STI: Bulls failed to clear major hurdle!

Strait Times(1704) Near Term Trend:Negative I was actively considering bullish up move- counter trend- since Oct lows. The rally did occurred but in a very fragmented manner, with more 'time' consumption rather than 'price' action.

See the inlaid daily chart, the index halted its corrective rally almost exactly on the 'middle' trendline of the equi-distance parallel channel. Since then the index came cracking with vengeance. Its resumption of bearish trend, started since cycle top of 3906. On the downside 1600-1650 is where the bulls will try to defend themselves, but it could be a temporary respite. In short, as long as STI trades <1860>

On the long term (monthly) charts, the support line has almost lost its relevance and now giving way to the bears to push the index lower, may be towards Mar 2003 lows.

STI showing arresting tendency!

Strait Times(1754) Near Term Trend:Turning Positive

In the previous review I said "weakness is persistent on the STI, unless and until seen a move above 1780-1785; the best case scenario is range trading between 1470-1785". Since then we had seen a down move towards 1638 and then a strong rebound almost there near to the upper end of the range.

Now what we required (for trend reversal) is a continuation of the up move above 1754 i,e, yesterday's high, towards the upper end of the range(1780-1785); if failed to hold 1754 then expect shallow down move towards 1650 (max), as the bulls have shown fairly good commitment in the recent past, near 1600 levels. On the monthly close charts, the STI is still holding the long term crucial support (trend) lines indicating a seriousness of the support (as far as long term scenario is concern). Overall, the index is showing arresting tendency on every down move, i.e. reduction in the bearish power, which is a sign of strength for the long term bulls, as well as subsiding the 'fear' of fresh impulsive down move, read 'crash'.

Weekness persist!

Strait Times(1655) Near Term Trend: Negative

In the last review I had argued that "STI is trading close to "reversal" points, however, a quick up move above 1785 is required to end the minor trend near 1565 with opening of short to medium term uptrend; Volatility SAR indicator pointing a reversal in the trend if able to close > 1820; on the monthly charts bulls need to 'push' the index above 1780 for the current month to remain in the game". The STI made an attempt to recover, but the trading remained confined below the crucial levels of 1780-1785, indicating lack of strength. See the inlaid weekly chart, failure to sustain above 1780-1785 can lead to retesting (breaking?) the recent low of 1473 and then lower end of the equi-distance parallel channel(1360). On the monthly chart, the month of November ended below the threshold. Now its trading below the long term trendline drawn from 1998, indicating continuation of the down trend. How much it can go down from the current levels? Its very difficult to answer that question. The best case scenario will be 'lackluster' range trading in 1470-1785 area.

Trading close to reversal points!

Strait Times(1662) Near term trend: Negative/Pending reversal

In the review dated 4th Nov(1864) I had anticipated the absolute reversal in the trend, at least till the year end, near 1680-1620 area. Accordingly STI fallen into anticipated area, however, in the last review I had suspected "expanding" triangle(daily chart) & as a precaution argued in favor of continuation of bearish trend, with "buying stop" placed at 1770-1785. However, in the last trading sessions, STI has bounced from 0.80% retracement of leg "b", Second, a & b leg had consumed 9 trading sessions, and so far leg c has also taken exactly 9 days. This price as well as time relationship indicates a possibility of end of "c", here, with an up move in sight provided a quick up move above 1785 in the next few days.

Traditional SAR (Volatility) system also indicates a reversal in the short term trend provided STI "closes" above 1820 i.e. buying stop for the bulls. {Sar- Stop and reverse system / the dotted line indicates a moving stop for the bears, where the original sell signal came at 3129 level on 9th June}. On the weekly charts, after moving in a perfect falling equi-distance parallel channel, since the top, the index got supported exactly on the lower end of the parallel channel on 27th Oct at 1473. Since then it had gained more than 31% before attempting to retest the lows. Quick upmove posting weekly close above 1865 is what required for the bulls to end the 28 weeks loosing streak(since 9th june), with conservative target price near 2k, i.e. value of the middle channel. On the monthly charts, STI is continued its struggle near (1780) to its 10 year support (rising trendline drawn since Sep 98 lows). In the last month it has briefly breached the support, but managed to close well above the trendline. For the current month, bulls need to push the index >1780 to remain in the game.

Expanding Triangle .? Heading towards new low.?

Straits Times(1665) Near term trend: Negative

In the last review I said "Considering the observations on weekly/monthly charts the possibility of significant bottom formation at recent low of 1475 is bright; However in the near term the existing rally is likely to be terminated anywhere between 1900-2000 with possibility of retesting 1680-1620".

As expected, the STI topped out at 1933 & fallen within the anticipated range. But the major difference is that, earlier I was expecting a confirmation for major reversal in 1680-1620 range. However looking at the daily price structure, expanding triangle formation (with "b" leg of the triangle has retraced 0.618% of "a" leg; the current fall could be "c" leg, which may retest the recent low) the possibility of bullish implication is ruled out, at least till seen close above 1770-1785.

On the weekly charts, value of the lower end of the parallel channel stands around 1400-1370 for the next 1-3 weeks. Will it test? If the "expanding" triangle scenario unfolds then "Yes". Lets see.

Straits Times- Bottoming out..?

Straits Times (1864) Near term trend: Sideways (Pending reversal)

Since Oct 07(3942) STI had lost over 62%, mimicking the trend witnessed in all the leading global stock markets. In the last week the Index has taken a good support near the long term trend line drawn by joining the respective lows of 1998 and 2003. (see the following monthly chart).

The "dotted" line indicates 98 & 2003 lows on "close i.e. line" chart; whereas the "solid" line indicates 98 & 2003 absolute lows on "Candlestick" charts.

Second, on the weekly chart, the entire fall was within perfect parallel falling channel with recent low of 1473 taken a good support exactly on the lower end of the channel, and also given the biggest rally of over 28% since May 2008(3269). After considering these observations on weekly/monthly charts, the possibility of significant bottom formation, here at recent low of 1475, is bright. In the extreme short term, the ongoing rally is likely to be terminated anywhere between 1.9k-2k area with possibility of retesting 1680-1620 before confirming the "absolute" reversal in the trend, at least till the year end i.e. Dec 2008.