Chartnexus Traders Club (9 June 09)

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SGX: Correction in the Making?

Interesting day today with many counters breaking 20-Day MA. Bank counters also showing signs of weaknesses with DBS breaching the Resistance turned Support level.

Below is the list of counters of stocks breaking 20-DMA today:

No. Stock Name Triggerred Date Triggerred Rules
1 ASL Marine 8 Jun 2009 ((Price touching MA))
2 Biosensors 8 Jun 2009 ((Price touching MA))
3 Broadway 8 Jun 2009 ((Price touching MA))
4 CH Offshore 8 Jun 2009 ((Price touching MA))
5 China XLX 8 Jun 2009 ((Price touching MA))
6 ChinaAOil 8 Jun 2009 ((Price touching MA))
7 ChinaFish 8 Jun 2009 ((Price touching MA))
8 ComfortDelGro 8 Jun 2009 ((Price touching MA))
9 CSE Global 8 Jun 2009 ((Price touching MA))
10 Ezra 8 Jun 2009 ((Price touching MA))
11 F & N 8 Jun 2009 ((Price touching MA))
12 FIRST RESOURCES LIMITED 8 Jun 2009 ((Price touching MA))
13 Golden Agri 8 Jun 2009 ((Price touching MA))
14 Goodpack 8 Jun 2009 ((Price touching MA))
15 IndoAgri 8 Jun 2009 ((Price touching MA))
16 KepCorp 8 Jun 2009 ((Price touching MA))
17 Longcheer 8 Jun 2009 ((Price touching MA))
18 M1 8 Jun 2009 ((Price touching MA))
19 MacqIntInfra 8 Jun 2009 ((Price touching MA))
20 MERMAID MARITIME PUBLIC CO LTD 8 Jun 2009 ((Price touching MA))
21 Midas 8 Jun 2009 ((Price touching MA))
22 Rotary 8 Jun 2009 ((Price touching MA))
23 SembCorp 8 Jun 2009 ((Price touching MA))
24 ST Engg 8 Jun 2009 ((Price touching MA))
25 StamfordLd 8 Jun 2009 ((Price touching MA))
26 StarHub 8 Jun 2009 ((Price touching MA))
27 Swiber 8 Jun 2009 ((Price touching MA))
28 Swissco 8 Jun 2009 ((Price touching MA))
29 TechOil&Gas 8 Jun 2009 ((Price touching MA))
30 Wing Tai 8 Jun 2009 ((Price touching MA))

SGX: Venture - A respite in uptrend?

SGX: Stock Watch for 19 May (Kepcorp & SGX)

Kepcorp

The current uptrend support line is holding up well. Stock closed marginally with a white candlestick today. Currently still awaiting a 4r1g MacD histogram signal.

• Action to take: Good for a LONG trade if stock trades and has a possibility of closing above $6.31 (20-Days Moving Average) and above previous session's high of $6.32.

SGX

Another stock which caught my attention today is SGX. Currently resting on a conflux of multiple support levels. Watch out for a Gap Resistance at 7.32 to 7.48.

• Action to take: Good for a LONG trade if stock trades above $7.02 (Fibo 38.2% Resistance)

*Caveat emptor - All usual disclaimers apply.
Trades are valid only for a short term time frame

World Indices: DJI - Downtrend Channel Negated

Interestingly, DOW has broken out of its recent downtrend channel on the 5-minutes interval chart as of 9:30pm. The index has entered into a Zone of Bullishness and is expected to test the resistance provided by the previous recent high at 8500 over the next few days.

SGX: Stock Watch (SIA, Kepcorp & Olam)

Stock watch for monitoring for next trading session. In order of preference:

1. SIA
2. Kepcorp
3. Olam

*Caveat emptor - All usual disclaimers apply.
Trades are valid only for a short term time frame

CTA SG Stock Alert: 18 May - 22 May

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Market Outlook: 18 May - 22 May

DOW

As anticipated previously, the long term Downtrend Line for DOW is holding quite nicely. DOW was seen retracing with a red bar on the 11 May 2009. Should this resistance fall, the next resistance thereafter will be around 9020 (Long term Fibo 38.2% Resistance), which conflux with Major horizontal resistance at 9030.

At the present moment, DOW is resting precariously on the 20-Days Moving Average. The closing on last Friday has seen the index breaking out and violating the current Uptrend Line. Should the 20-Day Moving Average and Psychological Support of 8000 fail to hold, we would probably see a fresh bout of selling down. In fact, bearish divergences are seen on the MacD, MFI and Stochastics.

