SSEC reversing SO SOON?

It was 2 weeks ago that I have an entry for SSEC in Is China doing badly? I was adamant that SEC was actually heading upward with resistances between 3,174 and 3,225.  

Even though there are additional levels on my charts indicating resistances between 3,370 to 33,555, I have not included them as I did not anticipate a strong move to reach these levels.

There was another concern, the long term moving averages of 55, 89 and 144-week moving averages were still intact, meaning the possibility that there may be a little more downturn before going higher.

While gapping up the week after my entry, crossing the resistance levels that I estimated, it's climb was milder. 

I went back to KL over the weekend, which normally led to a pause in my entries. This time round, additional alteration of family matter led to my urgent departure back to Singapore. A complete disruption of my weekend.

Meanwhile, I started receiving videos about people getting burnt due to abrupt reversal. "Are they over-reacting?" I thought. Afterall, I just looked at SSEC because of similar claim and it turned out to be false 2 weeks ago.

So I took a look at this counter again this week.

Fig 1. SSEC weekly chart

The week opened with a huge gap up, even violating my 100% and 127% projection, went above the 161.8% projection. Not only that it went much beyond the Bollinger envelop resistance.

The move this week also crossed the previous high, justifying a double bottom formation with objective of 3,711, which it was close to reaching.

Unfortunately, the surge was too strong leading to an equally strong pull back, with SSEC eventually closing within the band and coincidentally, its 100% projection. 

The movement also created a candlestick formation called Dark Cloud Cover uniquely for uptrend. This is a reversal pattern mark the beginning of a down trend. The 2-bar formation makes an equivalent shooting star.

So is SSEC reversing down?

If based on the candlestick formation, there is no need for confirmation of reversal. Furthermore, the momentum of its downward movement this week is strong, leading to the possibility that it would be on a down trend from now on.

The problem is that there was a gap up prior to the incident, and the move this week failed to cover the gap. 

In addition, it hung onto the Bollinger envelop after this forced reversal.

It gives me the feeling that while it may be heading down further in the coming week, there may be limited downside. Afterall, the 55-week moving average support is close by at 3,016. 

There is another scenario though, if SSEC inch back higher with candlesticks of small bodies, it will be indication to me that there is a continuation downward that may eventually surpass the 55-week moving average support level.

Is China doing badly?

 I have been receiving more videos about how badly China is performing at this stage of time. Massive unemployment, closure after closure for factories and eatery outlets and people sleeping on the streets while airports are empty.

It makes me wonder: Is China getting worse? 

It really took a long time for China to reach the level of Asean at the cost of its Neighbours. It was also very scheming to trap countries to go in debt through its One Belt One Road project.

I was very negative on China market for a long while. My last update on China was So Biden and Xi finally met at San Francisco... on 26th November 2023. It was at the time when I noted a potential reversal on CNY, with ration that it was due to the weakening of USD. SSEC on the other hand would continue to weaken with potential support between 2,564 to 2,892. 

It was Trump who stopped China's ambition to dominate with its parasitic behavior.

Is China really continuing on its decline?

I began my investigation with checking on SSEC index. Unfortunately, something is wrong with https://finance.yahoo.com, it hangs whenever I download SSEC chart. 

Eventually, I managed to obtain a reasonable chart for analysis through a chart from https://uk.investing.com/.

Fig 1. SSEC weekly chart

Since my last read, SSEC went to a low of 2,6535 before reversing up, followed by a continuation downward by 20th May 2024, stopped by its 55-week moving average. 

What's interesting is that the downtrend did not break its previous low of 2,635 and surged upward this week, breaking through most of its moving averages, falling short of its 144-week moving average, and the neckline of its supposing head and shoulder. 

Where shall it go from here? 

With such a strong surge this week, it is possible for a correction in the coming week, falling back to the moving average resistance turned support.

Nevertheless, there is a high potential for it to go further after its correction with its next objective of 3,225. It depends a lot on where it can break the neckline. 3,174 will also be a crucial resistance as this is the previous high.  

Meanwhile, with its close to 5-year head and shoulder setup, there is still a chance of downtrend. Then the support will be between 2,006 to 2,335. For this to happen, 2,692 is crucial.

What about its currency, CNY?

Fig 2. CNY weekly chart 

CNY broke through the 7.0275 neckline of its double top formation this week, giving a potential objective of 6.7045 with support at 6. 8263.In addition, its double top formation also provides another range of support levels. It breached its 61.8% projection support of 7.0723 last week with the next range between 6.8551 to 6.9459.

