Technical Analysis – 2nd March 2009

Before I dive in, let me just state while traders are celebrating a trend occurring for trading and investors weeping away especially with WB declaring mistakes made which is probably the first in 44 years. I don’t gloat on someone else’s misfortune or mistake. Yes I locked in some gains (I closed my UOB short at 9.05) but the kind of action is bitter sweet. It simply tells me what I should expect half a year down the road.

The movement is still coming into fruition. Today’s sell of is like a wave 3 sell off! Pure panic selling in UOB and when was the last time I saw DBS died the way it did, breaking very critical supports in a single day.

I closed my UOB and half of my StraitsAsia short. I still have SembMar, Capitaland, Olam, SIA, Cosco, ST Eng. Missed out on SPC for today. Still heavily on the short side and with the STI closing at its low with no short covering during closing, it doesn’t look hopeful for a rebound. True enough the US markets are continuing their plunge right into key support levels now. And oh yes I also have HSI put which cracked beautifully today at the 12500 level.

Markets are very oversold but with no real reason to buy, people who are dumping just have to dump to whatever price is below.

I really have to go for a rebound coming up. A muted one perhaps, with very limited upside. The sell off came quite early, earlier than I expected and new resistances are now set which are very good shorting entry positons on rebounds as I do not believe this is over. Not technically at least. STI is slowly but surely creeping towards the 1470-1500 level and is not the bottom yet I feel. 1470 may just give way but I do expect some support there. Remember I quoted 1580 being a weak support cause it had rebounded off it, which suggests the buying has already occurred. The end result of it is that people who bought at 1580 will dump as well, adding into the fury of sell orders. One example would be UOB where people would have bought at 10, at 9.80 and at 9.50. It opened at 9.70 and never got to gap cover the 30c gap resistance it has since formed. Bearish. But on very heavy volume.  Continue to sit tight and while some may decide to trade a rebound, I suggest long trades be kept either intraday or just a few days. Buy and hold? Not quite yet. Unless I see major sell offs continuing, and I will re-chart.

SIA has finally produced the short signal and it does appear the support may not hold. I would like to see it crack, rebound to re-test it and it will be a perfet place to add on more shorts. By locking in my gains (I need to give out dividends! haha.. and I think I am just about the only one giving more dividends year on year) and having the capital to go short again on rebounds.

Just look at the sell offs with the banks and the kind of volume. I am more in tune with locking in gains as the index heads down and then waiting it out.

US markets are down over 3% and the technical support for DJIA has since been taken out. The S&P is also very weak and is likely to drag asian bourses to their all time lows set last year. I’ll go as far to say that since everyone is waiting there, I think the support will be relatively weak. Either we don’t hit it and rebound before it hits, or we sink deeper and then rebound from below. It coul be either scenario but the general idea is there.

For those interested, the next minor support for UOB is 8.90 thereafter a fibonacci support just around 8.55-8.6. DBS I didn’t even chart it anymore. Everything broke so fast all my charts are now past my previous drawn support.

It is gonna be rough. And the guy on main street will feel it in good time, but for the rest of us here, trade safe. Pls.

I heard one of the most ridiculous thing today. My remisier was saying a few of his clients are on long positions, for investment. That’s fine. But on CFD? Oh come on. They don’t even own the stock. WHAT investment? This is a pure example of TA turn FA. A sure road to hell. Sorry to say. Been there, done that, learnt. I deal with retirement funds here so I better know what I’m doing.

My ‘dividends’ are due to pay out after the end of march so I will have to do some position house keeping. The only way to be sure of a profit or loss is by locking in and closing the position. Everything else is but an unrealised fantasy (or nightmare).