Friday, July 31, 2009

Today's STI performance

So far so good. All as expected...

Upon zooming in closer to my daily chart, a few more things were noticed. First was the fact that STI remained in my channels, which probably shows I'm still on the right track.

Interesting thing to note. I counted a 5 waves structure starting after the breakup of the symmetrical triangle (which constitute a complex correction wave) on 15th July 2009. I have plotted my expected subwaves on the chart using fibonacci retracement if you observe carefully.

My count is
subwave 1: 2319~2485 (166 points)
subwave 2: 2485 ~ 2443 (~23.6% retracement in 1 day on chart)
subwave 3: 2443 ~ 2642 (199 points)
subwave 4: 2642 ~ 2567 (~38.2% retracement in 1 day on chart)
subwave 5: 2567 ~ ???

I still expect this 5th wave to terminate within the region 2684 to 2709, giving us another 117 ~ 142 points rise... Sounds logical right?

Shall see how it goes... What I'm unsure of yet is which major wave this is part of...

Also from chart, we can see that STI is being "squeezed" by the mid term upchannel resistance and the short term upchannel support.
Expected trading range for STI tomorrow is 2610 ~ 2665.

Shall keep money in my defensive dividend stocks, and probably start moving funds out of my remaining pennies which are in red :(

Wednesday, July 29, 2009

Further analysis on STI

Based on the daily charts and recent price actions, it seems that STI will reach 268x within 5 more trading days to touch major resistance.

From yesterday's chart, we can see that today's action came down from a 4 months channel resistance line. STI has not been successful in breaching this resistance line... It attempted yesterday but failed to breach it convincingly today... It also came near short term support at 2563 before bouncing to close higher...

I expect a last mini leg up to complete within the next 5 trading days....

Expected range tomorrow: 2582~2655
A break up at 2655 will see next target at 2690 A break down at 2582 will signify the end of the recent uptrend.

Suddenly had an inspiration too to compare the performance of STI in 1996~1999 vs the current economic downturn. Below is a chart I took from Yahoo Finance, and edited in Photoshop to match them together.

Heard of the infamous 10~11 years cycle? Check this out:

Do bear in mind that the timeframe was kept the same. No scaling or stretching of the charts were done; this picture is just a superposition of 2 different time periods.

It does look like we are repeating the same pattern.
Will the pattern repeat again? Only time will tell. However, based on current sentiments, I do believe that it will repeat.

Tuesday, July 28, 2009

Updates, Updates, UPDATES!

A nice bullish run-up by STI today. The timeframe came earlier than expected by 2 weeks.
My earlier chart is now updated with certain channels and trendlines that were observed.

I can't identify any long downtrend channel yet...... the only one I can identify has already been broken.... So I shall concentrate more on the short term...

My revised target between 2684 to 2709. There, we can see a multitude of resistances. It would not be easy to break through this thick wall, but if it does, we can expect to see STI cheong to my second resistance line (green line) to reach the 28xx~29xx region.

For the short term, I don't expect this to happen. The defences set up by bears at 268x region are plentiful. RSI has reached 90% and stochastics have touched, possibly crossing downwards soon.

Let's see how it goes for STI.
In addition, I have sold China HongXing at 20.5 cents, admittedly a little on panic. STI has risen 403 points from 8th Jul to 28th Jul in just a span of 15 days!!! The rise is just too irrational for me... However, I bought into Hor Kew, a laggard construction stock, at 12.5 cents for a little punt.
As Warren Buffet says, be greedy when everyone is fearful. Be fearful when everyone is greedy.
Yet, another cliche goes that trade the trend until it breaks.
The uptrend hasn't been broken yet, but I'm extremely fearful now. Shall slowly unload Fuxing and Hor Kew whenever the opportunity arises to do so.

Saturday, July 25, 2009

Elliott Wave Basic Theory and Wave Structure Part 1

This is the first post of my research on the Elliott Wave Theory.

Basically, Elliott Wave Analysis is only about identifying 2 types of wave structures, which are Impulsive waves and Corrective waves respectively. To do further analysis, we will have to make use of

(i) Relationship between the waves
(ii) The degree of the waves.
(iii) Fibonacci Tools
(iv) Trendlines and channels

and so on...

