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.