Technical Analysis – 7th Jan 2009 ***READ!***

What an intraday reversal in the afternoon! Tracking movement on the HSI, banks and telcos took a hit as well on Singapore shores. Capitaland who flirted with the 3.30 support level went through it like it wasn’t there by the time the afternoon session began at 2pm. I was watching it and the downmove was unbelievable. It seems they released news that they may issue rights to shore up it’s funds.

I closed quite a few long positions by end of trading hours. Sold off half of my STI Call warrant, took profit on StraitsAsia (first time profitable!) and on Cosco (don’t like the chart formation) as well as Midas.  In the morning I closed my long on Noble and was preparing to go short but alas! No scripts on poems..

I then looked at Olam to short but it came down too fast, with limited downside to support so I gave it a miss. But I did open a short on Capitaland looking for support at 3.1 and got it to close at 3.11. F&N died literally but I ignored it earlier in the session due to low volume. By the time it was done, it died with pretty heavy volume but I have no regrets at not taking it up. Following my own trading rules. For those of you who shorted it, good for you!

Here’s what I see. The STI cracked its support at 1915 on pretty heavy volume as seen. What happened? People who went in during the morning session may have decided to dump as the markets sold off, so you get that double volume thing. I spotted distribution in the morning (where institutional funds seem to be offloading to retail investors) and decided it looked scary enough so I took half my STI call warrant profit. If you do recall, I called for a retracement on the US markets this week, anticipating a further upside move only next week. This puts a lot of stress on our key resistance levels (including HSI). I do not expect the STI to breakout with gusto on its first attempt at the key resistance level so what seems to unfold is a whipsaw. Expecting that, I did no buy calls, preferring to wait till markets to retrace to retest some levels first. Looking at the STI, I did say I won’t be surprised if it decides to gap cover. That put’s the STI to a support level of 1830. The actual level where a  turn around must occur (in order for market to remain bullish) is at the 61.8% retracement level which is 1748. Coincidentally there is good MA support there and will still form a higher low if the index bounces off it. My take? I will watch 1830 for entry on the long side if it holds. If it does not, I will look at 1748 for support. If it however does not hold, the next major level is that 1715 base. If it cracks, it will be an indication and confirmation of the move down as a reversal (no longer a  retracement) and it will be time to short it by getting put warrants. So keep those levels in mind! For the upside when 1920 clears successfully,  look for 2026 and 2145 as resistance levels. That’s your upside target levels. Watch out for the 100MA resistance which should offer a moving resistance level  which is at 2100 now and heading downwards.

There also seems to be some bearish divergence forming on quite a few local counters. I will be turning on my MFI (agreeing with my remisier on that and we will be reading indicators and spotting potential trend reversals together) for future analysis. My advice is to to keep trades close to you, regardless of being on a short or long side. We could have limited short/long momentum in the immediate term. If u wanna trade on a more sustainable momentum then I would have to say u gotta wait till 1715 to crack and go short (cracking 1748 will be your first wake up call to get ready). To go long, that level has not been determined yet but use the above levels that I have mentioned to find direction.

Across STI, Ezra failed to break out and reversed, DBS had a hanging man and a shooting star 2 days straight, Swiber had a symmetrical triangle breakout on 30th Dec and has topped and seem to be turning down, StraitsAsia has a shooting star, while STE looks interesting! I realise I keep looking at the same charts. I think it is time to begin scanning charts using XPerTrader with the proprietary buy and sell rules again.

STE! Looks like a nice ascending triangle. Short? Hmm… limited downside. Think wait for a breakout to occur before going long seems better. Notice the lack of volume. If it breaks out, with heavy volume, should be safe to go long.

For those interested in distribution, here is one form of distribution. Notice MFI heading down though price remains constant. It shows money leaving the counter but the buyers are keeping the prices at support. Once buying finally stops, booom!

By the way, here’s Capitaland for you. Closing at a key fibonacci level. If it trends further down I will be looking at $3 to take profit on the short. Enough for me.

And here.. is the TImeToHuat tip of the day. Thanks to Jay Chia my remisier who dropped me an MSN just 20 mins back to look at this.

KLCI’s TopGlov. It seems there are many bearish charts on KLCI but not many can be shorted, but here is one! I think you guys know by now what to do with such a chart. I have put in fibonacci levels for your ref also.

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