STI Update

STI hit a high of 2827 on Thursday but succumbed to selling pressure to close at 2802 on Friday.

Going towards the end of 2009, the index looks to be consolidating at current levels. The technical picture shows the MACD indicator below its signal line which is a bearish signal. The ADX has fallen to around 17 which correspond to the weakening of the uptrend. Short term stochastic is also giving a bearish signal and points to short term weakness.

Support is at 2770 and 2740 respectively. The break above the strong resistance at the 2700 to 2730 range is still valid. This indicates a target of 2900 which looks attainable.

STI is safe for now

Dubai’s announcement to restructure its biggest corporate debtor, Dubai World, and delay payment on some of the company’s US$59 billion of liabilities caused tremors across global stock market.

Singapore market was closed for holiday on Friday and did not bear the brunt of the global selling. Its impact will be felt on Monday on market open for business.


The technical charts are still showing a positive picture.





There is a high chance that the MACD indicator will move below its signal line in the coming week which will change the technical picture.


A look at the KST weekly indicator for STI showed a bearish crossover on 12 Oct 09.

If the index moves below 2600 then it will be very bearish. The last time the KST weekly indicator made a bearish crossover was on 28 July 2008. And the index dropped from a high of 2912 to 1473 before it made a bullish crossover again. Let’s see if the market is able to fend off a bear attack.

Market Correction Or Trend Reversal?

Dow Jones Industrial Average closed at 9712 on Friday down 249 points. The moved erased all the gains made on Thursday. The index closed below the uptrend channel and is at dangerous territory. The RSI is now at 45 level. Note that RSI has not fall below 40 level since Jul 09. MACD is showing bearish signal as well with the indicator below its signal line. -DI is set to cross the +DI, this may mark the beginning of the correction that the market has been expecting for some time now.

The next few trading days will be crucial. If the index is able to close within the
uptrend channel, it will be good for the bulls. If the index is not able to gather enough
momentum, then the correction looks set to test the low of 9378 set on 2 Oct 09.

SC Global

SC Global has come a long way since hitting a low of $0.295 on Mar 09. Prices tested $1.42 on 5 Oct 09 before rebounding to close at $1.63 on Friday 9 Oct 09.

SC Global is in the luxurious property sector. Sale of Seven Palms Sentosa Cove got underway and it managed to sell 6 out of 10 released units in a recent private preview. Transacted price range from $3,100-$3,400 psf with each unit costing $11m.

The technical charts are also showing improvements following the test of $1.42 on 5 Oct. Prices is on the rise and is set to test $1.77 level. MACD indicator is about to make a bullish crossover. However volume for the recent rebound has been on low volume which shows that market players are still not coming back in full force.

Last Friday, this counter makes a Doji pattern. If the price can break the $1.77 level on high volume, we could see $2.00 soon.

Singapore Market

STI index has stayed within a 200 points range since it broke the 2424 resistance level in mid July 09. The bulls pushed the index to 2700 on 4 Aug 09 but could not overcome the sellers that came in to take profit.

The market correction that analysts talked about has materialized. Investors have been buying on dips and that strategy seems to be working since March 09.

The technical charts are showing warning signs. –DI has just made a crossover with the +DI. MACD histogram has been fluctuating about the zero line which shows a directionless market. However the MACD indicator has recently pulled away from the signal line meaning that selling is gathering pace.

With Dow closing down 42 points on Friday, there will be some selling pressure early next week. Another thing to note is the strength in Japanese yen. USDJPY currency pair traded at a low of 89.50 before recovering slightly to close at 89.84. This will exert some pressure on the Japanese equity market next week as well as strength in yen is bad news for Japanese exporters.

The support level to watch is 2560, 2521 and 2424.

Shanghai Market

Shanghai market tested the uptrend line this week. The good news is the uptrend line is still intact with the support level holding on to attacks from the bears.

However there are a few warning signs appearing on its weekly chart.

Firstly, the MACD indicator has cut down from its signal line. The indicator has stayed above its signal line since end of Nov 08.

