only savior so far as I guess would be the three white soldiers formation during its bull run, the formation is an indication of bull tendency. It is rarely that the three white soldiers would fail ( it didn't on Tiong Woon ). So in case of STI, I would still consider this as a correction. Afterall, no matter how I calculate, the Fibinacci number is still pointing to 2,809 for STI.

Having said that, I must still respect the market, if the market run against me, it only means that I am wrong, thus its back to the drawing board for me.

Tri-Star Formation on New Toyo

I have been using Candle Stick more often lately, this is probably due to my hessitation in Creative earlier. Yes, I did not seel the chip even after a Gravestone Doji creating a shooting star (with confirmation). It made me lose my chance of selling at a higher profit. Nevertheless, there was profit.

On my earlier essay, I mentioned of a stock with a pattern that I did not like, and I promised that I would share. It is New Toyo.



Fig 1 New Toyo Daily chart

This counter is promising. It has created a triangle bottom and poised to move north ward with minimum target of about SGD0.27-0.28. I caught this stock late and was in fact late in entering this counter, nevertheless there is still some way to go.

While it has potential, its last 3 days move has been a waring sign. In fact by the end of today, it has completed a rare Tri-Star pattern. By right there is suppose to be some gap between each doji, the gap seen here is minimum, but the three Doji seems to be good enough warning for me. Of course the pattern will still need a confirmation and I did set my stop loss at SGD0.19. However, it si better to be safe especially when market is uncertain.

Moreover, the indicators are showing signs of fatique and starts pointing downward. This is again another tell tale sign of exiting this stock. I could be wrong but I have decided to still follow my instinct this round.

KLSE

It is difficult for me to be optimistic about the market at the moment. One might think that the market is improving since November fall last year. Many are hailing recovery!! Honestly, would recovery be that easy when we just have a half year of bear after more than 3 good years?


Fig. 1 KLSE Weekly chart

Looking at the KLSE chart, a top formation is completed (Shoulder-Head-Shoulder), it broke and has since retraced to the neckline. It is now hovering between trend resistance and the neck line support. RSI and Stochastic are diverging indicating a continuation towards Singapore.Should it fulfill the SHS prophecy, its target is 675. Present resistance is 1,078.

Malaysia is at the moment very chaotic. The ruling coalition is trying hard to hold on to power while the opposition is struggling to stay together. No one is actually focusing on improving the economical situation. It will not be surprise that the SHS objective be achieved.