Trading Ideas for Week of 11 May 09

A Look At the Big Picture - DJIA: The DJIA has consolidated around the 8200-8400 level over the last 2 weeks and is looked set to charge ahead. The +ve DIs and rising ADX points towards a continuing uptrend. However, stochastic is in the overbought region, suggesting some consolidation may take place in the days ahead. Given the strong uptrend, the pullback may not be severe. On the downside, it could perhaps retest the 8200-8400 levels to establish this as a firm support level. On the up side, DJIA could be flirting with the thrice tested 9000 levels. Breaking beyond 9000 would be tenuous in the short term, the market would require strong economic indicators to support it. I'll be watching out for the volume on the black candle stick days. If volume is heavy, it will indicate that the bulls may take a turn for the bears. On the contrary, a light volume during black candlestick days, wuld further reaffirm that the uptrend is still intact. Prices tend to overshoot in a bull rally and undershoot in a bear rally. The key question now is has the price overhoot? Or is it recovering from the undershoot bear in March?




STI: STI has charged furiously over the last 1 week, it's performance far surpassed the other markets around the world. It has broken the twice tested resistance at 1950 and crack through the 200MA resistance. The +DI and rising ADX suggest that an uptrend is in place. However, there are indicators that the bull is tired. The shooting star candlestick on Fri close, the red histogram MacD and overbought stochastics points towards a possible consolidation in the days ahead. The 200MA support line would serve as a strong support. This would attract more investors to buy during the dips. As the blue chips has been rising like a runaway gun, there is likely to have significant interest in the 2nd-tier penny stocks (especially oil&gas sector) as those who has missed the action would not want to be left behind. As most of the stocks has run up too fast, there are opportunities to short some of the counters. A good profit target would be either the 14EMA or 20MA support line.

My Stock Pick from Indicators Watch:
SHORT: SIA, MCL Land, Capital Land, Golden Agri


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.