City Development

City development is testing the upper boundary of its down trend channel.

MACD just made a bullish crossover and it indicating further strength.

ADX is decreasing which is a good sign. This means that the down trend that we have seen in the past few months is decreasing in strength. However the +DI is till below –DI suggesting that the current rally is most likely to be a bear market rally. The +DI will need to get above the –DI for a confirmation of bullish market.

Short term resistance is at $6.34 and $6.97 levels. All bets are off if the price drops below $5.15.

Keppel Corp

The stock market volatility continued to haunt market traders. Dow surged from 7509 to end at 8046 in the last hour of trading. News that newly elected US president is getting Timothy Geithner as treasury secretary gave traders a reason to buy up battered stocks.

The show of strength should spur Singapore’s market come Monday. Keppel Corp, once a market darling, has come a long way down since October 07 high of $15. The stock closed at $4.60 on Friday.


The stock price managed to hold on to the 61.8% re-tracement level of the recent up moved that saw the stock moved from $3.35 to $5.62 in 6 trading days.

If the stock is able to move above $5.62, the Fibonacci objective is at $6.57. If it breaks below $4.19, it is likely to retrace all the gains made and re-test the low of $3.35.

Dow Support Level

Dow closed at 8424 on Tuesday, up 151 points. The index tested 7947 level, the low established on 13 Nov 08. It managed to rebound and claw back above the 8000 level. Buyers came in only in the last hour of trading.


The index looks to be forming a double bottom and has managed to find buyers whenever it hit below 8000. Next resistance level is at 8835 and support level is at 8085.

Sembcorp Marine

Sembcorp Marine is having a good run recently. Recovering from a low of $1.15 set on 28 Oct 08, this stock has rebounded to a high of $1.98 yesterday. That is an impressive move of 72% percent in the span of 5 trading days.

The price has hit the pivot point made on 10 Oct 08 which is serving as resistance level. The stock has also retraced more than 50% of the down move from $2.73 to $1.15. The next resistance level is at $2.14 which is the 61.8% retracement level.

Let’s see if it can break through the downtrend line. If it is not able to make a break through, the stock may fall back to $1.66 level.

STI Statistics

Dow was down 313 points on Friday to close at 8378. The big plunge that was supposed to take place based on activity in the futures market did not happen. Dow futures plunged 550 points on Friday morning, triggering a temporary trading halt. A 313 points (3.6 percent) drop is therefore something that no one expected.

In Asia markets, Singapore STI drop 8.33%, Japan Nikkei drop 9.6%, Hong Kong Hang Seng drop 8.3%, South Korea drop 10.57%, Shanghai drop 1.92% and India drop 10.96%.
So the drop in US is mild considering what happened in Asia.

Looking at Singapore, STI has dropped 32% since the beginning of October. Let’s look at the index based on its performance from May to Oct and Oct to May period.

Based on records from 1988 till present, there was only 1 period where the index dropped more than 30% during the Oct to May period.

That happened during 1997 from Oct 97 to May 98. The lowest point during that period was 47% below the Oct 97 opening level. Following that decline, the index dropped by another 37% from May 98 to Oct 98.

Will we see another double digit percentage drop from Oct 08 to May 09? Based on the records that I am looking at, the chances of that happening is slim. STI have dropped 15% from Oct 07 to May 08 and another 25% from May 08 to Oct 08. The record shows that there was never a consecutive 3 periods of double digit percentage drop in the index. And when consecutive 2 periods of double digit percentage drop occurred, the next period was a rally. That occurred in 1998 (101% rally) and 2001 (30% rally). And both of these rallies stated in October.

STI Update

US market tried to overcome from market weakness on Friday. However at the close, it succumbed to market forces and Dow was down 127 points. At one point, the Dow index managed to put on a gain of nearly 300 points. The optimism could not hold and the index gave back all the gains plus some extra losses to end at 8852.

The STI index dropped 72 points on Friday in anticipation of further weakness in the US market. The index gave up all the gains made on the first 2 days of the week.

The index has broken through the 62% re-tracement level and is now heading towards the low of 1205 set in March 2003. The support level is at 1848 and 1793.

The daily chart is showing a potential for a double bottom. However the index needs to move above 2218 for the pattern to be valid.

US Market

Market players are waiting to see whether US officials will be able to come to an agreement to the bailout package. The market has been plagued by high volatility lately.