There are certain rules we must follow and many many guidelines to make use of in order to increase the accuracy of our counts.
This post aims to try to understand how to identify Impulsive and Corrective waves.

For traders experienced with Elliott Wave, he/she will be able to identify the Impulsive and Corrective waves immediately in one glance, and come up with one or more different wave counts which can all be valid. The purpose of wave counting is not so to get the correct wave counts, but more of identifying and recognizing what the next market trend is. Would it be a strong or weak wave? Would it be a simple or complex wave? Proper usage of Elliott Waves can give a trader the advantage of "timing" the market and to be able to be ahead of the market by a few steps.

*** More to come ***

Update on STI performance

From my earlier posting here

STI is having the mother of bull runs. However, it certainly looks on track that STI is aiming to hit the triple resistance point at 2680.

In addition, I have loaded on Macquarie International Infrastructure Fund today, with 8 lots at 0.36 and 8 lots at 0.355. I made a mistake for not checking the TA earlier that there might be some downside potential in the short term. However, FA wise, it certainly seems a bargain price. Assuming a poor return of 5 cents per annum, it gives nearly 14% returns per annum! That means I will get back my capital fully in about 6 years. The business is mainly on acquiring infrastructure, and the fund is slowly shifting their focus towards the next economic growth region, Asia. This fits in line with my idea of defensive dividend investing.

I will accumulate more funds to average down if it goes to 0.30, which is about 15% below my average price. Why 15%? This is because I have set myself a rule not to average down long term holding stocks unless it is down at least 15%. I shall try to adhere to this rule as best as I could.

Moving forward, I will continue to channel most of my funds into defensive high dividend yield stocks, while allocating an increasing amount of funds to trading.

Thursday, July 23, 2009

China Hongxing TA

Something about China Hongxing... Shall describe instead of uploading my chart here.

1) Hongxing first hit its 200 day MA on 11 May 2009 at 22 cents before bouncing down

2) Hongxing travels along its 200 day MA from 2nd Jun 09 to 8th Jun 09 before coming down again

3) Hongxing briefly crossed its 200 day MA on 26th, 29th and 30th Jun 09

4) Within this volatile period, Hongxing was still contained within the cloud of the ichimoku.

5) 9th July, 50 day MA crossed 200 day MA, 17th July price crossed 50 day MA.

6) 21st July, Hongxing officially break resistance of icimoku cloud, with the cloud now forming the support.

7) Hongxing touched 0.19 resistance.

8) Parabolic SAR green. MACD positive. Stochastics still positive, but seems like going to cross over soon.

9) 20 day MA coming up to touch 200 day MA, and we need to see if it will touch and cross 50 day MA.

10) Ascending triangle spotted. Break upwards expected.

In short, might expect a breakout from Hongxing upwards...

Caveat Emptor

Rising Wedge Observed on Daily Chart

Wave counting is getting too complicated. Shall revert back to basics for a while.

A rising wedge is observed on the daily chart of STI

Stochastics has started to cross downwards. RSI is also touching 70.
We will need to see if STI opens below or above the short term rising wedge support of 2470.

However, the resistance turned support line of 2424~2430 should offer some form of support should STI comes down.

Wednesday, July 22, 2009

Alternate Elliott Wave Count

Below is an alternate wave count raised by Milamberz of CNA Market Talk forum.

The chart looks very good, and it shows that we are in high danger of a big correction now.
Be it this count or the preferred count, we are approaching the end of this mega rally.

Will try to adapt this count to STI and post it tonight.

Also, the mentioned "expanded flat" has to be changed to an elongated flat as pointed out by 4dots in CNA Market Talk forum as well. This is because the C wave has over-extend the A wave by more than 1.618 times.

Typically, in an elongated wave, the C wave will extend at most 2.618 times that of wave A.

In short, be very careful and fearful of buying at this moment.

Monday, July 20, 2009

Fibonacci combined! The ARC, the FAN and the RETRACEMENT lines!

I was reading up on Fibonacci Arc and Fibonacci Fan today.

So I combined these 2 together with Fibonacci retracement and rising wedge triangle to come out with a chart....

