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Migration of my Market Opinion Posting

Jay Chia — Wed, 20 Jun 2012 02:56:17 +0000

Hi Loyal Readers,

Ever since I have been a contributor to TimeToHuat. I am always inspired to provide more information and analysis to the internet community. Due to the limitations of WordPress functions, I have decided to explore into creation of my personal website.

After painstaking creation and investment, I am proud to present you with

www.jay-chia.com

My new postings will be created in the website and I certainly hope that you can show support by visiting the website.

Cheers and HUAT AH!

Jay Chia

Daily Market Opinion for 18-Jun-2012

Jay Chia — Tue, 19 Jun 2012 02:00:16 +0000

STI was buoyant by the results of the Greek Election as the party with pro-bailout plans was being elected. With such buoyant mood, STI gapped up strongly as fears of European Crisis starts to ease. The opening price immediately reached 2849 level which broke the resistance level of 2830. However, this bullishness failed to sustain as seller made us of this opportunity to exit at a higher price. Buyers were not able to counter the selling pressure and STI started to creep lower during the day. When the European market opens weak, STI started to be depressed deeper hitting as low as 2821 level before closing at 2824 level. Despite such strong opening, STI was merely 13.22pts higher. Last night, DJI ended 25.35pts lower which was plagued by concerns after Greek Election. Has STI confirmed its uptrend formation? Will the uncertain situation in Greek trigger another wave of selling?

STI closed with a long black candle after a gap opening. This black candle shows that the resistance at 2830 level is strong and is preventing STI from going higher. There is also a small gap support that is being formed between 2814 – 2821 levels which STI might retrace to close this gap. The short-term indicators were seen to be mixed now as the Histogram continues to be bullish while the Stochastic seems to be weakening. However, one significant observation is that Stochastic is now trending out of the overbought region. This means that STI might still have good chance of heading higher. Despite the bullish possibilities, STI’s important support level now stands at 2775 level where it will determine whether STI’s uptrend formation is sustainable.

The banks attempted to trade higher yesterday but they ended up with a long black candle. They were facing their respective resistance levels and were unable to break it. If they were to trade lower than their yesterday’s low, a possible retracement towards 20ma might happen. That will confirm the formation of higher high for the banks and uptrend will be formed. The offshores also failed to maintain their bullish opening yesterday. Kepcorp and Sembmar faced resistance from their resistance lines and were unable to break them yesterday. They might have a chance to retrace towards their 20ma line if they trade lower today.

The properties were also struggling to maintain their bullish opening while they managed to close with some strength. Kepland had the strongest bullish showing yesterday as it managed to maintain its gap opening and even closed higher. Citydev’s candle formation is a black hanging man pattern which indicates that it could be a possible high. However, it could be supported by the 100ma support line at 10.50 level. If Citydev fails to hold at this support, it will retrace towards 20ma line. The commodities were trading mixed yesterday as they started to lose upside steam yesterday. Only Olam and Sakari were able to show bullish strength yesterday. Olam is now testing its gap resistance between 1.875 – 1.97 levels, while Sakari is also facing 20ma & gap resistance between 1.305 – 1.365 levels. If Sakari is able to break these 2 resistance levels, it will be heading strongly towards next resistance of 1.41 level.

In conclusion, multiple sectors were facing resistance levels yesterday which are preventing STI from heading higher. Currently, many are facing the risk of retracement to form a high. However, their retracement might be supported by 20ma line as many will likely to form a higher low. These are signs of uptrend formation. Hence, STI might experience retracement if these sectors like the banks and offshores start their retracement movement by closing lower today. If STI fails to hold at its gap support between 2814 – 2821 levels, it will indicate a deeper retracement towards 2730 level again. If this retracement did not happen, STI might be able to break 2830 level and head towards the next resistance of 2880 level.

Long traders can consider taking partial profit when their targets are met. Adding new long position today might not be a good strategy as prices closer to resistance. Shortist can consider counter-trend short position when there is bearish confirmation but the risk reward might not good and hence, quick profit must be taken.

*Disclaimer: This material is provided to you for general information only and does not constitute a recommendation, an offer or solicitation to purchase or sell the product mentioned. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of you acting based on this information. Investments are subject to investment risks. If there are any questions, please contact me (Jay)

Greek pro-bailout parties won the election. STI might head further.

