Technical Brief – 21st April 2009

U guys are expecting me to post right? LOL

And wonder what I did right? Well yes I closed all of my shorts. Decided to take profit first. When STI covered 1838 on rebound I took it there too. The other shorts were closed close to end of trading hours. I anticipated short covering.. and decided this time round I shall close from 4pm. Jay pointed out some counters which have a long trade possibility so I looked closer. Indeed so! Wilmar and Indoagri have a pretty obvious  bull flag. Long trade entered. Indo eventually rallied all the way to my profit taking point at 86c but I have not closed it yet. StraitsAsia was also a good one but I failed to get any. Jay went into Olam and Noble but I had too many on my plate so I decided not to overdo it.

Let’s see how the STI did today.  U can see the channel the rally has been in. Today it broke by gapping down but it fought all the way to close within the channel! Is this bullish? Maybe, we don’t know yet. What it does give is, ample space to go short again at resistance. In the early hours of trading, volume was quite high but it sorta quietened down a lot. It does appear we had a lack of buyers which explained the gap down at opening, and a whole lot of bears came in to short the price lower. But as selling stopped, it traded sideways till the bears got tired of waiting and began short covering into the close. It is obvious those who went long have not really sold yet. Not many. Maybe a few spiders here and there and then scrambled to buy back at the end of the day. Not a very wise thing to do but it is their choice.  So watch these lines carefully. Now if the price rallies to retest the resistance channel, and the histogram still forms a lower high, be VERY cautious in holding long positions. My personal view point is in the short term, 1-2 months be wary of a reversal on the downside. It might come earlier it might come later but it will probably come. For now things are okay it seems. Major MA supports held, like capitaland’s 2.71, indicating the odds of a retracement rather than a reversal. In this condition, either stay out of the market or take very short term trades and take profit fast.

As promised, Wilmar and Indoagri. Indo is looking for a breakout and so is wilmar from a bullish flag formation. If the uptrend is in fruition still the flag should follow through with a breakout. Very nice support Wilmar found and I will be looking to see how it behaves at 3.42.  Break that and I think a re-test of its current high should not be a problem. Indoagri has already tested is current high and may be primed to breakout but let’s see what happens.

OCBC, rebounded off the 50% retracement with a very nice hammer candlestick. Not a perfect hammer but nonetheless the color and position where u would want it to be. If it continues up tomorrow it will trigger a buy signal.  Let’s see if it confirms this higher low.

The DJIA is range bound.. somehow someday one side will break. I am thinking perhaps by end of the week one would.  With a somewhat bearish divergence also, the odds is on the downside. Any downside could be capped at 7520 for now it seems. If it remains bullish a support on the weekly chart at 7780 should hold by the end of the week. Lots to see… so let’s see!