No bottom for ‘collapse’

HUGE volume on the US markets to end the week. I wonder if it was a mistake on my charts? I doubt so.. hmm

And back home we’ve seen the kind of sell downs as expected when the bollinger band squeeze breaks. I have mentioned how the STI and various counters are having the sqeeuze which paves the way for a fast and furious breakout momentum. DBS, City Dev and UOB all cracked their critical supports. I will analyze them tomorrow..

I shall also try to study the huge volume on the US markets with somewhat a reversal candle and what it implies. I will also try to calculate rebound targets. Based on wave counts, we appear to be in a major wave 3 and within that major wave 3, we should be in minor wave 1. This is read as Wave 1 of 3. Wave 1 is a downward wave that doesn’t usually come with heavy volume. Wave 1 will end and cross into the wave 2 rebound when the support turn resistance line is recaptured. If you look at the US markets, it has already broken the critical low and has touched the next support in a matter of 2 days. Fibonacci support stands at 7070 next. Will it go there? I don’t know. I won’t know when wave 1 ends. If it rebounds, re-tests 7550 and heads back down then it is still within a continuation of wave 1 although at this rate it has dropped, people may count that as wave 2, with the subsequent drop as wave 3. Eitehr way, waves 1 and 3 are down waves, with wave 3 massively fast, and deadly. Wave 2 rebounds can also be typically strong.

Back on the STI. Although we have supports at 1470 and 1550-1580, you must remember these were opening prices on a gap down, and NOT closing prices. The STI has never closed below 1600 since quite a few years ago.. during SARs was it?

Will I go short when market opens on Monday even when DBS and all the other stocks continue the decline? No I don’t think so. We are due for a technical rebound in the very least, and I would prefer the market to rebound and test these new support turn resistances. UOB may break and go into a single digit price in a VERY long time. DBS may continue to break its $8 while others like CityDev have already gone way down. I am looking at oil and offshores to come into selling pressure in the next round of sector rotation.

I’ll study the charts in more detail tomorrow, paying attention to bollinger bands, and weekly charts. I noticed the weekly charts on MANYcounters have formed bear flags. I said form, not forming, cause the formation has formed and it has broken down, completing the formation.  A lot of people who went long will be sucked in during bear flag formations. The strong and huge rebound will also suck in a lot of people, before another big sweep down. This particular wave down could be the last chance to go massively on short. Cause by then, there will no longer be much downside anymore and the market is likely to begin forming a bottom/trading range. I am anticipating this level to be around 1200-1300 level. This is what I calculated when the STI cracked 2110 and today if I am not mistaken, there is no change in my calculation yet.

What I am concerned as a trader at this point is to enter on cracking of support. Technically, yes one can. But based on experienced, I got hit from the tsunamis before on rebound. The 1470 and 1580 level rebounds are prime example. Huge rebounds. Those are your little micro wave 2s. The idea is, if you weren’t in for the past month, it is a tad too late. I will be lookng at covering my STI puts along the way. HSI puts have long been covered at a loss. No choice.. expiry. Sideway movements are a warrants trader’s worst nightmare.

My strategy is not to be greedy, or impatient and to take profits along the way down, locking them in which gives me a confirmation of profits. Profits that I will then use a % of in my next round of trading, so even if I am wrong in ALL trades (which has never happened so far, unlike soccer betting which I did 10 yrs ago with the italian Serie A where I laid 10 bets, and ALL 10 were wrong. Talk about probability!) , I will never lose all my profits, let alone my capital.

Have a good weekend! Here’s an article from the ST for your reading. This is what the post title is about.

NEW YORK – RENOWNED investor George Soros said on Friday the world financial system has effectively disintegrated, adding that there is yet no prospect of a near-term resolution to the crisis.

‘I don’t remember any time, maybe even in the Great Depression, when things went down quite so fast, quite so uniformly around the world,’ Mr Volcker said. — REUTERS