Jay Chia — Mon, 18 Jun 2012 01:54:44 +0000

Last week, STI was up by 73.11pts despite the possibilities of the Greek exiting the EU after its election on Sunday. Many were concerned about the outcome of the Greek election and choose to stay cautious during the week. However, risk takers and bargain hunters were seen throughout the week to pick up long positions which caused STI to trade with an upside tendency. The start of the week was first greeted a strong gap up which its gap support was quickly being covered in the next day. Bearish signals also failed to confirm during the week after Friday’s strong bullish closing. Friday’s sharp rally is due to anticipation of positive outcome of Greek’s election over the weekend. STI indeed anticipated the right results for the Greek as voted for pro-bailout parties. This had erased the fears of further outbreak of Euro situations. Will STI be lifted higher this week after the Greek election? Has STI reversed its downtrend?
Let’s read the chart for the answer.

Trend: Downtrend with possible sideways, 20ma flat, MacD below 0

Support: 2770 (20ma), 2730, 2700

Resistance: 2830 (200ma),2880 (50ma), 2915 (100ma)

Observations:

Candlestick – Long white candle.

Histogram – 1G after 1R, bearish signal failed. Bullish divergence spotted.

RSI – Around 53.7%. Bullish divergence spotted.

Stochastic – Around 80%. Overbought. Bearish crossover seen.

Bollinger Band – Between Mid and Upper band. Band squeezing.

Conclusion:

The strong showing by STI last week had helped us to be more certain that the bulls were in play. The break of 20ma resistance line last Monday was the first clue that STI is experience bullish underlying. Furthermore, a strong rebound after testing the gap support between 2760 – 2770 levels is the second sign from the bulls. Further bullish confirmation was seen when 20ma line held well as a support on Thursday and strong upside movement that is being seen on Friday. These price actions provided strong evidence that STI is indeed attempting to reverse it downtrend. However, is this bullish strength temporary or will it be sustainable? The indicators should help to show the strength.

The mid-term indicators are changing last week as the bullish movement have started to change the bearish momentum. Although the MacD line is still below 0, the flattening of 20ma and RSI trading slightly above 50% line is giving some hints that the trend could have changed. Bearish divergence signals were seen to be intact and this increases the odds of a trend reversal. Short-term indicators were showing bearish signals last week but the bearish signal seems to have failed after last Friday’s long white candle closing. This is also a sign that the downtrend had weaken and possibilities of its trend to reverse. Henceforth, the indicators were indicating that the downtrend could have probably reversed to sideways at the moment.

As identified on the previous week, in order for STI to confirm its uptrend, it must either form a higher high or higher low formation. From the charts, STI seems to have formed a higher low formation after a strong gap opening on Monday. However, it is still very unclear whether this higher low formation is a valid one as this higher low is only being formed by 3 days of movement. Therefore, the key confirmation of reversal to uptrend formation right now is higher high formation. The recent high of STI stands at 2830 level and 2830 confluences with 200ma resistance line. If STI is able to break 2830 this week after positive results from the Greek election, it will confirm STI’s uptrend formation. Once the breakout of this major resistance of 2830 level is being seen, STI is likely to head to the next resistance level of 2880 to test it.

On the other hand, if the market participants felt that the positive news from Greek election is already priced in, retracement could occur. 2770 support level that confluences with 20ma will be the key level to hold in order for STI to have chance to turn uptrend. However, if it fails to hold, it would have confirmed that the trend is a sideway and this could lead the retracement to be a deeper one. The next immediate support of STI stands at 2730 level. This retracement scenario might have a chance to happen as Stochastic is showing overbought condition and its bearish signal is still intact.

In conclusion, with positive news from the Greek election over the night, it will likely to bring move bullish movements to STI for this week as the fear of further economic meltdown has been reduced drastically. This could lead to a break out of 2830 resistance level which will confirm STI’s uptrend formation. If this occurs, we will likely see STI heading for 2880 resistance level this week. However, there is still a risk of STI retracing after such bullish movement last week. If STI fails to break 2830 resistance level, STI might be retracing back to 2770 support level and continue its sideways formation. Despite these 2 possible scenarios to occur for STI this week, one can be certain that STI’s downtrend has ended and the trend now can either be sideways or uptrend. Henceforth, odds has been shifted to the long side currently.

