Technical Analysis – 11th Nov 2008

And there you go, the market taking cue from HSI right after lunch, moving down some 80 points. Well it didn’t move 100 points that could have happened like I mentioned earlier but what’s key is the kind of uncertainty and volatility that we have been having. 80 points down today, 100 points up tomorrow, that kinda thing.  We had minor supports cracking today but what’s important is that key support levels and 20MA supports mostly held. One interesting counter where I closed my short today is ST Eng. Compare the fibonacci retracement from the high to the low. Look where the previous low stopped at. 61.8%. Is this good? Yes. Sure enough we had a nice rebound which hit right smack into the 50MA. If you do remember, previously there was a descending triangle which cracked at $2.50 and that’s where  the 50MA happens to be at now as well. Look at the green fibonacci numbers. I took the last high formed on 10th Nov and took it down to the last low. I looked for 61.8%. If the counter remains bullish then this level should hold. I decided to close all my remaining shorts on STE at 2.29 which is where the fibonacci support is just before market closed. The counter closed at 2.32 which is where 20MA is and hence support is given. Now, I am not saying this counter cannot break all its supports one by one in the next week or so. What I decided to do in this uncertain conditions is to pare down my holdings.  I was very tempted to close all my other positions (buy and close shorts on weakness) but I decided to hold out for another day to wait and see. What’s remaining? Nothing much, SGX, Singtel, Kepcorp, and an STI put warrant. I am still bullish mid term as I see no signs of any crackdown (yet) but remain neutral bias in the immediate term. Hence, no opening or closing of positions. Just holding onto positions, and wait for either the cut loss (factored in when I opened the position) to be hit, or for the downtrend to continue since I am on shorts. I will progressively take profits along the way if the market continues to head down. But unless STI cracks 1722 and subsequently 1705, only then will I re-evalaute. Lastly, 1650 has to hold.

Wall street is flooded with negative news today. Japan in a slump. This down and that down, and Morgan Stanley downgrading our economic growth for the next year.. hell lotta news out. As a trader, one has to learn to filter out the noise from Wall Street, and focus on the charts. The charts tell the truth! That sounds almost like a religion isn’t it but to me, it’s true. They tell the story, with no lies. Unlike  financial reports. Then again if you don’t know how to read charts, then it is as useless as the financial reports if you don’t know how to. I don’t. And if you are reading them, I hope you do.

I need a break.  I am seriously considering closing all positions so that I can take a break and focus on some other stuff. Habits die hard though.

I haven’t scanned the charts today with our proprietary rules yet. I guess I would tomorrow and if I do notice something interesting, I will highlight them out sometime during the day.

Watch out for 907 on the S&P, and subsequently 900 as a psychological level. If we do close below it, I will be looking for confirmation on the following day. If things are confirmed, I will re-evaluate if conditions have changed. Whippy being whippy, I cannot rule out the last bottom being re-tested, which is why I keep some shorts in still. It might test it, it might pierce through even. All I am seeing is, I don’t expect that low to be broken as of yet. So that’s 845 on the S&P which coincides with 8140 on the Dow.

So the key numbers are 907 on the S&P, 8700 on the Dow, and 1650 on the STI. Suffice to say if we compared it this way then the STI has a lot of downside to catch up, or the US markets have a lot to rebound. Maybe we should quote STI alongside with HSI which is a fairer comparison. 1650 will match 12460 on the HSI.  At this juncture, if one has to trade, it might be a better idea playing index warrants instead unless a particular counter is extremely nice for a trade. I would rather not open new positions, at least for now. I am expecting Nov to end higher nicely, but December it seems may spell a different story.. but that’s still a while to go, so I shall KIV that for now. Have a good remaining week!

*** Edited : My scanning rule pulled out STX PO for a short trade. Looks like a good risk reward as the cut loss point is relatively near. Take a look!