It is likely CNY will continue to strengthen against USD.

At the same time, it is possible for the move this week to be a false break with CNY correction back to its 55-week moving average presently at 7.1596. The possibility of it continues upward (CNY weaken against USD) for the time being is low.

After thought:

After finishing this entry, I find it not really to my satisfaction. It seems that I have reservation on my view on the situation.

For SSEC, I am bullish with exception of a possibility that it may reverse the coming week, if the reversed bar is longer, then we should expect a continuation downward. 

However, when I looked at the daily chart, I saw 3 consecutive long bars with gap in between surging up. This made me feel that it is bullish at least on daily chart, if reversing down this coming week, I believe it is only a correction, with its 8 and 21-week moving average as the support. While the bars may look long, I should expect short bodies overlapping for the coming weeks.

The entry on CNY is much shorter than I have anticipated, because the pattern formed is relatively straight forward.

Why am I having reservation still?

The pattern is too obvious, this causes me to have some self-doubt that if 90% of the people see the same thing, it will lead to the counter to behave differently.   

 

 

Hang Seng is climbing...

My last update on HSI in The flaw of group project in school and is Hang Seng continuation...downward? on 17th June 2024. It has been 3 months since then. 

At that point of time, while there were indications of down slide. I noted that it was more likely to be a correction of an upward trend. 

It continued to decline there after until its reversal on 4th August 2024. I did not set any support level for its correction in my last entry. 

Using retracement measurement through its up trend. I noted the reversal point was its 61.8% retracement line.

Fig 1. Hang Seng weekly chart

While climbing higher since, there was a mild correction when it hit its 55-week moving average, and managed to break through 55-week moving average decisively this week. It is heading up.

One point to note here, it is facing an uphill task now, what do I mean by this?

Its climb will face numerous levels of moving averages. If I am to be strict on my selection, I will limit to Fibonacci numbers.

Its climb this week is held back by its 8-week moving average, with next level 144-week moving average in waiting. There is a possibility that a correction will happen every time HSI hit a moving average.

At the same time, this week's escalation of HSI also crossed its minor 61.8% projection with its 100% objective at 18,665.

What I will see is another resistance level of 19,594 to 21,573, with an additional resistance 22,868.

But what troubling me is its double top formation with support at 8,447 to 13,221. These levels have not been reached. Is it possible that Hong will go on further decline with the present move as a congestion prior to continuation?

A belated happy birthday to Malaysia...or was it a little too early?

 It was Malaysia's National Day on 31st August 2024. It was 2 Saturday ago.

You might expect Malaysians with great enthusiasm, rising up together to celebrate the event. On a contrary, it was more of a non-event with majority of the people treating it as another day of rest. It was a long time since I last stayed in Malaysia on this date, I sense no sign of passion for the country.

It might interest many here that 31st August in 1857 was not the day when Malaysia was complete. It was not until 16th September 1963 that Sabah and Sarawak joined the Federation, which complete the collection of all member state. The complete name of Malaysia is not just Malaysia but the United State of Malaysia. For some reason, I feel that there is a little plagiarism to the United State of America.

It took another 2 years before Singapore departed from the Federation in 1865, it declared independence on 9th August 1965.

It is because of this that some consider the actual birthday of Malaysia is 16th September and not 31st August.

I was supposed to create an entry on Malaysia on the weekend of National Day. Unfortunately, I was preoccupied with satisfying my mother's needs. 

Nevertheless, I am not late if I consider its true birthday, which is labelled as Malaysia Day.

My last update on Malaysia were So, another proof of weak government leading to a good economy? on 18th February 2024 for KLSE while Divergence after divergence after divergence... on MYR.... on 8th April 2024 for MYR and SGDMYR. 

I was actually bullish on both MYR and KLSE at the time. So am I right on both?

Fig 1. KLSE weekly chart

KLSE is on an uptrend, I expected resistance at between 1,674 to 1,860, which is its 61.8% projection. KLSE reached its 61.8% projection and retreated the week after National Day. It is presently supported by its 8-week moving average.

I believe KLSE should be on a correction or congestion phase with support between 1,556 to 1,615 if it breaks the 8-week moving average at 1,639. An important point is the previous high of 1,695. Should this level be breached, we may see an objective of 1,997, and 2,183. 

Fig 2. MYR weekly chart

In my last update, I noted multiple divergences on both MYR and SGDMYR, indicating potential reversals. 