What to watch out for this week:

1) Breaking of 2830 resistance level

2) Testing of 2770 support level

3) Testing of 2880 resistance level

4) Breaking of 2770 support level

Trading strategy to adapt right now:

- Long traders whom had entered based on counter-trend strategy last week will be greeted with profits. Partial profits should be taken when targets are met. Enter long positions when there is confirmation of break out for uptrend formation.

- Shortists with short positions should exit their shorts when uptrend is being confirmed. Entering new short position is not wise right now as the downtrend has been reversed.

*Disclaimer:

This analysis is provided to you for general information only and does not constitute a recommendation, an offer or solicitation to purchase or sell the product mentioned. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of you acting based on this information. Investments are subject to investment risks.

Please consult your respective advisers.

Daily Market Opinion for 15-Jun-2012

Jay Chia — Fri, 15 Jun 2012 01:41:48 +0000

STI continued to trade cautiously yesterday as the Greeks’ Election draws nearer. STI reacted with a gap down during the opening session after DJI failed to stay positive on the previous night. 20ma support line at 2773 level was immediately tested and there were multiple attempts to break it but going as low as 2767 level. However, bullish buyers were supporting the market by pushing the prices back up to as high as 2784. The tussle between the bullish and the bearish were seen throughout the day; while low trading volume amplified the cautious trading mood for STI. STI ended 13.07pts lower and close at 2773 level. Last night, DJI recovered its losses by closing 155.53pts higher. Will STI be able to hold at its 20ma support line? Will Greeks’ Election continue to impact the market?

Although STI opened with a gap down, it did not form any gap resistance yesterday. Doji like candle was formed yesterday and with closer look, it is a black candle with short body. This candle could probably confirm the bearish harami formation but it is certainly not a convincing one as the candle body is not long enough. This could be due to the support given by the 20ma line. However, the short-term indicators were triggering bearish signals which indicate higher chances for STI to start its retracement. Therefore, if STI is unable to hold above its 20ma support line despite the positive showing by DJI last night, STI will likely to go for a deeper retracement towards 2730 level.

The banks ended slightly lower yesterday after they gapped down during their opening session. Uob & DBS were seen having candle with long lower shadow yesterday. Their lower shadows tested their respective support level and this signifies that their support level is holding well. However, Uob’s short-term indicators start to trigger bearish signal which might lead to selling pressure today. If Uob fails to stay above 17.70 level, it might start to slide towards 20ma at 17.46 level. Most of the properties managed to strengthen yesterday despite bearish sentiment. Capitaland was the only one that failed to close higher and it confirmed its bearish signals. Capitaland is likely to head towards its 200ma support line at 2.59 and probably could test its 20ma support at 2.55 level. Citydev was able to inch higher yesterday and is now facing resistance from its 50ma line at 10.23 level. Overall, the rest of the properties were also facing resistance levels.

The offshores were generally lower yesterday. Kepcorp had started to retrace as it is unable to break 10.20 resistance level. It had tested the 20ma line yesterday and is showing signs that the support is holding well. Sembcorp which has been retracing for the past few days is now testing is horizontal support level and is likely to continue to test this support level. Its 20ma support line stands at 4.88 level which it could be testing to form a higher low formation. The commodities were generally lower yesterday as there is lacking of volume to drive the prices higher. Golden agri halted its’ ascend yesterday and closed with a bearish harami formation. If it closes lower today, it will be retracing towards its recent low level again. Noble grp had failed to head higher to test its 50ma resistance line yesterday and it triggered bearish signals. This indicates that Noble grp is likely to retrace towards its 20ma line at 1.11 level before one can be certain whether it will have further upside.

In conclusion, STI is set to continue its cautious movement today as today will be the last trading before the Greeks’ Election result over the weekend. Bearish signals were seen in multiple sectors which indicate the likelihood of STI to retrace. However, this retracement might have limited downside as many might be supported by their respective 20ma support line. The banks and offshores sectors should be facing their 20ma support line today and it is crucial that they are to stay supported. Failure to hold at 20ma support level will lead STI to head for a deeper retracement towards 2730 level. Henceforth, we might be witnessing STI’s struggle to stay above its 20ma support level today.

Long traders and Shortists should stay cautious currently as the market is at a tipping point currently. Short positions that are still open should have greater consideration to close at least half of it.

