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%.