The market fell 24.57 points to finish at 3147.79 today. Intra-day charts show that it fell sharply after 5pm. After 5pm, SingTel lost a good 5 cents bringing index south due to its high market capitalisation.
The outlook of the local market seems to be bleak for now based on current sentiments and the loss in capitalisation of other weights like Capitaland, Wilmar, F&N and UOB today. The 3-month chart shows a chance of a near-term support at around 3000, consistent with previous estimates. Speculating a longer horizon of 2 months, there is a chance of range market behaviour.
Wednesday, April 30, 2008
Tuesday, April 29, 2008
Tipping Over
I was hoping I was wrong. The market tipped over today finishing 29.27 points lower at 3172.36. Selling was strong. The previous assumption of short selling last Thursday did not hold true.
Yesterday, I mentioned that "the magnitude of the change can well upset the direction of this temporary bull". I hold this view. However, today's fall is what I will call, "in the 'OK' range". This approximately 1% loss probably will not turn the good sentiments around so soon and cause a steep ride to the bottom. However, the near-term support can be estimated at about 3000 points +/- 50.
Today's action can probably be attributed to profit taking from previous lows especially for those who took stock in march and missed the previous high earlier in the month.
As for a longer term outlook, we should not rule out the possibility that this is the early wave of an uptrend. I would suggest people to bargain hunt in the coming weeks when prices hit a cyclic low and go slightly longer on those purchases. I have the following reasons for this:
1) if it runs bull, you profit (of course!)
2) if the market ranges, you profit (much less but still no loss)
3) if the market continues to downturn (more holding power with a longer horizon)
The right stock pick and take your money far.
Yesterday, I mentioned that "the magnitude of the change can well upset the direction of this temporary bull". I hold this view. However, today's fall is what I will call, "in the 'OK' range". This approximately 1% loss probably will not turn the good sentiments around so soon and cause a steep ride to the bottom. However, the near-term support can be estimated at about 3000 points +/- 50.
Today's action can probably be attributed to profit taking from previous lows especially for those who took stock in march and missed the previous high earlier in the month.
As for a longer term outlook, we should not rule out the possibility that this is the early wave of an uptrend. I would suggest people to bargain hunt in the coming weeks when prices hit a cyclic low and go slightly longer on those purchases. I have the following reasons for this:
1) if it runs bull, you profit (of course!)
2) if the market ranges, you profit (much less but still no loss)
3) if the market continues to downturn (more holding power with a longer horizon)
The right stock pick and take your money far.
Monday, April 28, 2008
New Support?
The market resonated around 3200 today and closed at 3204.51, up 15.31 points. This was supported by gains in the counters like Wilmar, SIA, DBS and OCBC.
This is a good sign. If the market continues to oscillate around this level, 3200 could become its next support in the event of a breakout. As of now, it is safe to estimate that the support remains at 2800 +/- 100 and the resistance at 3200 +/- 100. I would expect my estimation to hold in the short-term given the limited options for liquid investments.
Even though the possibility of a breakout remains, one can expect the market to plunge thereafter. The reason for this is that current sentiments remain bleak and such a high, sparks of selling. In the case of last week's drop, it is yet to be confirmed if sellers were going short on Thursday. My guess would be that no matter what the case, today's high can be expected to spark a selling spree tomorrow and that cause the market to change direction. The magnitude of the change can well upset the direction of this temporary bull.
As mentioned before, we can well be at the second wave of an upswing but what it looks like at the moment, is a top of a range market. The future is now filled with uncertainty and we can only wait to be sure. My take is to start selling before the selling spree to lock-in profits or cut losses in preparation for the next downswing.
This is a good sign. If the market continues to oscillate around this level, 3200 could become its next support in the event of a breakout. As of now, it is safe to estimate that the support remains at 2800 +/- 100 and the resistance at 3200 +/- 100. I would expect my estimation to hold in the short-term given the limited options for liquid investments.