And this chart suggested that
(i) might be reaching 268x between 14 to 18th August eventually
(ii) the breaking of my rising wedge might occur in the week of 14th to 18th of September

From my chart plotted on hindsight, at 2424 where a mini rising wedge was formed, we had a correction to 2211. That was the point that touched
(i) resistance of major rising wedge
(ii) 23.6% fibo arc resistance
(ii) 50% fibo fan resistance
(iv) 38.2% fibo retracement resistance

Iif we continue to observe this pattern, it should go near 268x, probably to complete wave C (be it minor [a 3rd alternate count] or major). After that, it may trend down towards 264x, then break downwards...

Shall see how it plays out. Fibonacci is interesting, and it would be amazing if this works out to be true.

Saturday, July 18, 2009

Similar Expanded Flat Happened in 1973

From this website

In expanded flats, wave B of the 3-3-5 pattern terminates beyond the starting level of wave A, and wave C ends more substantially beyond the ending level of wave A,. The formation in the DJIA from August to November 1973 was an expanded flat correction of this type in a bear market, or an "inverted expanded flat".

Notice the similar pattern with STI????

Friday, July 17, 2009

Alternative Wave Count Updated

My Alternate Elliott Wave Count attempt:
A rather bearish mid-term, but bullish short-term outlook here...

Here is the weekly chart of STI. This alternate wave count suggests that Primary wave A had already completed in Oct 08, and we are currently in Major C of Primary wave B!

In the chart, minor wave B exceed minor A by about 18 points, giving rise to a type of corrective wave action called expanded flat. On a closer look at the weekly chart, we could actually count out a 3-3-5 wave structure as well, much like what flats should be like.

The 5 waves for Major C here is
Minor 1: 1455 - 1947
Minor 2: 1947 - 1791
Minor 3: 1791 - 2424
Minor 4: 2424 - 2211 (could be 2235 as well)
Minor 5: 2211 - ???

if minor 5 is to be 76.8% (a fibonacci number as well) of minor 3, we could expect 2697, which coincides with the 50% retracement of Primary A by Primary B!

A similar expanded flat pattern was observed as well on the S&P500, with minor wave 4 of Pri A overlapping minor wave 1 by a little. From the guidelines here:
  • Waves 1, 2 and 4 cannot overlap except by 15% of Wave 2 with leveraged securities, and then only for a maximum of less than two days.
So it does still look probable.

In addition, what gives more weight to this alternate count is that on the weekly charts of
1) Kospi200
2) Hang Seng Index,
Pri A ended on Oct, unless we count the March lows as a failed 5th wave which I doubt so.

To make things seem more bearish, a long term rising wedge seems to be falling.

However, be it the alternate wave count or the previous wave count, the general direction for the next week should be up. My target is in the 269x region.

Thursday, July 16, 2009

Revised wave count + TA

I learned something today. Simplicity is sometimes the best way to see charts. Trendlines, moving averages, RSI, etc...

My mistake was focusing too much on Elliott Wave counts previously, deviating too much from the simple traditional way of identifying channels. Furthermore, my understanding of Elliott Waves is incomplete, leading to a mistaken analysis. The symmetrical triangle that was formed beforehand should have given ample warning. Fortunately, this wasn't an expensive lesson.

The main thing about wave counting is not about getting the correct waves, but more of getting the correct trend. It is said that if one put 10 EW gurus in the same room, it is possible to have 10 different wave counts. Waves can be wrong, which is why EW practitioners will have to recount, and re-forecast, when violations occur. This was the case for me.

The chart I have now contains my revised version of STI minor wave counts. This is a bullish count.

Currently, STI is at it's resistance of 2424. It has to break through this resistance soon so that (i) it is not a double top resistance, and (ii) it gives confirmation that it is indeed in intermediate (or major) C.

Expectation is that it will be bullish. MACD has just turned positive, while stochastics had turned positive a few days ago, something which I ignored because of my wrong counts.

Based on EW theory, a dip is expected. It might be a good idea to load on a subwave ii dip for the daring, to catch on and ride subwave iii higher up.

How it goes from tomorrow onwards is up to anyone to guess.

