Brief summary – 15th Jan 2009

The STI broke it’s 1715 key support level today with gusto and forms yet another gap resistance above it.

Confirmation comes tomorrow to see will 1715 be captured or will it be re-tested and fail. If it fails, watch for 1655 which is the 61.8% retracement level.  It would have covered the current gap support formed in Dec last year too. Failure to hold that level will see 1639 and eventually 1580 into play.  One thing is for sure, the bearish divergence has decided to come into fruition. In the interim I am looking for a mini tech rebound to re-test 1715. It can however decide to drop all the way. There is nothing really to stop it from doing so.

I closed many open long positions today at a loss. KepLand, Capitaland and Allgreen. All at a loss. From profit become loss. Unlike my friend Alvin, long positions normally make me lose money. I am bucking the trend maybe. And oh yeh I closed STI call too at a loss. Now I am left with Wilmar. I forgot to close it!! It is not ripe for shorting though, with another 10c to go before breaking that base. Let’s see tomorrow…

What I did was to buy STI put instead. Since I also have closed capitaland, I decided to go short anyway. No extra charge. As u can see, the break of 61.8% is a bearish sign, coupled with volume. TP at 2.54 and 2.37. If it does a tech rebound to re-test 2.83 with an obvious failure to breakout, adding more shorts there might be a  good idea. But we have to look at the overall picture, candlestick and chart formations to confirm that. It is however, extremely oversold now from the MFI counter and such is prime for a tech rebound.Notice the bearish divergence on the MFI vs the price action. Obvious isn’t it. I have spoken about it for a week plus now so it is not on hindsight. Capland has now fallen $1 in 8 sessions.

STI on the other hand has not reached oversold region yet, suggesting there is plenty of room for more downside if it so wishes.

On the DOW, if 8150 does not hold, look for more possible downside, potentially to its previous low. There is a minor support at 8050 which is what the DOW is testing right now at the time of writing.

817 is critical for the S&P. Once these major lines take over, the bears will probably be out in full force.

I am holding my upside TP for the STI for now, but now it has 1775 and 1715 as support turn resistance. There is also a gap resistance from 1728-1765. Plenty of resistances! As such, upside will be quite a challenge. I may lower the price target again but I will need to monitor price action in subsequent days.

I will also be away on holiday to Phuket beginning next Wed for about 9-10 days. I will still blog for the rest of the week next week if there are developments that blog worthy.