Daily Market Opinion for 14-Jun-2012

Jay Chia — Thu, 14 Jun 2012 01:48:11 +0000

Yesterday, STI halted its’ ascend as concerns on the Greek meeting this Sunday starts to haunt the market again. STI opened with a slight gap down but bullish players were seen in the early trading session to push the price back up. However, the bullishness was not strong enough to counter profit takers whom prevented the price from going higher. Whenever there was profit taking actions during the day, bullish players were able to push the price back up. Eventually, STI managed to close at 2786 level which is merely 10.2pts lower than previous day. Last night, DJI also retraced slightly with 77.42pts lower. Is this the first sign that STI is about to retrace? Will the Greek meeting turn out to be a bearish situation for the market?

STI closed with a short black candle with longer lower shadow yesterday. This candle can be deems as a bearish harami formation which indicates that STI might form a high is this formation is being confirmed. The lower shadow of this candle indicates that the 20ma support line might be holding STI yesterday. If STI fails to hold at this 20ma support line, it would mean that the bearish harami is confirmed and retracement would happen. Currently, the short-term indicators were still giving bullish readings and its bullish momentum is still yet to change. However, Stochastic has entered overbought zone and this indicates that the upside might be capped. Henceforth, the 20ma support line at 2773 level will be an important level to determine if STI will have a deeper retracement. If 2773 level fails to hold, STI will likely to retrace further.

The banks were trading mixed yesterday as they halted their bullish movements. Ocbc is the only one that managed to head higher yesterday as it is trying to catch up with its counterparts. Uob continued to test its 50ma resistance line yesterday but it failed to break this resistance level, if it fails to hold at 100ma support level, it would mean that Uob will be heading towards its 20ma at 17.48 level. The properties were also trading mixed yesterday as profit taking actions start to be seen. Capitaland and Kepland failed to break this 50 & 100ma resistance line and formed bearish candle at these resistance levels. Their short-term indicators also indicate that they are ready for retracement and they might be heading towards their respective 20ma line to find support.

The offshores are generally lower yesterday as their attempt to test their support level continues. Sembcorp faced selling pressure yesterday but its support level 4.94 level was broken briefly yesterday. Its long lower shadow indicates that this support level is strong and is likely to hold despite bearish readings from its indicators. Sembmar continue to struggle with its 20ma resistance line and was unable to break it yesterday. With its bearish readings from the indicators, it might head towards its 200ma support line to test it again. The commodities were generally flat yesterday after their bullish movement for the past few days. Bearish candles were seen in Indoagri, Noble grp, Olam and Sakari. These counters might start to retrace if these bearish candle are being confirmed. The only strongest commodity counter yesterday was Golden Agri. Golden Agri managed to break its 20ma resistance line strongly yesterday and its trend might start to reverse. If it manages to stay above 20ma line which is around 0.635 level, it would mean that its trend could have turned to uptrend.

In conclusion, STI have already enjoyed its’ bullish ride and could be taking a break now while waiting for the results of the Greek meeting. Cautious traders were quick to take profit yesterday as numerous sectors have hit their respective resistance levels. Profit taking pressure is likely to continue today which might cause STI to retrace deeper. The key level for STI currently is the 20ma support line. If it manages to stay supported by this 20ma line, STI will likely to continue the upside movement. But if STI fails to hold at 20ma line, it will indicate retracement is in play. The next support level for STI will be at 2730 level. Therefore, STI is likely to stay cautious today with hints of profit takers.

Long traders with long positions might want to consider taking partial profits if targets are being met. Shortist can consider some short positions on counters that are trading at resistance level and with bearish reversal patterns being confirmed. The profit target for the short position should be the 20ma line.

Daily Market Opinion for 13-Jun-2012

Jay Chia — Wed, 13 Jun 2012 01:53:51 +0000

STI managed to perform bullish action again yesterday as it managed to close higher despite a weak opening. STI opened lower at 2764 level in reaction to DJI’s overnight drop. However, it manages to climb progressively during the day after it tested the gap support between 2760 – 2770 levels. More buying strength was seen after the European market open as the European market opened with positive note. Hence, STI managed to close 9.27pts higher at 2797 level. Last night, DJI recovered from its previous day’s losses and close 162.57pts higher. Will STI be able to continue its bullish streak today? Has it confirmed its uptrend formation?

