Brief Review – 18th March 2009

The US markets did not confirm the reversal candle yesterday so I was quite intrigued by it and decided to do a fibonacci projection on where things are.

So we observed a resistance turn support at 7210. Next resistance will be stronger at 7435. Stochastics are oversold (although it can remain so for a very long time) and is at least due for a retracement. The question is will it do a healthy and bullish retracement, or will it be a reversal.  Short signals are not likely to appear till 7210 is broken. MACD and Stochastic will likely show sell signals if that happens. I suggest going short only if 7210 cracks, or if it tests 7435.  As for going long, I personally feel it is not the right wave to do so. But let’s see. If it becomes a healthy retracement, it will be re-evaluated. The thing is, the dow has come down so much, for it to form a higher low it is not feasible.  The ultimate breakdown level at 7955 is unlikely to be re-tested within this wave.  The bias is on the downside at the moment.

Same thing on the STI. You will see based on previous low, the resistance is where things are right now.A break on the upside could see 1630 being re-tested. Biased is however again on the downside. Any further downside which cracks 1555 will trigger sell/short signals. It is possible for it to head sideways after wave 2 is done, before wave 3 begins.  Question is if wave 3 will bring it back down to 1470 or if a higher low will form.  1530 will be a key level to watch.

SIA died a natural death. I was not able to add extra positions in it due to the slow yet constant death with very little rebound periods. It does look destined for 9.10 as it broke 9.60 on heavy volume. Stochastic and MACD short signals which appeared yesterday is confirmed today. I question the ability to rebound towards 9.70, and if it does will make a good entry for short positions again.

Wilmar on the other hand has been very bullish. Notice the symmetric triangle. I actually got fried by this previously but cut loss real quick. I neglected to look at the big picture. Here is a tip. A symmetric triangle (if formed properly) has a good chance of breaking out as a trend continuation. As an example, Wilmar’s previous trend is obviously up. And then a symmetric triangle formed. The chance of it breaking to continue to the upside is high. Let’s wait for this to re-test the downtrend line that offers support. If you can see carefully, there are 2 MA lines offering support right there now. As time goes on the MA lines will turn up offering support at a higher price. Extremely overbought here. Not ideal to go long until it has retraced back and rebounded off support levels which confirms its bullish bias.