Even though the possibility of a breakout remains, one can expect the market to plunge thereafter. The reason for this is that current sentiments remain bleak and such a high, sparks of selling. In the case of last week's drop, it is yet to be confirmed if sellers were going short on Thursday. My guess would be that no matter what the case, today's high can be expected to spark a selling spree tomorrow and that cause the market to change direction. The magnitude of the change can well upset the direction of this temporary bull.
As mentioned before, we can well be at the second wave of an upswing but what it looks like at the moment, is a top of a range market. The future is now filled with uncertainty and we can only wait to be sure. My take is to start selling before the selling spree to lock-in profits or cut losses in preparation for the next downswing.
Sunday, April 27, 2008
A Late Post
This post is late due to personal reasons. I am just too busy and lack of rest to have promptly maintained this site last Friday.
The Singapore market closed up 11.65 points on Friday after its drastic plunge in the morning after the early gap after the opening. An interesting note is that from 5pm to 530pm, the market was on a downward movement.
The US market was in the green on Friday and I can reasonably expect Monday to be green for us. However, considering the current trend, this moderate upside may not be enough to counter the start of a downtrend as can be expected after Thursday. The HSI closed 0.64% lower on Friday and the movements of our market lately has been tracking that.
If Thursday's selling was sparked by shorting more than profit taking, Tuesday may be the start of a new surge towards the upper limit. My outlook stays at 3250 for resistance and 3000 for support in the short term.
The Singapore market closed up 11.65 points on Friday after its drastic plunge in the morning after the early gap after the opening. An interesting note is that from 5pm to 530pm, the market was on a downward movement.
The US market was in the green on Friday and I can reasonably expect Monday to be green for us. However, considering the current trend, this moderate upside may not be enough to counter the start of a downtrend as can be expected after Thursday. The HSI closed 0.64% lower on Friday and the movements of our market lately has been tracking that.
If Thursday's selling was sparked by shorting more than profit taking, Tuesday may be the start of a new surge towards the upper limit. My outlook stays at 3250 for resistance and 3000 for support in the short term.
Thursday, April 24, 2008
Bearish Engulfing Candle
We see a bearish engulfing candle today signifying a likely peak to the recent upswing. The market hit a high of 3235.24 in the morning and tumbled all the way back to 3177.55 at its close. The 3180 mark seems to be a temporary support for now while the momentary peak seems to be close to 3250, as I have predicted.
Looking at the charts today, in particular the after trading hours trend, I would expect the market to continue in a very short-term downward path. As I have mentioned, this is likely to be a second-wave upswing. This upswing is not without perturbations and corrections. The major fall would likely hit close to the 3000 point support in the short term.
Since November 2007, international markets have been closely correlated. Today's phenomenon marked a strong deviation from this close correlation. As one interesting news article suggests "every day, traders start their guessing game". Today it seems, traders here have made their own mind, in either taking profit or going short, sparking a selling frenzy.
The reason why I do not think this bear market is going to persist is because the current trends suggest good upside and in the worse case, a range market. In these cases, buying will come back when the market feels that stocks have become cheaper or when short positions need to be covered. However, in the former case, the upward trend will take a longer time when buyers are more conservative in their increments than they are at liquidating their holdings at whatever gives a good profit.
Looking at the charts today, in particular the after trading hours trend, I would expect the market to continue in a very short-term downward path. As I have mentioned, this is likely to be a second-wave upswing. This upswing is not without perturbations and corrections. The major fall would likely hit close to the 3000 point support in the short term.
Since November 2007, international markets have been closely correlated. Today's phenomenon marked a strong deviation from this close correlation. As one interesting news article suggests "every day, traders start their guessing game". Today it seems, traders here have made their own mind, in either taking profit or going short, sparking a selling frenzy.
The reason why I do not think this bear market is going to persist is because the current trends suggest good upside and in the worse case, a range market. In these cases, buying will come back when the market feels that stocks have become cheaper or when short positions need to be covered. However, in the former case, the upward trend will take a longer time when buyers are more conservative in their increments than they are at liquidating their holdings at whatever gives a good profit.
Wednesday, April 23, 2008
Camel Back
Market action today was an undulating camel's back. The market soared to a high at 12pm only to continue lower after lunch. This beautiful camel back shape seems to be a rare sight.
