Technical Analysis – 14th July 2009

The DJIA posting huge gains last night, recapturing its support turn resistance. Volume wise, looks like a fair share of buying but largely short covering activity it appears. Confirmation of the recapture is if that line holds for the rest of the week. Presently dow is trading in the green after J&J and Goldman Sachs released results that largely beat expectations but overall sentiment remains subdued as investors dug into forward forecasts for the companies, as well as better than expected readings in certain barometers (retail sales figures) are due to gas prices.

The downmove on Monday bounced off the symmetric triangle support line. Resistance remains with the downtrend line that hasn’t been tested in recent days, confirming a lower high (2nd consecutive). In the immediate term is it is hard to picture the direction the STI is heading towards. In the mid term it looks like it will be up, but in the immediate term a trend has not formed and is still in consolidation mode despite the big move up today. Volume is extremely light and can be attributed to short covering rather than any real buying.  My analysis over the weekend remains. A break below the support line could see 2100. A breakout on the upside should see an immediate new resistance at 2420 with a possibility of going beyond that in the mid term.

I took DBS for a tikam trade on price match during closing today after closing Jardine C&C.  50MA remains as resistance and indcators are neutral – positive.  A failure to breakout in the next session or so will see the triangle fail and will negate any price target.

DBS can also be seen as a descending triangle in formation which is bearish if support cracks. If on a long trade, watch out if 20MA is breached. A f urther breach at 11.20 will trigger short signals. For bullish momentum to continue, breakout must be confirmed with a break above 12.08.