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.