Anyway, the market has broken the 3200 mark. Current trends in the 1-year chart seem to imply that there is further uptrend. The lines suggest that the market has entered the second wave in its upswing. Considering such a trend, previous speculations by analysts of a V-shaped or U shaped recovery seem to be possible. If that is the case, we can expect to see about 5 months more of bull market to go. The basis for this is that the market started its decline from October 2007 and this lasted until March 2008. This gave it an approximate 6 months of bear market. Negative serial correlation suggests a general bull market in the 6 months after, March 2008 to September 2008.
Even though the 6 month outlook may look good, care must be taken in stock-picking. Some stocks have been captialising very quickly on the current upswing and hence may reach their peaks prematurely before the general market does.
A general way to judge whether or not a counter falls into the above category, is to look at its bottom support (lowest possible price for the moment) and upper barrier (highest possible price for the moment). Estimates can be done from looking at the past highs and lows. The way to use these values is to use them as limits of the counter movement together with, the price where the counter is now. For example, a counter has a bottom support at $5 and a barrier at $10, if it is $8 now, there is lesser upside than downside (+$2 and -$3). If we vaguely put our judgment accuracy at 50:50, then our expected return will be, E(X) = 0.5(2) + 0.5(-3) = -0.5. This means that you probably may not be able to make a good return considering the risks. You should not buy the stock. When E(X) > 0, the risk you take is justified and you have a better chance of success.
Anyway, the market has broken the 3200 mark. Current trends in the 1-year chart seem to imply that there is further uptrend. The lines suggest that the market has entered the second wave in its upswing. Considering such a trend, previous speculations by analysts of a V-shaped or U shaped recovery seem to be possible. If that is the case, we can expect to see about 5 months more of bull market to go. The basis for this is that the market started its decline from October 2007 and this lasted until March 2008. This gave it an approximate 6 months of bear market. Negative serial correlation suggests a general bull market in the 6 months after, March 2008 to September 2008.
Even though the 6 month outlook may look good, care must be taken in stock-picking. Some stocks have been captialising very quickly on the current upswing and hence may reach their peaks prematurely before the general market does.
A general way to judge whether or not a counter falls into the above category, is to look at its bottom support (lowest possible price for the moment) and upper barrier (highest possible price for the moment). Estimates can be done from looking at the past highs and lows. The way to use these values is to use them as limits of the counter movement together with, the price where the counter is now. For example, a counter has a bottom support at $5 and a barrier at $10, if it is $8 now, there is lesser upside than downside (+$2 and -$3). If we vaguely put our judgment accuracy at 50:50, then our expected return will be, E(X) = 0.5(2) + 0.5(-3) = -0.5. This means that you probably may not be able to make a good return considering the risks. You should not buy the stock. When E(X) > 0, the risk you take is justified and you have a better chance of success.
Tuesday, April 22, 2008
Charts and data
First of all, I would like to state the inconsistency of my sources. Yahoo Finance is a good source of free data however, yesterday's its data was a bit misleading as already stated once before. Yesterday, Yahoo Finance stated that the market opened at 3162.94 with an intra-day range of 3162.94 and 3201.38. The market closed at 3171.09 according to yahoo and this led to my conclusion of a shooting star. However, today's chart shows a big white candle with a long wick and no leg making it less of a shooting star. Apparently, the market opened lower than reported.
That does not change my outlook for the time being, however, it would have changed the predictions of today. Given that yesterday was not a shooting star, today would not be a down. In fact, it is not. Today the trend was up.
Today the market closed in a white candle gaining 16.14 points. It has now reached the level at which it was at its last peak. Considering the onset of a new cycle, I would place the following supports. Low at 3000, High at about 3250. Not a completely bullish estimate.
That does not change my outlook for the time being, however, it would have changed the predictions of today. Given that yesterday was not a shooting star, today would not be a down. In fact, it is not. Today the trend was up.
Today the market closed in a white candle gaining 16.14 points. It has now reached the level at which it was at its last peak. Considering the onset of a new cycle, I would place the following supports. Low at 3000, High at about 3250. Not a completely bullish estimate.
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