Brief Update – 14th Jan 2009

Back from a night out drinking and I am gonna post a couple stuff before I hit the sack.

The STI failed to hold onto its rally for the second time today. It is not a matching low today but close enough. A matching low is somewhat bullish, but…

A pivot day called on Tuesday did see a rally in the morning but it could not hold till closing. The same happened today. The support at 1775 appears to have turned into resistance now. If this level confirms the break, the next level is 1715 which is major support. If it does crack that level, it will absolutely break any chance of a near term upside. For now the bulls have clearly lost control, coupled with the many bearish divergences observed everywhere, things do not look good for the upside at all. This is not to say we cannot have a technical rebound, or what may turn out to be a sucker’s rally. I have done some re-calculations and I am making an official revision to any upside to a target of 1845. This is revised down from 1920.The MFI shows the bearish divergence, with a lower high created on the indicator despite the STI climbing to 1960. I have explained, that a bearish divergence does not imply the price will crash. It implies the trend is weak and could reverse very easily. In the case of the MFI it measures money flow. In this case, money has been flowing out. Typical bear rally.

That is the good news. The bad news is that firstly, it may not even rebound to that level. Also, if it does, and heads back lower, it could form that bearish chart formation. But till it forms I will not harp on it too much. With the recent top, the significant resistance is now at 1960. Too many resistances on the upside, compared to just a couple key support levels. A break of 1715 will see gap support covering till 1660.

Capitaland is weak, with ADX showing uptrend is obviously weakening, and the MacD doing a bearish crossover.  2.85 is a critical level, which if it breaks below, 2.38 comes into play. On the upside, 3.25 is resistance. Investors and traders alike are advised to be cautious. FYI, I have long positions on it which I have not closed yet. I will once 2.85 cracks, and pending price actions, I may do a double sell (close the long, and reverse to short).

Cosco also sees many resistances hovering, holding back any upside. Moving Averages along with support turn resistance at 93. Ultimate resistance is at 1.12 while key support is at around 66c.

I maintain a sell on strength strategy. We will only know the current wave is ending when the next wave (expected to be fast, furious, but forming a lower high) begins. Sentiment is not good, and with the multiple bearish divergences, the upside does not look very promising for a breakout.

I will continue to track STI as the days go by.

As a reminder, please take my posts as a guide, FYI only. It should not be taken as an advisory.

PS : HSI has cracked its critical support at 13800.