Important Levels to Look Out for:

Confirmation of Bullish Trend to continue:

• Price rebounding from 20-Days Moving Average (MacD Histogram showing 4r1g signal)
  

Confirmation of Bearishness:

• Price breaks out of 20-Days Moving Average
  
• Price breaks Psychological Support 8000 points
  
  

*Let's observe if the old adage of "Sell in May and Go Away" will come into fruition.

STI

We observe a similar pattern for the Straits Times Index, where the price was resisted by the Long term Downtrend Line on 11 May as well. The gap resistance at 2260 - 2290 was closed as well, and price is currently seen retracing from these levels. The next level of resistance will be at around 2400 (Long Term Fibo 38.2% Fibo Resistance). Price is currently seen closed with a black candle from last trading session but is slighly higher than Thur's session. Using a short term Fibo retracement, this confluxs with a Short-Term Fibo 38.2%.

Important Levels to look out for:

Confirmation of BULLISHNESS:

• Price breaking out of Downtrend Line
  
• Price rebounding from 20-Days Moving Average
  
• Price rebounding from Major Resistance turned Support 1970
  
• + MacD histogram (4r1g) signals at these levels

Confirmation of BEARISHNESS

• Price breaking below 1970

Chartnexus Traders Club (11 May 2009)

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SGX: CityDev (CT1 SHORT)

Market showing signs of retracement today.
Several counters are retracing from their previous session's high.

Managed to filter out CityDev using CT1 SHORT signals.

Entry: 8.04 (1 bid below previous close)
Stop loss: 8.64 (1 bid above recent high)
Profit: 7.38 ~ 7.63 (gap support conflux with horizontal support)

Those who are interested in shorting may consider this counter. Do note however that this is a counter trend strategy i.e. you will be assuming a greater degree of risk as you are working against the prevailing trend.

*Caveat emptor - All usual disclaimers apply.
Trades are valid only for a short term time frame

SGX: OCBC, Yanlord & Citydev

This post is in response to Douglas' email:

Did an analysis on OCBC, Yanlord and Citydex to see if they are suitable counters for going on the LONG side with a mid to long time framework. Apparently all these counters have broken out of their Uptrend Channels and MacD bearish divergences are currently in play. 2 possible scenarios may happen with a MacD bearish divergence in play:

1) The counter starts trading in a range bound, sideway fashion; or
2) The counter starts plunging in price

Both scenarios seem highly likely now until we have further confirmation i.e. a break of the support provided by 20-Day Moving Average.

*It is also interesting to note that these counters on the weekly chart shows a 4g1r signal on the MacD and overbought on the Stochastics indicators.

Bottom line: Stay at the sidelines and observe for now until there are clearly signals. The current conditions favour more of a SHORT rather than a LONG position.

SGX: F & N S2M2 (Stock Pick of Day - 15 Apr)

T3B Strategy: F & N is poised for a S2M2 breakout. Conflux of resistances provided by downtrend line and peak. K-line is currently around level 9.



Technical Analysis: We can see a cross-over signal for both MacD and GMMA signal as well. MFI and Stochastics show bearish signals as well.



Entry (E): 2.40 (1 bid below trough)
Stop Loss (S): 2.60 (1 bid above peak)
Profit (P): 2.13 (approximation)

SGX: SPDR Gold (Stock Pick of Day - 14 Apr)

Was monitoring SPDR Gold Shares for the past few trading sessions. Noticed a suitable entry point to LONG for tomorrow. The stock is currently trading in a tight peak and trough range (Peak: 87.64 and Trough: 86.16). Two possible scenarios may happen: 1. Stock breaks trough (no position taken - await for another suitable entry for LONG) or 2. Stock breaks peak

Using Classical S3 entry, the K-line is currently touching the bullish volume bar, which indicates a possible reversal point. The rationale for this trade is as such, the stock is currently downtrending, which means that the chances of a trough breaking is much higher than a peak. Should the stock break the peak, this would indicate a change in sentiments and thus, a translation into a high probability trade.

One may ask why would we want to LONG a downtrending stock? - Answer: there is a possible rebound back to the downtrend line before the stock would resume its downtrend again; this is otherwise known as a Counter Trend strategy. If the above scenario comes into fruition, a lower high would be formed. For those who are acquainted with Technical Analysis, you would have notice the prices resting on 100-Day Moving Average for the past few trading sessions.