Reversal came and MYR surged against both SGD and USD. Well, reversal against USD partially because USD on the decline. 

What I see for MYR now is a double top formation with neckline at 4.57, and MYR reached its objective of 4.358. 

It is congesting at the moment, with and with a reduced downward momentum since 12th August 2024. 

I believe there is more downside to this counter with support at 4.2836. 

Another import level for MYR is 4.2224. This is the previous low for the counter and crossing this will form a major double top with support between 3.6987 to 3.8996.

Fig 3. SGDMYR weekly chart

While MYR also strengthen against SGD, SGD is more resilient. It congested after breaking its 144-week moving average. For the time being, I do not see a very specific top formation for this counter.

There is a mild downside potential though. If SGDMYR not managed to pull itself back up, its next level of support will be between 3.2189 to 3.2838 using projection. 

As far as I concern, the Malaysia political arena remains in a messy state with the Government remain under the scrutiny of a strong opposition. Many will consider it troubling because the government's hands are tied. Me on the other is happy with the outcome, this leads to little interference to the economy allowing it to recover.

In fact, this is very similar to the US Republican's ideology emphasizing free market with minimum government control. 

With a stale mate situation in the Malaysia political arena, the politicians WILL have to listen to the people. They will less and less able to use racial topics to divide and conquer. My only hope is for Malaysians to be wiser in future electing people who REALLY willing to serve them, like Khairy.

It is tumbling down, but it is not yet for Dow Jones

I remember it was a day of tumble on Dow Jones, leading to a group of anti-Biden-Harris using it to determine that US market is collapsing and that it is due to Harris' proposal. 

That was a month ago that happened to be Singapore's national day. I wanted to complete the Singapore's read first before continuing with proceeding to checking on the US market. After all, it was only a single week of downturn and insufficient for me to determine a reversal.

unfortunately, what followed led to further delay in my entries.

First off, my wife's family gathering used up one of my week. Then a gout attack on the second weekend caused me to take some pain killers, but the wrong prescription from the pharmacy caused me to take anti-depressant instead.

At least I know now that it did not make my less depressed, but instead I was attacked by continuous drowsiness and slept throughout the weekend with no improvement on my swelling and pain.

Then I had a week's off going back to KL, focusing on my mum's needs.

Finally, this week, I get to sit down and work on this entry.

I have been following the US political arena and if you are observant enough, you will notice that US is on deterioration as a country. It is very deep in debt while the politicians lack the will power to bite the bullet and move towards austerity. 

They attempt to distract the people into focusing on personal gain, ignoring the more pressing issue what the country is heading into the abyss of down fall. 

Having said that, I believe it is not yet time for US to collapse. There is a Chinese saying that 'even a rotting ship contain 3 portion of iron nails'. There are sufficient talents and resources in US for it to stay afloat, if they play their cards right.

Fig 1. DJIA weekly chart

Since the tumble a month ago, Dow Jones actually reached a new high after its fall stopped by the 21-wek moving average, only to 'tumble' again this week. Strange that there is no comment from anyone this time. Is it because the event does not match the narrative?

Ok, let's stay objective in looking at Dow Jones chart. 

The Dow just reversed from a major 100% projection, crossing and stayed below its 8-week moving average. The gradient of ascend remained gradual, indicating a weak momentum. The potential of a downward movement is increasing. 

On the other hand, it has not produced any reversal candle stick. Neither has MACD shown any divergence, indicating that there might be some upside. 

I suspect it may still be another correction with the next support at the 55-week moving average of 38,060, which is mildly above the Bollinger envelop of 37,824. If this happens, it crosses a crucial point of 38,390, which become a neckline for double top base on the present set up, this will lead to a new objective of between 35,389 to 36,708.

On the upside, its immediate resistance is between 41,773 to 42,2185.

For the time being, I do not see that Dow Jones is crashing, at least not yet. However, the same can't be said for its currency.

Let's look at JPY first.

Fig 2. JPY weekly chart

My last entry on JPY was The curious case of JPY-Nikkei divergence, I noted JPY strengthening against USD, with downward potential of 143.141.  As of today, it crosses this level reaching a low of 141.6770. It corrected after the support from Bollinger envelop, it continued its decline but more gradual with present low still above the earlier level. 

Based on the present set up, I do not have upward measurement as there is still no reversal nor divergence indication. So, I will assume continuation downward with further strengthening of the currency against USD.

The next support level is between 129.176 to136.906.

If I am to set an up-side resistance, it will be the 55-week moving average of 149.2248.