Secondly, the +DI is about to go below the -DI line. This indicates that the uptrend may be slowing down.

The critical level to watch is the uptrend line. The index needs to stay above the uptrend line. If it closes below uptrend line, a sell down may be in the cards.

Dow Potential RSI Divergence

Dow closed at 9544 on Friday, down 36 points for the session. For the week, the index rose 39 points.

The technical picture is mixed at this point.

The ADX and DIs indicators are indicating a continuing up trend.

RSI is showing a divergence pattern with the Dow making a high this week but with no confirmation from the RSI indictor. This is bearish and suggests a possible sell down.

The MACD indicator is not able to make a decisive crossover with its signal line and it shows that the bull’s strength is waning.

The moving average is showing a bullish picture with the Dow above its 14, 25 and 50 day moving average.

At this point, the bulls and bears are equally matched and there is no clear evidence of where the market is going. However I will lean more towards the bear's camp.

STI Update

Singapore market closed slightly below 2600 level on Friday. This was the first time the market made a series of “Black Candles” since it broke out of the 2424 level on 20 July 09.

Fibonacci retracement level is at 2527 (38.2%) and 2417 (61.8%) respectively.

RSI has dropped from overbought levels and is now at 57 level. There is no RSI divergence at this point and this suggests that the up trend is still intact.

MACD just made a bearish crossover. This indicates weakness in the near term.

+DI is still above –DI. However it looks set to go below the –DI.

The index is still above the uptrend line. Unless the index drops below this trend line, the market should continue to trend higher.

Dow Updates

Stock market has rallied across the board. The Dow Industrial Average is now above 9000 level. The index is currently at Jan 2009 level.

Technically, the charts are looking better. Just a few weeks ago, there was a possibility of a sell-off based on the head and shoulder pattern. That did not materialize. And when the pattern failed, the market rallied. The reverse seems to be happening. An inverse head and shoulder is now in the picture.

The ADX chart is showing the development of an uptrend, with +DI above –DI and ADX moving towards 30 levels.

MACD is indicating a bullish trend as well with the indicator above its signal line.

RSI is now at overbought levels but it an uptrend situation, market can stay at overbought levels for longer periods.

Based on the monthly charts, the 50% Fibonacci retracement level is at 9176 and 61.8% retracement level is at 9825 level. Market needs to scale these 2 levels for up move to continue.

Let’s see if the market is able to stay above 9000 level next week.

Happy trading!

Dow Industrial Average Potential Head & Shoulder Pattern

Stock market around the world is in corrective phase except for the Shanghai market which went above the 3000 resistance level.

If you look at the technical charts from US, Hong Kong, Singapore etc, the charts are all showing a potential head and shoulder pattern.

For US Dow Industrial Average, the index needs to stay above 8200. If it breaks this level, the right shoulder will be completed and it suggests a target of 7523.

Let’s see if the US market is able to hold on to 8200 level next week.

COSCO

Cosco is approaching resistance level of $1.47 again. The stock price broke through $1.39 on 8 Jun 09. However bargain hunters emerged on the 9 Jun 09 and the rebound took it back above $1.39. The stock chart has been making higher highs and higher lows since it bottomed out in early March.

Cosco needs to take out the price level of $1.47. If it is able to take out this level on high volume, the next target level is at $1.72 which is the Fibonacci target objective level.

Another thing to note is that one of the substantial shareholders Lee Fook Choy bought 150,000 shares at $1.33 on Jun 10. In addition, Cosco is scheduled to deliver its Sevan 650 round rig at the end of this month.

STI Update

Dow Industrial Average reached a high of 8839 in the opening minutes before succumbing to selling pressure. It lost all its gain and went into negative territory before buyers came in to bring up the index. Market closed at 8768, up 12 points for the whole session.

The non-farm payroll showed a decline of 345000, a better than expected number of job losses. However un-employment rates reached a high of 9.4%. This mixed picture also explains why the market closed near the unchanged mark.


Looking at the STI, it has recovered more than 50% of its downswing from May 08 till March 09. Immediate resistance is at 2571, 2663 and 2745 respectively. Support is at 2283, 2190 and 2094.