The VIX closed at 34.73 on Friday. It spiked to a high of 42.16 on 18 Sep. Assuming that you buy into the Dow Industrial Average when the VIX went above 40 and hold the trade for approximately 1 year, the trading result is as follows:

Entry Date	Entry Level	Exit Date	Exit Level	% Change
1-Sep-98	7583.09	7-Sep-99	11079.08	46.1
4-Sep-98	7737.32	10-Sep-99	11087.00	43.29
8-Sep-98	7964.91	13-Sep-99	11027.40	38.45
11-Sep-98	7583.61	16-Sep-99	10795.77	42.36
14-Sep-98	7936.08	17-Sep-99	10745.38	35.4
1-Oct-98	7749.42	6-Oct-99	10399.77	34.2
2-Oct-98	7631.50	7-Oct-99	10588.34	38.74
5-Oct-98	7760.75	8-Oct-99	10534.52	35.74
6-Oct-98	7733.97	11-Oct-99	10649.76	37.7
7-Oct-98	7754.82	12-Oct-99	10648.81	37.32
8-Oct-98	7734.48	13-Oct-99	10412.31	34.62
9-Oct-98	7806.57	14-Oct-99	10230.89	31.05
12-Oct-98	8038.03	15-Oct-99	10286.61	27.97
13-Oct-98	7982.68	18-Oct-99	10018.45	25.5
14-Oct-98	7925.01	19-Oct-99	10117.54	27.67
18-Sep-01	8922.70	23-Sep-02	7984.77	-10.51
20-Sep-01	8375.72	25-Sep-02	7687.16	-8.22
21-Sep-01	8356.56	26-Sep-02	7844.62	-6.13
24-Sep-01	8242.32	27-Sep-02	7996.01	-2.99
23-Jul-02	7785.55	28-Jul-03	9284.92	19.26
24-Jul-02	7698.46	29-Jul-03	9268.19	20.39
5-Aug-02	8312.92	8-Aug-03	9127.36	9.8
6-Aug-02	8049.93	11-Aug-03	9189.62	14.16
7-Aug-02	8282.25	12-Aug-03	9218.12	11.3
20-Sep-02	7945.93	25-Sep-03	9425.58	18.62
25-Sep-02	7687.16	30-Sep-03	9378.10	22
8-Oct-02	7425.82	13-Oct-03	9675.72	30.3
9-Oct-02	7499.96	14-Oct-03	9763.27	30.18
10-Oct-02	7286.34	15-Oct-03	9824.09	34.83
19-Sep-08	11027.51	Open	Open	1.05

You have a total of 30 trades with 26 ending with a profit.

China HongXing

China Hong Xing has fallen from peak of $1.45 on Oct 2007 to a low of $0.34. That is a whopping 76% drop.

The technical indicator is showing a mixed picture.

The price is closed to the lower Bollinger band and 20 days moving average is showing sign of flattening.

The –DI is greater than +DI which is a bearish signal. However the ADX is also decreasing suggesting that the stock may consolidate in the current region before a new trend develops.

The MACD line is about to cut the MACD Signal line which is a bearish sign. However there is a possibility of a MACD divergence as shown in the MACD histogram. So the bears may cover their shorts and wait for the price action to confirm the next move.

STI September Performance

September has started and hopefully this Sep will see some better trading environment.

Entry Date	Entry Price	Exit Date	Exit Price	% Change
1-Sep-88	1,031.80	3-Oct-88	1,023.10	-0.84
1-Sep-89	1,363.70	2-Oct-89	1,375.30	0.85
3-Sep-90	1,265.60	1-Oct-90	1,103.40	-12.82
2-Sep-91	1,429.00	2-Oct-91	1,357.00	-5.04
1-Sep-92	1,378.50	1-Oct-92	1,351.00	-1.99
1-Sep-93	2,008.70	1-Oct-93	2,015.30	0.33
1-Sep-94	2,315.70	3-Oct-94	2,334.40	0.81
1-Sep-95	2,146.60	2-Oct-95	2,120.00	-1.24
2-Sep-96	2,153.50	1-Oct-96	2,175.70	1.03
1-Sep-97	1,805.60	1-Oct-97	1,954.80	8.26
1-Sep-98	826.93	1-Oct-98	938.08	13.44
1-Sep-99	2,116.71	1-Oct-99	2,021.14	-4.52
1-Sep-00	2,158.77	2-Oct-00	1,970.93	-8.7
3-Sep-01	1,622.21	1-Oct-01	1,329.54	-18.04
2-Sep-02	1,485.16	1-Oct-02	1,345.69	-9.39
1-Sep-03	1,608.59	1-Oct-03	1,621.06	0.78
1-Sep-04	1,921.48	1-Oct-04	1,986.96	3.41
1-Sep-05	2,289.58	3-Oct-05	2,302.03	0.54
1-Sep-06	2,489.21	2-Oct-06	2,571.45	3.3
3-Sep-07	3,390.84	1-Oct-07	3,734.94	10.15
1-Sep-08	2,739.95	Open	Open	0.69

Looking back at the September STI Index performance from 1988 till 2007, there were 11 winning September months. That is about 55% chance that you will end up better if you buy the index at the beginning of September and hold it till the first trading day of October. There were also nasty down move like in 1990 and 2001. Lets see how the index will perform this month. But looking at how the Dow gave up its gain yesterday night, it doesn’t look promising.