Guess I should be seeing more downside on Nikkei since it always move in the opposite direction to JPY.

Fig 3. EURUSD weekly chart

My last entry on both EUR and GBP is Divergence between GBP and EUR dated 3rd Sept 2023. That was more that a year ago. I suspected at the time that EUR and GBP might part their ways. They did not, both continued to weaken against USD for a short while before reversing back up.

I see from the latest chart that EUR is correcting after crossing its 61.8% projection resistance now turning support. It remains above this level of 1.10258. I believe that it should further strengthen against USD with next resistance level between 1.12922 to 1.14787.

One point to note here is the previous high of 1.2759, this coincides with the 61.8% retracement level which is also very close to the 100% projection resistance.  I suspect it may be difficult for EUR to break this point. 

Fig 4. GBPUSD weekly chart

GBP actually fair batter than EUR, it crosses its previous high of 1.31425. It presently retracted from its 100% projection point in what seemingly a congestion at this point. It may hit higher after this.

The next resistance for GBP should be 1.33897 to 1.37742.

One point to note is the gradual gradient of the uptrend for these 2 counters. I suspect while both currencies strengthen against USD, they may be negotiating a top formation. But I think it may take some time before reversing downward.

In conclusion, it is not Dow Jones that is going down, but USD certainly shows much weakness at this point of time. The most important asset of USA is its currency that is used in all international trade. But generations of US politicians take it for granted and print USD as a quick fix for all their problem. Its debt is in level of Trillions, an amount unseen in history. If USD breaks, it signifies the collapse of USA.  

Happy birthday Singapore....and what happened to you?

 It is National Day for Singapore today, it is the date that they officially declare independent from Malaysia in 1965. At the time of independence, Singapore has resource except for people. It led the then government to develop the only resource it has for survival.

The result today is a strong and sturdy country with well educated professionals in technical and financial field. The talents of its people are even sort after by multinational companies. Few countries in the world can compete in this area.

The weakness of Singapore is also its strength, a nation of skilled workers. the amount of time spent to develop the skillset leads to a fear of letting go of the rewards that follows. This one fear cause many to stick to their jobs with reluctance to venture into the unknown such as entrepreneurship.

It further that many business owners maintain a traditional mindset, comfortable with where they are and lacks the will power to grow. The goal of these is just to live. Most businesses are stagnant with aim to just service their existing customers.

What of those that grew? Ever notice those listed companies? Remember those who flourished in the 90s and 2000s, like Creative, Aztech, IPC, Venture, JTC and Goldtron?

They are presently only a fraction of their past values, why? Even when they were listed, they maintained the same ownership regardless of their performance. The business owners maintained a firm control over their entities, there was no change in leadership when things go wrong, and companies were filled with people lacking in true skills on company growth while focusing their resource satisfying the narcissistic needs of their bosses.

The government is eager to grow entrepreneurship, they give a lot of support to new start-ups and subsidize industries they intended to grow. However, this also leads to a growth of parasitic companies cannibalizing on government project with little interest in growing beyond government links. 

In addition, because Singapore is a country with strong rule of law, it tends to stiffen economy growth. The stock market is one such example, the vase number of restrictions limits speculation, leading to a relatively stagnant market.

Singapore is only ideal for foreign companies who intend to use Singapore as a regional headquarters, with its strong infrastructure and stable environment, it is a suitable place when you just want an environment that just follow instruction.

Anyway, I believe it has been a while since I last look at Singapore market. My last update on SGD was Crude oil is cooling down dated 12th May 2024 while STI in Something is wrong with Straits Time Index (STI) dated 3rd December 2023. While I was confident in the strengthening of SGD against USD, I was negative on STI as there were indications of a market downturn.

 Fig 1. SGD weekly chart

Technically, I have not modified the set-up of SGD, the direction of SGD has not changed against USD. However, SGD is still within the congestion zone a this point of time, the crucial level for SGD for its downward movement is 1.31582, it is presently at 1.325.

The downward projections still valid for SGD. SGD crossed 61.8% of its minor projection at 1.32911. It is possible for a correction to above this value before going down further. The next level of support with this projection will be between 1.2899 to 1.3066.

In a more major move, it is yet to reach its 61.8% projection support level at 1.2861. 

Together with what I saw on JPY last week and Ruble weeks before, I suspect that it is USD that is weakening in general.

Fig 2. STI weekly chart

what the hell happened to STI?!

