Hey folks, this is a special post as you can see, I have made it a sticky! First of all I would like to credit Jay Chia for sharing this with me and everyone. Jay of course once again, is my trusted and dilligent Trading Representative.
Now, you will remember what I spoke about the daily chart in 2003. I am going to give you a contrarian view of the weekly chart in 2001.
I would like to point out the chart back in Sept 2001. This is after 911, where the markets tanked very shortly before picking up, but only to tank further in 2002 before the rally began in 2003.
Notice the similarities between both charts. Right click, open as a new tab/window to compare both charts. Quite similar. Will it happen again? No one knows for sure. I will paint 2 scenarios for you here, and these should be made clear within Sept-Oct this year. The game? To prepare for both possibilities, and then prepare to follow the trend which it happens.
Now in 2003, if the markets today follow through, we will see the retracement followed by a trading sideway motion. The range could be as large as between 2480 and 2700. Confirmation of this scenario will come with a breakout at 2750. Immediate resistances as I type now, are at 2580-2610. If it turns down at 2610 the odds of this scenario happening is not very probable. The RSI has turned down breaking 50% which is not a strength of bullishness. It is a sign of bearish sentiment and must be taken into account. Largely, bearish divergences on the RSI is noted today, and in the years mentioned above. In this scenario, prepare for a sideway movement lasting beyond September, into October before the markets react on the upside.
2nd scenario is bear, with reference to the weekly chart (hence mid term) in 2001. A large support at 2420 has been repeated by many. In fact no one I know sees a great fall. To void this scenario, 2420 must hold, failure of which the chart in 2001 could come into fruition, taking the STI to an eventual level below 2000. This would be the flush down that is typical in a bear market, flushing away the bullish sentiment where investors will finally GIVE UP altogether, with a total lack of confidence in the market. Will property prices correct in tandem? Likely.
So in short, 2 main possible scenarios. A sideway movement leading to a break on the upside, or a deep flush down. I have my strategy in place, not only in my investments, trading portfolio as well as CPF holdings. You should have a plan too, so you can react accordingly. 2420 is huge. A break below will confirm shorting opportunities right there with an extremely good risk reward, and probability based on confirmation on indicators. We should have clarity in the next 2 months of the next trend ahead.
TA vs FA. What could drive us down all the way? With liquidity flowing everywhere unlike SARs or the previous bear market (dot comm burst) and where this global recession is led by the US, does a down draft make any sense at all? FA will contradict scenario 2 but from an FA contrarian’s view, we can never say never right? Do a reality check on things, and if everyone’s sitting on one side, nature seems to have a way to tip the boat over to rebalance. My point is not to debate or argue if it will happen, or not. It is to know the possibilities from what history and the charts say, prepare for the possibilities and be prepared to react. Didn’t everyone want an edge? Or do you wanna miss out (again) and get stuck somewhere, unable to capitalise? So this is somewhat of a reality check.Your investment decision ultimately is yours. This is not an advisory to buy and sell. My posts here has always been on what we can do depending on the current momentum and trend. It is NEVER an advisory to buy or sell. Rather it is sharing my own journey in learning, a way of remembering what I need to do (when I type things out, my brain registers it better) and to provide a platform to communicate with friends, as well as you, the casual visitor. I cannot provide advisories to people whom I do not know simply cause everyone has a different time horizon, risk appetite, and investment goals. I have my own, and will differ from many others’. My friends Alvin and Jay both have very different strategies and goals, although the common one with everyone, is to make money from investments. I do not think anyone came into investments to lose money.
I will update this page with the 2003 chart. I will amend this line accordingly then.