Technical Analysis – 15th June 2009

The market continued its sell off today on extreme low volume. This indicates a lack of buyers while traders and contra players closed their positions. As expected, a sideway movement that basically tests everyone’s patience. My price target for the downside remains to be at around 2280.  A crack below should revisit 2200 and 2100 regions respectively.  We don’t really want 2280 to be taken out as a break below could negate the momentum. It is obvious the market is tired and is somewhat directionless.  One way or the other, one side will break out. The odds seem to favor the downside, and I am using the DJIA as a barometer for that reading, as well as wave count.Sideway movement with a downside bias is very damaging to the traders on the long side. Take the chance to sell into any upward move?

Immediate resistance remains at 2400-2420, with the next major one at 2600.

Across the board, Kepland continued its selloff after the rights issue was done on Thursday. Friday began the usual dumping as the profit from rights subscribers are huge based on their issue price, and the current trading price. Makes sense to sell. In other property stocks, shittygroup downgraded CityDev, Allgreen and KepLand to sell, while it downgraded Wing Tai to hold. It seems quite obvious to be they have began shorting them since last week.

Based on wave count, the DJIA might have commenced a wave 4 downward move. If so, there is quite a lot of downside to go. However we have the 200MA, 20MA and other minor resistances along the way to act as support. It might however end up as a sideway movement. Either way it doesn’t seem to look good for the long side as well. However to be sure of a new trend, the sideway bands need to breakout, which it will eventually. Watch for 8600 as range bound support.  In this region, the 200MA and 20MA converge as well.

I don’t like such market conditions for trading and perhaps, it is time to take a break till the market has consolidated enough for a trend to continue. Prices falling like pan cakes with buy signals being violated, however on lower volume.Very challenging.

When in doubt, such as during these times, quit trading and take a break. Do not aim to trade everyday, but rather aim to trade profitably.