A long white candle was seen in STI yesterday and it represents a very bullish day for STI. This candle has shown that STI’s gap support between 2760 – 2770 levels held well and this is a mark of a sustainable bullish momentum. This could mean that STI might still have strength to reach out to the next resistance level at 2830 level where the 200ma stands. The short-term indicators were indicating similar bullishness which might encourage STI to appreciate further. The weakening of Stochastic that was seen of the previous days had vanished and it seems that Stochastic might be heading towards its overbought region so. Henceforth, upside strength is likely to be sustainable for STI and should be able to test 2830 resistance level soon.

The banks were exhibiting strong bullish movements yesterday as managed to close higher despite weak opening. Dbs and Ocbc, which are seen resisted by their 20ma line, managed to break the resistance yesterday and likely to head higher. Uob seems to have broken its recent high level and could be confirming its uptrend formation; however, as it close at 50ma resistance line, Uob might not be able to form a clear higher high formation. Similarly, DBS is also facing resistance from its 50ma line. The offshores ended mixed yesterday as some of them are unable to continue their bullish streak. Sembcorp and Sembmar failed to head higher yesterday. Sembcorp decided to retrace back to its MA support level and closed with a bearish harami cross formation. It could be headin back to its breakout level of 4.95 level to test it as support. Sembmar failed to break its 20ma resistance level but its gap support is holding it well for another attempt to break the resistance.

The properties were able to close slightly higher yesterday after its attempt to close the gap support level. Capitaland was showing strong bullish strength yesterday as it managed to test its 50ma resistance at 2.74 level. Citydev tested its resistance level at 10.15 level again and if it managed to break this strong resistance level, it would mean that its uptrend is being confirmed. The commodities were generally higher yesterday. Indoagri and Noble grp managed to break out of their recent high and this might have confirmed their uptrend formation. If they are able to stay supported by their breakout level, these 2 counters will be head for the next resistance levels in the upcoming days. Golden agri have managed to form its lower low formation and might have a good chance to reverse its current downtrend as there is clear bullish divergence. If Golden agri is able to break its 20ma resistance at 0.64 level, it will indicate that Golden agri will be forming an uptrend formation.

In conclusion, the bullish movement yesterday was clearly a bullish indication that STI have good chances of turning uptrend. However, the upside movement was not a broad-based one and were generally being pushed up by the banks. Many were facing resistance levels yesterday while some managed to break out for higher high yesterday. Hence, the bullish strength will certainly start to weaken further soon but STI will still have good chances to test 2830 resistance level. The gap support with 20ma line at around 2770 level will continue to give STI support in order to maintain its upside chances. Therefore, STI might stand on neutral grounds today.

Long traders have to be selective on long side as many have hit resistance level. Breakout strategy can be adopted as long as it yields good risk reward. Shortist have to stay sideline for the moment.

Daily Market Opinion for 12-Jun-2012

Jay Chia — Tue, 12 Jun 2012 02:15:27 +0000

STI started the week with a strong gap after positive news that was flowing into the market over the weekend. Traders attempted to push the price higher during the opening session but the buying momentum started to drop after HSI opened. Trading activity turned stale during the day until the European market opens. Positive opening in the European market helped STI to rise gradually again before closing at 2787 level for the day. Hence, STI was up 49.92pts yesterday with average trading volume. Last night, DJI returned its gains back by closing 142.97pts lower as the market turned sceptical of the Spain’s bailout. Will STI fail today? If it falls, how low can STI go?

The strong gap up yesterday has helped STI to form a new gap support level while a break of 20ma resistance line also occurs. The new gap support stands between 2760 – 2770 levels which can provide support for STI if the trend has turn bullish. A white candle pattern that breaks the 20ma might be the first clue of STI showing bullish strength. However, STI has yet to break for a higher high as it is now meeting its resistance at 2790 level. The short-term indicators remains bullish today but Stochastic is continuing to show signs of narrowing as it is approaching overbought region soon. Henceforth, STI’s current bullish momentum might still have upside room, but there is also a chance for STI to close the gap between 2760 – 2770 levels today. Upside might be capped by 2790 currently.

The banks managed to strengthen yesterday after positive news of Spain bailout by the EU. Uob showed the strongest surge within the sector and it managed to trade above 20ma line and tested 100ma resistance line. It is now facing its recent high level and if it manages to break it, it might be reversing its trend. Ocbc and Dbs were now facing resistance from the 20ma line and it might face some trouble breaking it as their candle shows upper shadow. The properties were surging strongly yesterday. Capitaland gapped up strongly and confirmed its breakout of 200ma resistance line. Capitaland is now facing 50ma resistance but it created a big gap support between 2.61 – 2.66 levels. Kepland & F&N are now testing their recent high and if they managed to break it, they might experience a change of trend.