If you are interested in trading the counter, you may find it under POEMS CFD or DMA --> look for GLD 10 US$.

SGX: SPDR Gold Shares - A Safe Haven?

Attended the 3rd session of T3B Wealth Creation and Portfolio Management Gathering @ Kreta Ayer People's Theatre yesterday. It was a rather insightful sharing session by Keane with regards to current market conditions and some interesting trading ideas.

Keane touched on an important point which was with regards to the Obama management printing more money to buy up toxic US assets. This would eventually set off high inflationary concerns which would see the erosion of the value of the US$. Investors would thus see gold as a more attractive option for the preservation and growth of wealth. We would thus expect to see an increase in the demand for gold in the mid to long term.

A look at the charts show that now is not the right time to purchase gold shares as it is currently set on a downward trend, after breaking out from its Uptrend Support Line on the 2nd of April. The price will be testing the 200-Day Moving Average (84.95) soon and should that fail to hold we would expect to see the prices plunging towards the previous downtrend line and critical support level at 79.74. Will be looking to accumulate some shares at that level, using low K-line as guidance and break peak signals for entry.

T3B Gathering: Wealth Creation & Portfolio Mgt

As quoted from Mr. Chow Y H from T3B Forum:

I thought it will be beneficial to reiterate what Keane has gone through in our Wealth Creation Portfolio Management Part 1 course. For those who were unable to attend as well as for attendees to recap! Rain started pouring an hour before the start of the session and I thought the attendance will be affected. To my surprise, the rain did not dampen the eagerness of the attendees to listen to what Keane has for us.

Keane began with a harsh reminder to attendees who failed to take advantage of the recent stock market crash which was comparable to that of the Great Depression. He mentioned that the "best bear" is over but shorting is still an important skill as there are "at least 2 corrections in a bull run". He wanted us to reflect on the mistakes that we have made throughout the past year and why our trading has not been successful as what it should be. Be it that we have not been following the rules, or not taking actions, or even taking too much actions; we ought to reflect on our trading behavior.

To trade successfully using the T3B system, he stated the 3 qualities to dream big!
1) Conviction - we must have faith in the system and believe it will work. The moment we second guess the system, we will find it hard to follow the rules, and it become a self fulfilling prophecy that it will not work.

2) Courage - Following rules properly and cutting losses require courage. Never stop trading despite a few losing trades also requires courage.

3) Confidence - We must have confidence in the expectancy of the system. Confident that as long we follow the rules and keep trading, the expectancy will be positive and result in profits.

Current Market Conditions
I could feel Keane's excitement at the current opportunity and he wants us to be ready for it. He does not know whether the Singapore market has really bottom out, and was wary it might be a W-shaped recovery. Nonetheless, he believed that STI will not go below the low of 1455. Coupled with the affirmation from Coppock Curve, STI may move on to the previous high of 3900. At current level of 1800, he feels that we have nothing to lose even if it drops 350 points to 1455. Hence, we have more upside probability than going downside.

Apart from the comments on STI, he was actually more bullish about China companies listed in Hong Kong Stock Exchange. The main reason was that China has the best economic stimulus package in the world in reaction to the recession. He elaborated that the package involves empowering the Chinese population with subsidies which "force" them to purchase goods and services. The large Chinese population will be able to consume enough to sustain the growth of the Chinese economy throughout this difficult time. It has been evident in the stock market that these Chinese companies have began their run.

Sharing Fundamental Analysis
As a technical trader, I did not expect him to do fundamental analysis. At this depressed market, he believes this is an opportunity to take advantage of. Warying of the collapse of big companies like Lehman Brothers, he is more inclined to local companies with government backing. He has 3 rules to evaluate companies' fundamentals:

1) (profit growth) must be consistent and predictable

2) company must have competitive advantage for a long period

3) the product must be simple and never be obselete

One good example is SMRT where it satisfies all 3 criteria - 1) its profits have been growing steadily despite the downtrend. 2) The local MRT market is considered monopoly, if not at least obligopoly. 3) Everyone still needs to commute during an economic downturn. In fact, more may sell cars and take public transport.