US Market

Market continued to rally higher in May. The upward momentum seems to be slowing down as the market hit critical resistance level.

The S&P500 index is approaching its 200 day moving average. The market has been going sideways for the past few trading sessions with the index moving in a band of 880 and 930 levels.

The index has rebounded from its 20 day moving average and seems to be moving towards the upper Bollinger band.

Next week should see the market testing the 930 level.

STI

STI made a spectacular recovery from its March 09 lows. The index climbed from a low of 1455 to reach a high of 2283 last Friday, a gain of 56%.

Technical indicators are showing a positive picture. The 50 day moving average has made a crossover with the 100 day moving average. MACD line is above its signal line. +DI is above the –DI with an ADX value that is above 30. Continuation of the bullish trend looks likely.

STI Update

We have a pullback of the index this week. STI dropped from 1896 to close at 1852 for the week. The index went below the 61.8% retracement level on Tuesday but was able to snap back from the losses.

As long as the index is able to hold above 1754 level, we still have a pattern of higher highs and higher lows. This bode well for the bulls.

The 50 day moving average is upward sloping and the index is still above this moving average line. Bears will not be aggressive in shorting the market with an upward sloping 50 day moving average. The bigger bears will come to the market if we see the index dropping below this average line.

One of the worrying sign is MACD indicator. This indicator just made a cross below its signal line.
Support level is at 1813 and 1754. Resistance is at 1868 and 1950.

STI Update

STI index retraced the complete downswing from 1780 to 1455. The index fell 13 points on Friday.

The index has stayed above its 50 day moving average for 5 trading days now. Any fall is healthy if the index can stay above its 50 day moving average.

A similar situation occurred in Jan 2009 where the index went above its 50 day moving average only to make a new low of 1455 on 10 Mar 09.

A bullish scenario will be for the index to fallback to its 50 day moving average before making a bullish move that takes out the high of 1780.

Support level is at 1711 and 1657 respectively. Resistance is at 1780, 1844 and 1959.

US Market Update

Dow Jones rebounded from its low of 6440 set on 9 Mar 09 to end at 7278 yesterday. That is about 13% rebound in the span of 2 weeks.

The rebound has taken the index right up to its 50 day moving average. Last night the market was not able to take out the 50 day moving average. That is not a good sign. However, it may turn out to be just a pause before the index attacks its 50 day moving average again. A lot will depend on whether there is any good news to lift the market next week. The index has fallen back into its downtrend channel and if it is not able to go above it's 50 day moving average next week, the downtrend will resume and index may test the low of 6440 again.

The 7392 level now serves as a critical resistance that the index needs to overcome in order for the rally to continue. Support level is at 7041.

This is not the time to establish huge positions. It is best to let the market decides which way to go below going in for the ride up or down.

Dow Update

Dow industrial average has fallen to 1997 levels. It has broken its Nov 07 low of 7392. The picture looks bad at the moment. ADX is at 49 levels and –DI is above +DI. This suggests a continuation of the down trend. MACD indicator has also crossed below its signal line, another bearish indication. The only bright spot is that the RSI indicator has not made a new low yet and divergence of RSI can still occur. For trend to reverse, Dow has to conquer the resistance at 7392 and 9175. In the mean time, the bears have the upper hand.

Dow Jones

The Dow Jones Industrial Average looks to be forming a bottom. The index is near its Nov 07 low of 7392. The trend is still bearish at this point in time. However there are 2 positive signs in the technical charts. Firstly, the weekly MACD indicator is above its signal line and secondly, the weekly RSI seems to be forming a divergence signal. The index needs to break the downtrend channel line in order for a sustainable rally.

Resistance level is at 8446 level and support is at 7392 level.

Capitaland

It is interesting to see Capitaland shooting up even though it announced a rights issue.

The technical indicators sure look good at the moment. The MACD made a bullish crossover on 10 Feb 09 on heavy volume. Stochastic indicator also made a bullish crossover. RSI is increasing and is not in overbought/oversold territory.