The offshores were also showing bullishness yesterday. Sembcorp has the strongest movement yesterday as it broke out of its recent high and 50ma resistance line. During closing it had also broke its gap resistance between 5.01 – 5.13 levels. This sharp movement might be due to short covering and it will likely to attract more buyers into it. Kepcorp and Sembmar did not enjoy such bullishness as they are now facing 20ma as resistance. The commodities were trading higher also. Strong gains were seen in Olam and Indoagri yesterday. Olam surge was due to news on its approve of share buyback programme which traders thought that it will help Olam to sustain its badly beaten price. Indoagri managed to break its 20ma line yesterday and could be testing its recent high of 1.25 level. If 1.25 level is being broken, Indoagri might be forming an uptrend with an upside of 1.30 level as resistance.

In conclusion, STI’s gap up yesterday was a broad-based one and this could be a first sign that bullish momentum is building up to reverse STI’s current downtrend. However, due to DJI’s drop last night, it will definitely affect STI opening today. Given that many individual counters are facing resistance, there are chances of retracement for STI today. This retracement will probably drive STI lower to test its gap support level between 2760 – 2770 levels to close it. If STI is indeed bullish, this gap support level should hold well. However, if this gap support level fails to hold, STI might start to test 2730 support level again.

Long traders might want to execute cautious long trade if the gap support level holds well. Shortist might want to take this retracement opportunity to close short positions if the gap support holds.

BULLISH DIVERGENCE SPOTTED IN STI, POTENTIAL TREND REVERSAL.

Jay Chia — Mon, 11 Jun 2012 02:13:31 +0000

Last week, STI had a volatile week as it not only dropped deeply, it also rebounded strongly. The week was started off with a strong gap down, reaching as low as 2698 level, due to weak US job data. But STI was quick to recover in the mid week and reached as high as 2775 level before it started to retrace back to close at 2737 level. This volatile week ended with just merely 7.82pts down. Last Friday night, DJI managed to climb 93.24pts higher in anticipation of positive news over the weekend. China economic showed positive data while Spain managed to get loans from EU to help their banks. This positiveness might help STI to reach a higher level this week. Has STI formed a bottom last week? Or is it merely a dead cat bounce where further downside is to happen?
The chart will give us clues to make decisions.

Trend: Downtrend, 20ma down, MacD below 0

Support: 2730, 2680, 2640

Resistance: 2775 (20ma), 2830 (200ma),2880 (50ma)

Observations:

Candlestick – Long black candle.

Histogram – 3Gs. Bullish divergence spotted.

RSI – Around 41.3%. Out of oversold. Bullish divergence spotted.

Stochastic – Around 66.3%. No bearish crossover.

Bollinger Band – Between Mid and Lower band. Band starting to squeeze slightly.

Conclusion:

The volatile market action last week is seen hovering below and above 2730 support line. STI was also seen to bounce off before testing the support level of 2680. Its rebound had managed to break the gap resistance between 2715 – 2737 levels which showcased the bulls were in play. However, this bullishness was not strong enough to break 2775 resistance level as the sharp rise in price had attracted many sellers to enter the market. Therefore, STI eventually managed to end the week above 2730 support level. Such sharp rebound is usually caused by a shift in sentiment of the market. Has the bearish sentiment in the market starting to weaken? Given that positive news is being announced, will these news reverse STI’s current trend? The indicators should be able to give us further clues on this matter.

The mid-term indicators are starting to show some signs of changes after last week’s movement. The MacD line formed a bullish crossover which indicates a possible change in trend while RSI is clearly out of the oversold zone. With formation of bullish divergence in both Histogram and RSI, STI’s downtrend momentum has clearly been weakened and chances of a trend reversal are increasing right now. Short-term indicators continue to show short-term bullishness which might help STI to propel higher. But Stochastic is starting to show some weakness as the 2 lines are starting to narrow. Overall, STI might be starting its trend reversal formation and key levels are needed to be identified in order to confirm the change in trend.

