Trading Idea for Wek of 23 Mar 09

A Look At the Big Picture - DJIA: The Dow has managed to keep its gains and maintained above the 20MA support line. The rebound has been strong, briefly testing Fibonacci 38% resistance. The last 2 trading days' negative closing is at it stands now, a healthy consolidation for the overbought situation in the first half of last week. Is this the bottom yet? Confidence is building up, and anticpations are high. Many that had stayed at the sidelines are beginning to feel that they have lost out on the rebound, and started moving into the market. The $300Bn "quantitative easing" by the US administration has a few impacts. First, it makes the borrowing cost cheaper and second the mortgage rate will be much lower to encourage the housing markets. With a flood of liquidity in the market, the money needs to be channelled somewhere. With the confidence builing up, risk appetite of investors will increase. This is evident from the high volume traded in the stock markets around the world. I'll be watching for chart formation of an ascending triangle in the next 1-2 weeks. The first half of next week will see some more consolidation, before the bull regain its breath to charge again. However, if the DJIA is unable to hold its 20MA line, we could be really in a "dead cat bounce" scenario. Run for your money!




STI: STI had a great showing. It is more resilient than the Dow. I'm inclined to believe that the worst is behind us. Look at the banking stocks, they have been able to hold their gains pretty well. However, nothing is for sure. Indicators are entering into overbought region soon. In the next 1 week, we'll probably see STI entering into a consolidation phase. Will it tank on Monday? If yes, this could be signs of more down trend. If it survives, this will provide additional indications and confidence that the STI is in the recovery phase. Look at Shanghai, it has been on a path to recovery since Nov, an indication that their stimulus package has worked. Let's hope US' stimulus package will do likewise.

My Stock Pick from Indicators Watch:
Nil from Indicator watch. But I'll be pondering over the local banking stocks.

Disclaimer: My assessment of STI is for fun reading only. It is not an inducement to buy or sell nor an investment advice. By reading this blog, you have agreed that I shall not be responsible for any profits or losses based on the information provided.