I have one more alternate wave count that is of a bearish nature. Instead of being in the initial stages of major C, we might instead be in the final stages of it. Will post it tomorrow, then observe where market action will be.

Previous Elliott Wave Count WRONG!

Today's rise proved my wave counts totally wrong. Looking back, I failed to adhere strictly to the rules of EW counting. Fortunately, I only sold 1 single lot of capitaland in this short downturn, and hence my portfolio was relatively untouched.

I still have some possible scenarios where it could be bearish. The possible scenarios are
1) We are in Minor B sub wave c
2) We might see an expanded flat, with minor B retracing more than minor A at 2424, before minor C commences...
3) Minor B retrace 100% of minor A, then minor C... a flat...

However, a break up of the symmetrical triangle proved me wrong otherwise shows that it is likely more bullishness is to come.

With bullishness in mind, and on hindsight, I believe for STI, we have completed wave 4 of int A at 2211, and we are actually on the final wave 5 leg up, having finished first and 2nd subwaves... Today was the beginning of subwave 3... and this bullish scenario best fits the break up of the symmetrical triangle...

For now, it's too late at night to chart after I went to read up more on Elliott Wave. There's just so much more to learn.

Wednesday, July 15, 2009

Elliott Wave count update for previous day STI post

With today's rise, it appears that my minute wave counts were wrong. Well, I still have lots to learn :D

Having discussed with more experienced people at CNA Market Talk forum, I conclude that we are indeed still in minute ii.

Minute iii of Minor C should, however, start very soon.

Will need to meditate more on this though. However, in the short term, I shall remain bearish till Mr. Market prove my minor counts wrong.

Monday, July 13, 2009

Elliott Wave Count for STI Jul 13th

My Elliott Wave Chart for STI Jul 13th

My count since Sunday is that we are in minor C (blue arrows) of intermediate B (dark orange arrows) of Primary B. (Note: The EW count on the weekly chart is even more prominent)

Minor A has retraced nearly 23.6% of intermediate A, and minor B has retraced 61.8% of minor A.

As of now, minor C has commenced of which there should be 5 subwaves since C is a impulsive wave.

Let's zoom in to minor C.

In my opinion, minute iii of minor C has started, and could possibly bring us down to STI 2195.

In addition, we see an evening doji star (see http://candlesticker.com/Cs73.asp) on the daily chart and a descending triangle on the weekly chart for STI, further hinting us to more downsides ahead.

Although at the moment of post/analysis, Dow Jones is up by about 115, I wouldn't be surprised if STI follows my count on minute iii, and confirms the bearish candlestick pattern tomorrow.

*Disclaimer: Not an inducement to follow; it's just for entertainment value*

Thursday, July 9, 2009


A long time since I have written into this blog. Many of my ideas has changed since the last posting. I shall summarize mainly in points instead of writing one whole long paragraph.

1) I have found renewed interest in Technical Analysis. :)
Basically, before my renewed interest, I thought all there was to TA was just looking at indicators, candlesticks, and finding patterns. Then thanks to Market Talk at CNA forum, I'm impressed by the vast knowledge of the forumers in charting channels, doing Fibonacci analysis, and best of all, applying the Elliott Wave Principle. It really opened my eyes to a new world in TA such that I begun re-reading up and hungrily searching for data on Elliott Wave counts!

In addition, I have learned a lot from many kind forumers at Market Talk CNA forum.

2) I have done a little bit of short term trades along with buying more blue chips. In addition, I have offloaded Darco when a certain financial institution did a classic pump and dump (in TA). My portfolio is rather different from the last time I posted it. Will do an update soon.

3) I have finally realised that one of the most effective ways to earn is to couple TA together with FA. TA is useful in helping to identify a good time to enter, while FA is used to identify good stocks that will generate good returns over the long run. Used properly, we can "time" the market effectively while buying good and undervalued stocks, hence multiplying our rate of return. In a way, the probability of going wrong is reduced.

I shall try to post some charts while polishing my TA skills. Hopefully I will have time to learn more FA as well at the same time.

Yet... even though I'm more into TA at the moment, my strategy for improving cashflow by dividend investing remains. Will delve more into this in a later post.