The week opened with a steep gap down and there is not enough will power of the counter to even attempt to cover the gap. It opened with resistance from its 21-week moving average, dropped down only to be supported by 144-week moving average at 3,209 and recovered by end of the week to its 55-week moving average at 3,261. 

Its MACD has also crossed at this point of time, to some this will be the entry level for short. However, I am a little skeptical, I suspect STI may tried to recover the coming weeks before continuation. 

There are a few crucial levels that need attention: 2,968 and 3,041. these are the lows of its downward move. Crossing these levels with more indication of reversal and may mean a double top formation with support zone between 2,475 to 2,633.

However, we are looking at the closer to the present position, It stopped at its 61.8% projection at 3,216. If it crosses this level, the next level of support will be 3,013. This will be very close to the past low.

Just a side track, I received a letter from my broker for Singapore stock, I have not been trading on Singapore market since 2017 and they would close my account if not action by September this year. It caused me to log in to my account to check if there is any share I can trade. I do not really like this as I can only long and not short.

But checking on the counters only led to disappointment, the counters are at the level of cents. it was so tough to even find an active counter that is at tens of cents level. Many even dropped all the way to sub 1 cent. How to trade with this market?

Singapore government love stability, they are uncomfortable with chaos. The stock market on the other thrift on chaos and I think it makes the government irk. SGX will stop and investigate counters with any "abnormal moves". This cause traders reluctant to trade because you can't really make money from a stagnant market.

The curious case of JPY-Nikkei divergence

July this year is really a crazy one for me, lots been happening. My son's project, from his course as well as the competition, Noy to mention my daughter is finally started her journey through University. 

Finally, life is settling down by the end of the month and what happened on arrival of August? 

Nikkei was down 1,733 plus points in one day, while whole day fluctuation reached a range of 2,388, closing at 34,928.

While this was happening, JPY strengthened by 2.803, with fluctuated range of 3.361, closing at 146.5560.

I am not sure what happened as I was still trying to re-adjust back to my normal life. But my interest is only on the chart. So just look at the chart.

I did an entry on Nikkei "Is Nikkei firm on continuation downward?" on 1st of June 2024 and JPY in JPY is....ENGULFed!!! dated 4th of May 2024. I estimated a potential reversal then for both counters. They did not, at least not yet at the time. Both counters went on further continuation only to reversal after hitting the Bollinger envelop.

So what is happening now?

Fig 1. JPY weekly chart

JPY reached the 61.8% level of a major projection before it reversed, and the reversal was with momentum. Its descend even dropped below its 55-week moving average this week, closing below the level only supported by its Bollinger envelop.

I rarely use project such reversal as it went above the previous high. However, due to its gradual gradient  upward after a steep drop, I believe his is applicable. 

Using the projection measurement downward, it can be seen that JPY already dropped below its 161% level and 23.6% retracement line. 

The next level of support will be its 89 weeks moving average at 145.601, beraking this point, the nextr level of support will be 139.811, which also coincide with its 38.1% retracement (138.645) and its 144 weeks moving average.

Having said that, it was a steep drop this week and I believe a correction or congestion in the coming weeks before continuation.

If I consider the recent formation a double top, it is possible to measure an objective, which is 143.141. This also mean a potential retracement back to its neckline at 151.859 before continuation.

Fig 2. Nikkei 225 weekly chart

When I look at Nikkei 225 chart, I can't help but to note that similarity between Nikkei and JPY at this point of time, except that Nikkei is weakening while JPY is strengthening. 

The difference is that Nikkei crossed the 100% of its major and minor projections while failing to reach its 127% major projection resistance, it crossed the 127% minor projection before retreating.

Using projection measurement downward, similar to JPY read, it is noted JPY is presently supported by its 161% projection (34,973) which coincide with its Bollinger envelop (35,442), closing at 34,928 at the end of the week.

Similar to JPY, I expect a potential correction or congestion before continuation downward. Like JPY, I can also consider a double top formation with a minimum objective of 32,039 which with neckline of 36,688, the retracement may reach back to this neckline before continuation, this also coincide with its present 144-week moving average at 32,217.

This one thing I do not understand is why the continual divergence which JPY does not follows the behavior of Nikkei. In general, a rise in index would indicate a long for shares therefore an increase in demand for the currency, vice versa. With such a sharp fall on the index, I would consider an exit from the market leading to weakening of JPY, yet the demand of the currency increases. Unless someone is accumulating and expecting Nikkei to go higher.

Anyway, I believe this will be an issue of fundamental analysis.