Technical Analysis – 30th Oct 2008

Just got back from watching Saw 4. Have been following the series with gusto and this one is a continuation from Saw 3 where it was clear that the game has just begun. Saw 4 takes the view back to the mind of Jigsaw and how it seems apparent that he does not consider himself a murder, and why he does the stuff he does. This time round I don’t seem to consider him a psycho anymore and find that he actually makes a lot of sense. Maybe cause I am turning psycho?

Back to the market. One thing I neglected to look at till today was RSI to spot divergences. Alas I spotted a bullish divergence in some of the counters, and I have closed the positions. Bullish divergences are not something one wants to mess with with a short position. So if you still have shorts, you may wanna relook what I see here.

Capitaland, Wilmar and perhaps even a little bit from Citydev all spotted bullish divergence. A divergence occurs when the price action is going the opposite way of the indicator. In a bullish divergence, it occurs during a downward move, as the price heads south, the RSI actually points upwards. A divergence warns of a reversal. As such I decided not to adhere to my trailing stops and decided to close the positions. So you’ll see in the following 2 charts where the divergence is spotted.

My  current calculations show a possible turn date for the US markets sometime next week. A turn date simply implies a trend reversal. Some use the bradley turn date which is pretty astrological in nature but others use different techniques to anticipate a turn in events. They can be pretty powerful if done right. I aint quite there on that yet so let’s see.

The S&P has met with the 20MA and a pull-back would be pretty healthy and ideal before the next push up. It has been in a range, like the Dow. Huge range though cause we are talking bout a 1000 point range from peak to trough but hey, what have we not seen in October so far? Their charts are quite unlike the STI and HSI and as the struggle to find a direction continues, bulls and bears could continue to get crushed.

I am currently digging up some concepts and if they come into fruition and turns out useful, I will share it with all. No point sharing something that didn’t work well. Then again it is hard to find a technique that works well in all scenarios so things have to be tweaked along the way. What I like to use is the combination of the 20MA and MACD. So far it has been pretty useful and will probably find its way in both bull and bear scenarios.

I am dead beat. I need my beauty sleep. Sit tight for Friday! Traditionally… Friday sees some form of blood on the streets. As long as it is within limits, there’s nothing much to worry about. These days the volatility is so extreme, anything 2% or less in price action is deemed flat to me. HAH. I never thought this day would arrive so soon. Stay safe!