In order for STI to turn uptrend, it must either form a higher high or higher low formation. Last week, STI formed a high after testing 2775 level. This high is not a higher high but instead, it is a lower high which indicates a downtrend movement. Hence, in order for STI to have a convincible uptrend, it must not only break the immediate resistance at 2775 level, it must also break the next high at 2830 level. This would mean that STI have to break 2 MA lines too, which is 20 & 200ma respectively. This could be a harder formation to form. The next alternative would be higher low formation. There is a good possibility for STI to form a higher low formation right now as it is now trading higher than the recent low of 2698 level. Furthermore, the immediate support level of 2730 level is also higher than the recent low. If STI manages to hold at 2730 support level, a new higher low level will be formed and uptrend formation will start to form too.

Despite positiveness, one must not forget that STI is still trending in downtrend. There is also a possibility of the bullish divergence signal to fail. Bullish divergence signal will start to fail if STI breaks the immediate support level of 2730 and confirmation of failure will happen when STI fails to hold at 2680 support. Therefore, 2680 support level is an important support level if STI still wishes to reverse its downtrend. However, currently, with positive news over the weekend plus bullish short-term indications, STI might have the strength to hold at its support level at least.

In conclusion, bullish divergence signal has given STI higher chance in reversing its current downtrend. Confirmation of uptrend formation can happen by breaking 2830 resistance level or rebounding off 2730 support level. These 2 are the key levels for STI to form an uptrend formation. However, STI is currently still in downtrend formation and there is still a risk in continuation of downtrend. If STI fails to hold at 2680 support level, the implications would be failure of bullish divergence signal and continuation of downtrend. Henceforth, with these expectations, one can start to accumulate long positions via counter trend strategy cautiously.

What to watch out for this week:

1) Breaking of 2775 resistance level

2) Testing of 2730 support level

3) Breaking of 2830 resistance level

4) Breaking of 2680 support level

Trading strategy to adapt right now:

- Long traders can adopt counter-trend strategy to enter cautious long positions.

- Shortists should start to reduce or even close their short positions as the odds for the downside is lowering.

*Disclaimer:

Please consult your respective advisers.

Daily Market Opinion for 8-Jun-2012

Jay Chia — Fri, 08 Jun 2012 01:42:49 +0000

Yesterday, STI attempted to head higher by having a strong gap up opening in reaction to DJI’s strong closing on the previous night. However, STI did not manage to continue its bullish streak as sellers start to be attracted by the bullish prices yesterday. Sellers were seen throughout the day which forces STI to drop gradually during the day despite the regional market being positive. Firm European market opening did not help STI to recover either. Eventually, STI closed 1.57pts down which ended its 2 days bullish streak; STI closed at 2759 level. Last night, DJI did not enjoy strong continuation of bullish as it ended merely 46.17pts higher. Will STI be able to stay bullish today? Or will the downtrend starts to continue?

Failure to head higher yesterday signifies that the downtrend is still intact. Furthermore, STI closed with a black candle yesterday which formed the bearish thrusting pattern. If there is strong confirmation on this bearish pattern, STI will likely to head lower. However, the short-term indicators continue to be bullish and confirmed its bullish signal. This could be an indication that there could be still some underlying bullishness to push STI up if there is no confirmation of the bearish candle pattern. Therefore, the immediate support level of STI might be crucial to determine if the bullish underlying has diminished. Immediate support for STI stands at 2730 level and if this level fails to hold, it will mean that STI will be set for another lower low formation. If it holds, STI might have a good chance of forming uptrend formation.

The banks gain in price yesterday as they managed to continue their bullish strength. Dbs and Ocbc headed higher marginally while Uob showed strong upward movement. Uob was seen to do its catch up with Dbs as it did not have significant rebound like Dbs for the past few days. Ocbc continues struggling for rebound as it is now facing 200ma resistance at 8.34 level. The offshores managed to close slightly higher yesterday. Kepcorp and Sembmar seem to be lacking of bullish strength to head higher yesterday as they closed with bearish candles. Sembcorp is the only one that shows firmness as it managed to test its recent high and its long lower shadow indicates its support at 20ma line.

The properties ended generally higher yesterday. Kepland, Capitaland and F&N were able to continue their upside movement but the bullishness starts to weaken as their candle gets shorter. Kepland and Capitaland ended with a black candle which indicates that they might be facing resistance. Citydev was the only one that is unable to head higher as it is currently facing resistance. The commodities were trading mixed yesterday as some of them start to retrace slightly from their high. Golden agri continues to face resistance from the gap resistance level and is retracing back to its support level of 0.615. Noble grp faced resistance from its recent high and it might start to retrace back to its recent low also. Sakari failed to confirm its bullish reversal signal and it could retrace back to its support of 1.20 level.