He added that companies should have debt gearing ratio less than 10 to lower the chance of insolvency. The strategy to adopt is to find value-growth stocks with buffering dividend yield. Value = after the downturn, many stock prices have dropped below from what the companies are worth. Growth = companies are still able to expand and grow their business in such economic conditions. Buffering dividends yield = 4% dividends yield is a reasonable expectation. If we are to enter now and the market goes further down to 1455, it would mean a 20% decrease. However, a 4% dividend yield will soften the impact and make it up in 5 years even if the fundamentally sound company has zero growth (which is unlikely).

He also advised that one should have substantial capital to do such fundamental investing, otherwise, T3B trading should take precedence for higher profits.

It's not all about money I could feel the Keane's sincerity to bring every T3B graduate onboard his ship and sail towards the pot of gold at the end of the rainbow. He does not wish to leave anyone behind. He told us he gains by sharing his thoughts. He believes by giving more, he receives more. It just reminded me of Zig Ziglar's famous phrase, "You can get everything in life you want if you will just help enough other people get what they want."

*Ed notes: It was mentioned in another forum posting that a new strategy - S4 was developed.

HKSE: EVOC Intelligent Technology

The Hong Kong 'H' Shares (China Stocks) were the first to lead the charge on an uptrend in recent weeks. Was sieving through several stocks when I noticed an interesting counter.

Apparently EVOC Intel Tech has been running on a nice uptrend since October last year. However, it has breached its uptrend line on 1 Apr 09. Interestingly, Short-Term GMMA is criss-crossing Long-Term GMMA as well - indicating a point of deliberation for a possible trend reversal. A bearish divergence signal was observed on MacD (26D, 12D) as well, which further fuels the possibility of a fall in prices.

Both Long and Short Stochastics is currently in the oversold region so there is a possibility of the stock having a short rebound up to Support-Turned-Resistance of Uptrend line before continuing its run down. That would be a good point of entry for a SHORT position. Unfortunately, CFD is not available as an instrument for shorting in the HK market :(
Nevertheless, this portends to the fact that there may be a possibility of a trend reversal for the recent run-up in the global indices, which is too fast and furious.

*Other stocks which exhibit MacD bearish divergence signals include Orient Overseas (Int) and Haitian Int.

**Based on historical records, April is technically the most bullish month of the year for stocks. Will the bear come out on its prowl again towards the end of the month when May approaches such that the old adage "Sell in May and Go Away" materialises? Let's wait and see!

World Indices (For Week: 6 Apr ~ 10 Apr)

DOW JONES INDUSTRIAL

This week has been a rather bullish week for DJI. As previously anticipated, the Fibo 38.2% + Resistance turned Support levels (7468 to 7500) is holding out quite well and price has currently broken out of Fibo 50% (7778). Based on closing from last Friday (3 Apr), the price is currently resisted by Fibo 61.8% (8087) and 100-Day Moving Average. A white hanging man formation is also observed which indicates a possible slight retracement to Fibo 50% (7778) and Uptrend line, before resuming its bullish run.

The real test for DJI will be the slew of coporate earnings which will be released this week. Should the market not react favourably and the Fibo 50% + Uptrend line fails to hold, a SHORT position may be opened.

HANG SENG INDEX

For the Hong Kong market, HSI has staged a rather impressive run for this week too. Notice the multiple Rising Window Supports which are currently holding the price up. This indicates the powerful momentum of the stock. The price closed with a doji on last Friday, which indicates a deliberation (either a pause for retracement before resuming bullish trend upwards OR a reversal of bullish sentiments). Scenario 1 seems to be more likely at this point in time as I anticipate the stock price to take a short dip towards the upper limit of recent gap support (13975) and bounce off from Uptrend Support Line to test gap resistance (14763 - 14966).

STRAITS TIMES INDEX

We see a similar note for somewhere closer to home. STI closed on last Friday with a variant of a white hanging man formation as well. A possible retracement to support at uptrend line will be healthy at this point of time before resuming its bullish streak to test the gap resistance (1863 - 1881).

In a nutshell: So what is the cue that we can take from all these indices? The market is extremely volatile these days, should one decide to take a position, they have to be relatively nimble and lock in any profits quickly. Should one take a LONG position on rebound from critical supports? - Maybe, but do note that all technical indicators are currently in OVERBOUGHT region. Though classical analysis takes precedence over technical indicators, the recent 'rally' is, in my opinion, too fast and furious.

A safer bet would be to wait for the price to break out of the current Uptrend Support Line and enter with a SHORT position as we are still technically in a bear market.