Technical Analysis – 1st Dec 2008

Today’s World AIDS Day.. have you bought your condoms from a store near you yet?

On a more serious note when we look at what’s happening around, it’s a stark reminder that it can happen to anyone and everyone if one let’s his or her guard down. So what do I do? I come home after work and do my homework like what I am doing now… that is my night time activity..

Back to the charts. I am gonna take a peek at the STI and HSI to see what is happening. You’ll observe similar chart formations and that is the double bottom (W formation) in the making. The HSI has flown past 20MA and is now supported by it and is on its way to that major resistance. Pretty far still, at 15320. I am gonna watch that 20MA to make sure if the price re-tests that level, certain indicators do not turn bearish which may imply a violation of the formation. By the way it is VERY important to note, a formation is not completed till it has broken out. Do not attempt to go long now in anticipation of a breakout. You go long only on a breakout confirmation. The price could trend upwards but hits that major resistance and trends back down. It is however very possible that in a bear market, there can be strong bull runs that could see some 30% gains or even more. Even with that, it does not imply we are out of the woods. I think we are very much in the woods and looking at things right now, people are wandering in the woods in complete darkness. Blind, and unsure.

Similar chart on the STI but it has not been powerful enough to break through the resistance levels. Every attempt brings it back down. This is like trying to get a 10 ton truck to move. But once the momentum gets going, it can be a lot easier. However we could do either way so it is very important to watch for the levels. The US markets are due for a  retracement. Too fast, too much. I anticipated sometime today or tomorrow but it seems the futures are deeply in the red so it may begin today. I will be watching the charts every couple days to see if supports hold. Paulson speaks tonight (I think) and frankly if you have noticed, when Paulson speaks the markets sell off. When Obama speaks, things are a lot different. I do not bother what that ‘means’ but it is an observation that I may or may not use.

Kepcorp’s probably on everyone’s mind. The ChartNexus course participants would have done lots of analysis on Kepcorp over the weekend so they know what to do, and what to look out for. Nice symmetric triangle, somewhat with decreasing volume with a breakout on Friday on high volume. Confirmation came today with relatively high volume as well. Gap resistance never got covered and still remains. Price target? This is a tough one. Tough because of the potential downside. It looks destined to test that low but if that cracks, can you see where my blue arrow is? That TP is not based just on 168.2% though. There are other reasons for that.  But for everyone’s sake honestly, I hope it will never get there. I hear one company has confirmed they are not going ahead with the contract. I can only imagine if another one announces and how that is gonna spook the entire market. SembMar also cracked $1.58 but I decided not to chase it for now. I did add more shorts to Kepcorp though.

So what’s in for tomorrow? Capitaland triggered one of our proprietary shorting rules. I haven’t closed my shorts on CityDev yet (it is in the red for now) but I will be looking at Capitaland tomorrow to see if the price action goes according to what I would like to see.

Have a good trading week! Hopefully we will get some direction lead soon.