Technical outlook – 20th April 2009

In a very strange fashion STI tried to tag alongside with big brother HSI but failed to do so eventually. HSI closing up 1% in the green while STI closed in the red after a sell-off into the close.

Before I dig into it,let’s take a look at gold.

So here’s the gold chart and you can see where we are right now, a very crucial price at 884. Generally when the market tanks, gold prices will rally. There is a bullish divergence observed but gold is clearly in a downtrend. You have a resistance point where it is now, the 20 and 50MA above, along with the downtrend line. The feel I have towards it is that it could rally to test the 20MA and the downtrend line, thereafter it makes good sense to go short, and on confirmation of the major support break, enter more positions. So we have a few key resistances above, and we have a bullish divergence. It will be interesting to see but in the mid term, I am anticipating it to totally crack 800. With a fair amount of certainty. TP for now remains at 910-920 on the upside.

Alright into the STI. Bearish divergence still in play. Support at 1840 still in play which is where I will take some profits first.

OCBC continued its move down in a stronger fashion than UOB though the latter has a stronger bearish divergence. OCBC TP is between 5.35-5.5, 50% and 38.2% retracement accordingly. Why this range? Both will still give a higher low and OCBC goes XD on Wed with a 14c dividend payout. I will have to decide tomorrow if I shall hold, or close the position as I still have other positions in.

Someone asked if he can buy China HongX. Whenever I see these mad rush in for small caps, it is clear the BBs are trying to stir interest to dump to retailers. Same goes for the big caps. A lot of clear distribution going on. Bottom line is however, watch for volume and chart pattern for a  possible bull flag. It’s current movement is in sync with a bull flag formation in the making but if we get one large black candle with volume then all bets are off on it.