Shanghai Update

Shanghai market was whacked again yesterday. The Shanghai Index closed at 2319 down more than 5%.

The index is now at the year 2001 level. The immediate support is at 2245 level which is the high set way back in Jun 2001.

For those that are still holding to their stocks since the index broke out of 2245 level, all the gains have more or less vanished.

We are back to square one again.

STI Update

STI made a pivot low on 16 July and it has met a resistance at 3000 level. The market is not out of the woods yet.

STI is still trending downwards. Based on Fibonacci Analysis, the downside objective point is at 2546. There is also support at 2745 level, the low that was established on Jan 08 and Mar 08 respectively.

Dow Update

It was a see-saw trading session on Friday for the US Market. The Dow Industrial Average dropped to a low of 10978 before bouncing to a high of 11239. The Bears attacked the market again bringing the index down to close at 11100.


The index managed to make a higher high and higher low on the 5 minute chart which indicates some strength towards the closed of the session.

The VIX is charging towards the 30 level again, with the indicator hitting a high of 29.44. There are fears in the market again.


The next support for Dow is 10849.

STI AD RSI

I received a request for analysis of STI using the AD line derived from the 30 stocks in the FTSE STI Index.



The 13 day AD RSI is now at 28.24 level. It is certainly oversold. If you apply the technique of buying the STI index when the AD RSI rises above the 30 level, you will be 9 winners and 2 losers and 2 trades that are still opened.

The trading record is shown below:

Entry Date	Entry Price	Exit Date	Exit Price	% Change	Draw Down %	Max Gain %	Bars Held
12-May-04	1807.89	10-Jun-04	1814.08	0.34	-6.5015	1.4912	20
19-May-04	1741.09	17-Jun-04	1827.60	4.97	-0.1373	5.3851	20
24-Oct-05	2249.57	22-Nov-05	2278.74	1.3	-2.6449	2.4262	20
24-May-06	2429.77	21-Jun-06	2322.98	-4.4	-6.25	1.1993	20
12-Jun-06	2328.31	10-Jul-06	2429.42	4.34	-2.1647	5.2867	20
16-Jun-06	2354.57	14-Jul-06	2373.58	0.81	-1.8534	4.3299	20
21-Aug-07	3320.72	18-Sep-07	3452.09	3.96	-2.7723	7.2617	20
27-Nov-07	3344.57	27-Dec-07	3469.11	3.72	-1.3069	8.2902	20
18-Jan-08	3073.76	19-Feb-08	3100.26	0.86	-10.6394	3.0734	20
24-Jan-08	3055.76	25-Feb-08	3048.64	-0.23	-6.4364	3.6806	20
12-Mar-08	2964.32	10-Apr-08	3089.72	4.23	-7.3663	7.3406	20
17-Jun-08	3036.92	Open	Open	-2.67	-3.7554	0.3392	9
26-Jun-08	2986.62	Open	Open	-1.03	-2.1345	0.9144	2

For more information on the AD RSI, please refer to my earlier post.

Dow Update

US market was hammered again on Friday. The Dow closed at 11346. From the 5 minute chart of the Dow, we can see that the index was attacked by the Bears from the opening bell.




The only positive sign is a bounce off the lower Bollinger band at around 1.45pm. The index managed to stage a higher low near the 61.8% Fibonacci Re-tracement Level. It is now resting at the lower Bollinger band. The resistance level based on the 5 minute chart is at 11401. If it managed to clear this level, the next resistance is at 11440.

US Financial Sector

Dow closed at 11,824.69, down more than 200 points. The index is now very close to 11,508, the low established on Jan 22 2008.

The headlines are saying that the fall on Friday is due to credit woes and high oil prices. If you look at XLF (Select Sector SPDR-Financial), the MACD chart is hinting on a potential reversal.



The XLF established a low of 22.13 on 11 Jun 08 and it reached a low of 21.86 on 20 Jun 08. However the MACD histogram has held above the low made on 11 Jun 08. This divergence is suggesting that a reversal is near.

However traders need to have strict discipline and stick to pre-defined stop losses in order to survive in this tough environment.

Happy trading!

China Hong Xing

China Hong Xing was hammered this week. The stock closed at 0.45 on Friday, a loss of 20% in 5 days. That is a significant profit for the bears.

