May 27, 2010 § Leave a comment
A bear market is when the market has fallen over 20%. STI has yet to fall by that amount but I could not help but think that this “correction” is far from over.
During the global rally last year, the charge was led largely by China and consequently, a booming property and commodities sectors. Singapore and US were considered laggards.
However, the China market has since plunged into a technical bear market, bringing along with it the commodities and properties sectors.
In traditional trading wisdom, the leaders are always the first to fall followed by the laggards.
Zooming in closer into individual Singapore stocks, we see commodity and property plays establishing downtrends earlier than the rest. Market leaders like HL Asia(a leader on its own), Wilmar, Noble, Capital Land, etc has since retreated sharply. CapitaLand in particular has already formed the dead cross where the 50 and 200 day moving averages intersect each other on the way down. This has bearish implications for the medium to long term.
On a more macro view, the boom could be attributed to inflation and not real gains. Balance sheets on property firms and commodities firms look rosier, beefed up by better numbers. But how many of us are thinking harder about buying the next property, car or even a cup of coffee?
At the end of the day, Mr Market is always right.
May 25, 2010 § Leave a comment
CapitalLand’s intraday candlestick has a long upper shadow. This is characteristic of many stocks in trading today.
Prices were bid higher and only to get sold down in the later part of the trading session.
This is a sign of distribution in progress, where sellers quickly dump stocks to optimistic buyers.
Having said that, stocks are likely to be trading lower, as any buyers right now will be weak holders, and likely to take flight when things go bad.
Stochastic and momentum are turning down.
GMMA is showing “healthy” trend.
50 and 200 days moving average has already formed a dead cross a couple of sessions back. This is an extremely bearish development to indicate the confirmation of a major trend reversal.
All these factors, coupled with a strong resistance at $3.63, makes this a good counter to short.
Expect the fall to gather pace once again.
May 19, 2010 § Leave a comment
STI’s move today provided a low risk entry for shorting.
Stochastics failed to move further up and has started to turn down.
GMMA shows what might be the beginning of a downtrend.
In a downtrend, this might mean stochastics will continue to stay in the oversold region for a longer period of time.
This is especially so during a trend reversal when many traders are still caught off guard from leveraging, triggering a series of margin calls.
Breakdown level at 2809 would provide a good price resistance (support for shorting).
In the event that trading breaks below the next price support level of 2770, it will be used as the stop loss level for shorting.
In any event, keep small positions as the downtrend is relatively young and requires further affirmation.
On a sector basis, commodities and properties sectors are good candidates for shorting as they have been on the downtrend for quite a while.
May 3, 2010 § Leave a comment
Osim’s fall seems to have been cushioned by the 2 support levels at 82 cents and 87 cents.
The 50 day moving average has lent further weight to the support and look likely to intersect with the 87 cents support level.
GMMA shows trend is likely to continue as the green bands are still well sepearated.
Stochastics are starting to turn up in the oversold region.
Low risk trade, with tight stop loss at 87 cents.
For less risky trade, keep stop loss at 82 cents.
May 2, 2010 § Leave a comment
Soilbuild has formed a very strong support at $1.48.
Up days has seen larger volumes than down days.
The long consolidation has caused stochastics to turn down to oversold region without breaking the support.
Resistance is at $1.55, a short way from the support, looks likely to be broken on the next rally.