In conclusion, STI’s upside might come to a halt as many counters are starting to face upside fatigue. Numerous were facing resistance level and is unable to break it. If STI is to close much lower today, it might confirm STI’s lower high formation which might trigger further downside. However, due to the presence of bullish divergence in the indicators, STI might still have chance to form uptrend movement by forming a higher low formation. Currently, the possible support level for higher low formation is the 2730 level. It will be a crucial level for STI’s chances to turn uptrend. If it fails to hold as support, STI will likely be breaking its recent low and test 2680 support level.

Long trader can continue to identify counter-trend opportunities when 2730 support level is being tested. Shortist can take on some short positions but stop loss level has to be tight as there is bullish divergence.

Daily Market Opinion for 7-Jun-2012

Jay Chia — Thu, 07 Jun 2012 01:48:27 +0000

STI rebounded strongly yesterday and managed to break its gap resistance between 2715 – 2737 levels. The bullish strength was due to hopes on the European Central Bank (ECB) to introduce easing measures to calm the market. However, the ECB decided to keep the interest rate unchanged last night during their meeting. Yesterday’s opening started with a gap up and STI managed to gain strength gradually till it broke the upper resistance line of the gap resistance. Buyers were quick to enter the market after the resistance broke and it could also be pushed higher by European market’s bullish opening. Eventually, STI managed to close at 2760 level with 48.52pts higher for the day. Last night, DJI ended bullishly with 286.84pts higher despite ECB announced to keep the interest rate unchanged. Will STI be able to head higher today? Has STI reversed it trend?

Breaking of the gap resistance level confirmed that STI had formed a lower low at 2698 level. This breakout is a convincing one as STI closed with a long white candle yesterday. This also indicates that STI is now heading towards its next resistance level of 2780 and could probably test this resistance level to form a lower high. Short-term indicators have reversed its bearish momentum to a bullish momentum as they triggered bullish signals. If STI manages to head higher today, it will confirm this bullish signal. Bullish divergence signal is also formed after yesterday’s movement and this could indicate that STI’s downtrend has weakened. Hence, in order for STI to turn uptrend currently, it must break its recent high at 2811 level before we can conclude a possible uptrend formation.

The banks ended positively yesterday as they were recover their gains they had lost yesterday. Dbs, with the strongest bullish strength on the previous day, managed to continue higher but it is showing signs of fatigue as it closed with a dragonfly doji. Uob managed to how its support very well and formed a bullish harami pattern at 200ma, hence a reversal might happen for Uob. The properties were showing strong bullish movement yesterday as some managed to break its 20ma resistance line. Capitaland and Citydev managed to break their 20ma line without hesitation yesterday. Their movement yesterday has increased their odds of reversing their downtrend formation till an uptrend one. Kepland & F&N were also close to their 20ma line and could probably mimic the other 2 properties to break this resistance line.

The offshores were also performing bullishly yesterday. Sembmar was able to hold well at its 200ma line and closed with a bullish reversal pattern. Coupled with bullish signal from its indicators, it should not have a problem to rebound towards its resistance at 4.38 level. Kepcorp also have similar readings and it could also rebound towards 10.00 level. The commodities were one of the main contributors of STI’s strong upside movement yesterday. Sakari, Olam and Indoagri rebounded sharply yesterday. Sakari managed to rebound above its 1.20 support level and proved that previous day’s movement is just a whipsaw. Indoagri and Olam’s sharp movement yesterday have created bullish divergence signal in their indicator, hence, their downtrend are weakening.

In conclusion, STI’s broad-based bullish movement yesterday has changed the strength of the downtrend movement. Numerous sectors formed bullish divergence signal and this clearly indicates that their downside is getting limited and a trend reversal might occur. However, we can’t confirm that STI’s downtrend has turned uptrend as there is no formation of higher low or higher high. In order for STI to turn uptrend, it must not only break its current resistance of 2780 level, it must also break its recent high of 2811 level before we can conclude that STI is turning uptrend. The odds of turning uptrend are definitely higher right now as long as the various sectors are able to continue their bullish movement.

Long trader can start to look for counter-trend opportunities as bullish divergence has formed. Shortist has to be wary of the weakening of downtrend and if needed, short positions have to be close prematurely before it has meet its target.