RSI is in extremely oversold levels. There is no sign of rebound from the price chart.

ADX is above 20 and with –DI greater than +DI, this point to a downtrend. The –DI is now greater than 40 level. A similar pattern occurred on 22 Jan 08 and at that time we see the stock rebounded from a low of 0.48 to a high of 0.74 in 3 trading days.

MACD made a crossover its signal line on 13 May 08 and the stock has since moved from 0.68 to 0.45.

The stock is approaching the support of 0.405 which is the low made on 20 March 08. It looks like the best time to short this stock is probably over and a rebound is near. Given the positive close on Dow on Friday, Monday should be positive for this stock.

Dow Update

The Bears came out to party this week. The Dow closed at 12209, down 429 points for the week.
The loss on Friday erased the 214 point gain made on Thursday. Jobs number came in worst then expected and high oil prices were the culprit for the Friday decline.



Looking at the weekly chart for the Dow, there should be support at 12155, 11952 and 11508. If the index breaks below 11508, we are looking at possibility of index falling to 10849.

China XLX Trend Score Case Study

This is a case study of using Trend Score Indicator on China XLX.

For definition of Trend Score Indicator, please refer to my earlier post.

Entry Rules:
1. Today’s trend score is less than -5.
2. Yesterday’s trend score is greater than -5.
3. Enter a short position on the next trading day at the market opening price.

Exit Rules:
1. Close the trade after 10 trading days.


The trading result is as follows:

Entry Date	Entry Price	Exit Date	Exit Price	% Change	Draw Down %	Max Gain %	Bars Held
8/1/2007	1.25	8/16/2007	1.03	17.6	-0.8	17.6	10
10/25/2007	1.16	11/9/2007	1.21	-4.31	-15.5172	1.7241	10
11/15/2007	1.16	11/29/2007	0.97	16.38	-0.8621	22.4138	10
1/4/2008	1.04	1/18/2008	0.93	10.58	-19.2308	12.9808	10
1/15/2008	1.04	1/29/2008	0.92	11.54	-1.9231	24.0385	10
2/27/2008	0.82	3/12/2008	0.805	1.83	-10.9756	9.1463	10
3/10/2008	0.765	3/25/2008	0.56	26.8	-5.2288	39.2157	10
4/1/2008	0.76	4/15/2008	0.745	1.97	-11.1842	3.9474	10
5/27/2008	0.92	Open	Open	8.7	-2.7174	9.7826	5
5/30/2008	0.925	Open	Open	9.19	-0.5405	10.2703	2

Average gain is about 10%.

STI June Performance

This is the performance of STI in June from 1988 onwards.

Entry Date	Entry Price	Exit Date	Exit Price	% Change	Draw Down %	Max Gain %	Bars Held
6/1/1988	1006	6/30/1988	1093	8.62	0.00	8.62	18
6/1/1989	1279	6/30/1989	1308	2.23	-5.64	2.82	21
6/1/1990	1556	6/29/1990	1527	-1.85	-2.13	0.79	20
6/3/1991	1566	6/28/1991	1490	-4.84	-4.84	0.00	17
6/1/1992	1511	6/30/1992	1481	-1.95	-2.27	0.81	20
6/2/1993	1895	6/30/1993	1803	-4.88	-9.14	0.27	20
6/1/1994	2280	6/30/1994	2225	-2.43	-3.65	1.29	21
6/1/1995	2180	6/30/1995	2093	-3.97	-5.35	1.80	21
6/3/1996	2332	6/28/1996	2296	-1.55	-2.78	0.65	18
6/2/1997	2065	6/30/1997	1988	-3.74	-4.68	0.07	20
6/1/1998	1254	6/30/1998	1067	-14.94	-17.74	0.00	21
6/1/1999	1910	6/30/1999	2168	13.49	-0.37	15.88	21
6/1/2000	1810	6/30/2000	2038	12.61	-0.04	15.72	21
6/1/2001	1663	6/29/2001	1727	3.79	-1.08	3.79	20
6/3/2002	1677	6/28/2002	1553	-7.38	-9.34	0.27	19
6/2/2003	1367	6/30/2003	1448	5.92	-0.13	11.43	20
6/1/2004	1787	6/30/2004	1838	2.83	-1.13	3.22	20
6/1/2005	2169	6/30/2005	2213	1.99	-0.08	2.82	21
6/1/2006	2394	6/30/2006	2435	1.71	-4.86	2.17	21
6/1/2007	3548	6/29/2007	3548	0.02	-1.89	2.94	20

Out of 20 June months, we have 10 winners and 10 losers. Interestingly from 2000 onwards, STI performed quite ok in June except for 2002 where it was down 7%.