Technical Analysis – 16th February 2009

Good evening! The US markets are on holiday! Why can’t we have as many holidays too eh.. hmm

Alright. Let’s examine if anything has changed.

Looking at the DJIA, you’ll realise where 61.8% is which technically broke on 14th Jan 2009. It has tried to rebound but has failed. On 10th Feb, not only did it test the level at opening, it went on to break another support level. The price movement over the past week has confirmed that as a new resistance.  Another minor one at 7845 and then it is back to 7430. Is it ugly? Certainly so.

But what has it done to the STI? Nothing much really. It has been having a mind of its own. Trading sideways! Traders who trade in such a condition should do intraday. Carrying positions over can be quite nerve wrecking. For me, I have been having open short positions. Thousands in unrealised profit one day, and it is back to 0 the next. Up down up down. Scary? Not really. My nerves have been trained. What I was looking out for is, if there is any bullish signs? I see none. The bearish divergence might have come into fruition and its done already.  Bollingerband is being squeezed still, with an even tighter range today, testing the 1680 support level again. I don’t know how long it will go sideways for. But if you are gonna ask if its more likely for it to go up or down, I’d say down.

I went in short on F&N today. I also closed my capitaland. No choice, tomorrow is the last day anyway. With the US markets sleeping, the STI is unlikely to have big movements. That is not to say it cannot decide to just drop like a bowling ball tomorrow if it so decides! So here’s our F&N. Breaking the 50% level today.  2.7 is critical and if it cracks I will add in more short positions.  Cut loss is around $3. On hindsight I should have gone in more.. but never mind.  Look at the number of MA resistances above. Sell signal triggered, but money has not begun to flow out fully yet.  We need confirmation of this move.

Similarly, SIA never recovered from its crack at 61.8% which is around 10.88 or so. On hindsight I should have added positions there but I was too busy that day to watch closely.  Support at 10.40 is holding it for now but if it cracks, we could see a 40c downside at the very least.  Notice the double top formation lookalike with a support at 10.88 neck, with a bearish divergence.  10.80 is a strong support turn resistance!

UOB’s sleepy. Minor support at 11 before 10.4 which is a 60c downside. I’ll look for 11 to crack with gusto, a rebound to re-test it and if it fails to get higher, a good place for a short position.

We’re not out of the woods yet, and the market crash from Oct is filtering down to the average guy on the street finally. If the STI break new lows then the last couple quarters of 2009 could be quite depressing. But the good news is we should see the worst of it soon. Question is when will things recover? Not so soon. The next bull run? Gotta wait a lil longer..  I still wanna buy my apartment though!!