The stock is approaching resistance at $2.90. This level also coincides with the upper Bollinger Band.

Let’s see if the stock can penetrate the $2.90 level today.

SPC

SPC had a good run recently. It rallied from a low of $2.18 on 21 Jan 09 to a high of $2.86 on 9 Feb 09. Goldman Sachs downgraded the stock from “neutral” to “sell” and reduced its target price from $1.80 to $1.60.

The stochastic indicator is indicating short term weakness as the %D line has just crossed under the %K line making a bearish crossover.

The force index has also decreased from a high value and it looks to be going negative anytime soon.

The next support level for this stock is at $2.49.

10 Stocks To Ride A Recovery

The Lunar New Year got off to a good start this week. The index managed to gain 61 points for the week to close at 1746 on Friday.

However US market experienced a triple digit loss of 148 points on Friday to end at 8000 level. This will put some pressure on the Singapore market on Monday.

The latest issue of Edge investment weekly has recommended 10 stocks to ride the recovery.

The list is as follows:

Company	Price as at 30 Jan 08 (S $)
Capitaland	2.400
Epure International	0.280
Genting International	0.435
Midas Holdings	0.525
Neptune Orient Lines	1.130
Pan-United Corp	0.370
Sihuan Pharmaceutical	0.705
Singapore Exchange	5.150
ST Engineering	2.280
United Overseas Bank	11.880

The reasons quoted for buying the stocks sound reasonable. However note that last’s year recommended holdings produced an average return of -55%. For more information, please refer to Feb 2 – Feb 8 09 edition of the Edge Weekly.

Let’s hope this year the recommended portfolio can give a better return.

Happy investing and Gong Xi Fa Cai.

SPH

Analysts are looking at the potential dividend payout to support the shares. Citi Investment Research expects a 9.9% dividend yield for FY2009, Kim Eng expects a prospective 7.5% dividend yield in FY 2009. DBS and OCBC are forecasting dividend yields of 8% and 7.1% respectively. For more information please refer to The Edge Investment Weekly.

The technical picture for SPH is not looking good. It broke the $3.00 support level on 13 Jan 09 and closed at $2.73 on Friday.

The Fibonacci objective point indicates a target price of $2.72 so the stock may stage a rebound from this level.

However, looking at the MACD charts and ADX charts, any rebound will be simply be a technical rebound and traders who are still holding on to their long positions will try to liquidate their holdings to limit their losses.

Capitaland

Capitaland had a roller coaster ride this week with the stock going to as high as $3.68 before hitting a low of $2.89 on Friday. The stock managed to close above its low on Friday to end at $2.91.

The stock is now sitting on the 61.8% Fibonacci Retracement level as well as the support level. With the Dow closing near its low of the day on Friday, this support level will be difficult to hold come Monday.

The test will be to see if the break is a false breakdown. If that is the case, the stock should quickly reclaim the $2.90 level. However looking at the big sell down volume, the bears should have the upper hand. The next support line is at $2.66.

In the latest issue of The Edge Magazine, it was mentioned that there were rumors that Capitaland may announce a right issue and the ratio would be at one-for-four, at $2.50 per share. If the rumor turned out to be true, the possibility of the stock retracing all the way to 5 Dec 08 low of $2.43 is very high.

STI Update

DOW opened 2009 with a bang, going up 258 points to close above 9000 points for the first time since 5 Nov 08.

Singapore market also got off to a good start on Friday with the index closing above 1800 points.

The technical indicators are bullish at this point but do not seem to point to a sustainable rally.

The MACD indicator is still above its signal line which is a bullish sign. But one concern is that the indicator made a bullish crossover at the end of Oct 08 and may pullback anytime soon.

ADX indicator is still at the low end indicating that any rally will not be sustainable. The good thing for the bulls is that +DI is now above –DI. So there should be a short term rally.

RSI is also not at overbought level and there is still room for the market to go up.

Hence for the short term the market should be positive but mid and long term the market is still not in good shape unless we see further evidence on the technical charts.

Happy trading!