Technical Analysis – Feb 19th 2009

Capitaland went XR and it traded better than I thought though it got pretty weak eventually. I took profits off by closing my shorts on SIA, KepCorp and CityDev. I still have another mountain of shorts with UOB shorts in place still. UOB closed at its low at 10.50!

My TP has been hit and I shall monitor its movement tomorrow. It releases results tomorrow and I don’t wanna play much into it. 2 scenarios. Bad results, but factored in and I won’t be surprised from the kind of action on the counter. Or it gets so bad the selling continues and breaches 10.50. This will bring it to an all time low in many years and for some reason, I am somewhat expecting 10.50 to hold for now. Just a gut feel. TA wise, bearish of course. Will it form a reversal candle tomorrow? Ideally, a hammer. Opens say 10.40, gets sold down hard, 10.30 maybe 10.20 even and rebounds to close near its opening, or better still, gap cover till 10.50 (as it gapped down at 10.40). That would be a nice hammer and I will certainly take profits off there.

Has anyone noticed, AIG, Citigroup and bank shares on the US markets? They broke their all time lows. My TR came around for a lil chat and we agreed, damn, we don’t know how to chart anymore cause our 10 years of data is just that. The prices have never hit so low. We could use fibonacci projection but as Jay pointed out, it is at 168.2% already. There is no next level!

Moving forward what do we see? If we are in minor wave 1 within wave 3, then a rebound is due. It is common sense the US markets are badly due for a tech rebound. For us where do we stand? I’ll use 1680 as the rebound target for now. Why am I locking in profits? To realise the profits, so I can reshort after rebound USING REALISED PROFITS. The mistake I had last year was I added positions using unrealised profits. When the fast and furious rebound came, it took a large chunk of my unrealised profits away from me. I have learnt and this time round I have LOCKED IN THOSE POSITIONS! So with real profits, I will not only clear the table and be able to begin from fresh, but also I can better do my position sizing for my next trade.

Moving forward, after the minor wave 2 rebound, wave 3 of the large wave 3 we are in should be set. This may take us to new lows. As of now, wave 1 may see an ultimate TP of 1470 on the STI. I certainly do not see it breaching it yet. It may not even get there.  Whatever it is, the strategy I am employing is to short at resistance, take profits along the way as the market heads down, wait for rebound and add more positions. In the event the market heads down one solid move down, I will close ALL remaining positions at my ultimate price if it reaches. I still remember how my TR and I rushed to close all our positions when the STI headed one swift motion down to 2300. It was our TP and we didn’t think it will hit BUT it did within days and we took ALL profits. I spent 5 mins closing my positions! Checked what holdings I have and the size, and proceeded to buy up everything to close all positions. If you’d like to know 2300 was the pivotal day and the market rebounded thereafter as we expected it to be.

Another observation. US bank shares are forming bullish divergences on the weekly chart. I repeat, WEEKLY chart. This implies a rebound is in the works, but it may take up to months since it is a weekly chart.  There is really limited downside for shares like AIG.. Citigroup and all. One of my associates said AIG might be taken private. Hmm… based on price, why not? It is possible.

So in short what do we have? On the STI, resistance at 1650-1680. Support at 1580-1600 region. What am I anticipating? A short rebound with limited upside as mentioned above. I will have to monitor as the days go by to find the ideal zone to re-add short positions.

Now what could be the reason to see a fast and furious downward move. Another collapse? I think the market is jaded with it now. I don’t expect to see a prolonged sell down for it. What I am looking at is perhaps, things like war. North VS South Korea? Which in turn could actually pit China VS US?

7500 to hold. Else, kaboom. The kaboom is gonna come if the banks all break their already current lows. If that one gives way, that’s it.  I honestly think people can consider buying a lil, even if it is gonna stay at this price for years. I am building my cash for that fishing.. one portion for investment (to buy and keep) while another for trading on momentum.

If you haven’t start saving cash, START NOW. Don’t say I didn’t advise.!

By the way, while my ads here are generating money, it is lower than my expectations. I have an inking to privatise proprietary analysis to within my circle of friends only, ie set those posts as private. I’ll monitor the numbers for a while more and decide later.

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