Trading Ideas for Week of 20 Apr 09

A Look At the Big Picture - DJIA: Overbought indicators seems to suggest that the bull is going to take a break, hitting trendline resistance. However, the uptrend seems to be intact (+ve DI). The bearish divergence 2 weeks ago seemed to have dissipated with volume coming in over the last 1 week. DJIA will probably test the 20MA support (7870) this week. If it is able to hold the support line, the bull will continue to charge again. If DJIA is able to break above Friday's close, it will be a positive indication of a continuing uptrend. Otherwise, watch out for 20MA support. If this breaks down, we will perhaps see a retracment to 7500 level.



STI: STI also needs a break. Indicators shows that STI is highly overbought. However, a clear uptrend (+DI and rising ADX) is developing. This is perhaps fuelled by the Shanghai and Hong Kong market. But there are strong headwinds
ahead. The resistance at 1950 seems to be a strong one. Beyond 1950, there is a 60 points gap as well as the 200MA resistance that needs to be broken. A retracement towards the 20MA support line (1830) will be a healthy sign to give the STI the energy to charge ahead. The uptrend is still intact as long as the 20MA support hold. Otherwise, we'll expect the correction to test 1700 level.

My Stock Pick from Indicators Watch:
Nil from Indicator watch.

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.

Trading Idea for Week of 6 Apr 09

A Look At the Big Picture - DJIA: The Dow has shown signs of recovery. The million dollar question is, "Is it time to buy?". I'm cautiously optimistic. Shortist beware... At best, it will continue recovery; at worst, it will move sideway for another few weeks in search of the next trend direction. We are at a key crossroad, the chart has formed a classical ascending triangle. However, does the market have enough strength to break the resistance line? My guess is perhaps yes, but not this week as the market has been grossly overbought. The volume has been declining as the DJIA rises. This price/volume bearish divergence is a sign of imminent trend change. Hence, some consolidation is expected in order for the bull to gain strength before it charges again. The catalytic news would be the quarterly earnings results of the big banks. Given the implementation of the mark to market accounting rules, the banks could report positive earnings for the quarter. Could this be the catalyst? Maybe yes, maybe no. It depends on how investor perceive the effects of this new rules.


STI: The outlook for STI is more positive than the DJIA. The rise in the ST Index has been supported with good volume. This is a sign of strength of the market. The market could garner enough strength to break above the ascending triangle. I guess many investors at the sideline over the past few weeks were afraid that they may be left behind, and started to buy into the market. However, beware. Whether the trend is sustainable would depend on the performance of the DJIA. Many of the local counters are grossly overbought. A better strategy is to wait for a pull back and buy at key support lines. In an uptrend, the Index will likely be supported by the 20MA line, similarly for the various stock counters. Patience is the name of the game.

My Stock Pick from Indicators Watch:
Nil from Indicator watch.

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.