Monday, November 30, 2009

Going for 1-week reservist

I will be off from market for 1-week of reservist. Will still be getting my girlfriend to help me queue for these 2 stocks for dividend investments.

1) 3 lots of Starhub
Tgt Price: $1.83 (changed to reflect 5 cents dividend after it was at $1.88)

2) 10 lots of Starhill Global REIT
Tgt Price: $0.500

Total price: $10640 excluding brokerage.

The technicals of Starhub does not look favourable. However, I believe in the long term management. So I would queue to buy at the support price.

Starhill has 2 supports. Depending on the price actions, I might enter at a later date of $0.520....

If these two trades went through, they would sort of finish up my spare cash and my salary + 2 months of annual wage supplement, with only my coming dividends left for me to spend. However, it would increase my monthly dividend amount to about $540 from my dividend and investing basket, bringing me one step closer to my first target of $1000 per month.

Tuition is starting soon, so I will be able to build up more funds again to do more things.

Sunday, November 29, 2009

Starhill Global Reit -- selldown unwarranted?

Starhill REIT recently made some acquisitions.

Starhill Global REIT proposes to acquire David Jones Building in Perth for S$148.0 million; And enters into heads of agreement to acquire Starhill Gallery and Lot 10 in Malaysia for S$423.3 million

Simply put, this acquisition will result in increased dividends per unit (DPU). Why not?
Without adding the three new properties, at current price of 53 cents, it's about 7~8% dividend yield. Adding the acquisitions, we could possibly be looking at nearly 9% dividend yield per annum at the current price.

Yet... why the selldown? Some reasons I could think of:

1) Rights issue was supposed to reduce debt, but instead, with these purchases, the amount of debt increased.

But.... If all the rights proceeds are used to pay debt, it would be very silly, because loan interest is much lower than net property yield. In so doing, there will be very little upside on DPU on saved interest.

Acquiring assets which you're familiar with and possess potential for enhancement will generate higher yield than loan interest.
Question is, when you have cash on hand, and asset prices to the low side, with bank lending interest at a low too, do you use the cash plus loan to buy cash generating assets or do you use up your cash to pay existing loan? The answer should be obvious.

2) The two Malaysian REITs are bought too expensively. Suck thumbs to retail investors for you have no control.

The key thing is, other than because they buy from their own sister REIT, what are the other reasons? Who determines whether they bought it too high? What and who determines the "too high"...? From the other REIT's investor point of view, it might have been sold too cheaply?

Taking a leaf from MIIF... They sold MEIF... There were also rumours here that claimed that they sold too cheaply to their own people... But the share price has been rising since then...

3) The two Malaysian malls they bought are not good.


I asked my Malaysian colleague about the two Malaysian malls... Without knowing anything about Starhill, he told me it's almost like Ngee Ann City and Wisma at Orchard...
Is it a coincidence that Ngee Ann City and Wisma are owned by Starhill as well?

Starhill seems to have succeeded in their quest of acquiring assets in prime locations.

Why the selldown? Perhaps some big institution is rebalancing their portfolio. As to whether I can get it at 50 cents.... only Mr. Market knows. Depending on the price actions, I might just buy in more at the 51.5 cents to 52 cents region.

Saturday, November 28, 2009

Random Thoughts: Stars stars stars

Recently, I shared that I will still be waiting for Starhub at $1.88 and Starhill at $0.50... Why?

I combined a little FA with a little TA to derive these values.

My FA is purely (and simply) dividend investing... I believe in the long term dividend sustainability of these two companies...

Starhub is a telco, which is defensive in nature. It is in their culture to lead the market (they are the first to have pay TV, free incoming calls, free dial up internet in SG). Hence I believe they have the capability to sustain dividends via their innovativeness. 10.5% yield is attractive.

Wednesday, November 25, 2009

STI Updates

Nothing much to update. So won't be posting a chart here.

MACD remains bullish. Waiting for a turn.
CCI is still high.
MFI's negative divergence remains.
Stochastics and %R both remains at a high, overbought region.

The bollinger band is opening up, signifying greater volatility. When will the party end? Perhaps when the bollinger band starts to close up.... all the stars will align....

Investors should only take on highly selective longs. On my radar are Starhill and Starhub. Patience is key now.

Tuesday, November 24, 2009

Investments in Health

Sometimes I wonder... whenever I spend on health, i.e. gym expenses, supplements, doctor fees, should they be treated as an expense or as an investment? Afterall, health is wealth.

It's the same as when I spend on books or invest in gaining knowledge for myself... An expense or an investment?

At the moment, I'm tracking such spending as expenses, incorporating them into my maximum of $900 a month. Yet expenses in buying stocks such as Starhub are not included into my expenses column. Weird right?

These thoughts have been revolving around my mind for a period of time, and I have decided to blog on it when I purchase some supplements over iherb.com because it is cheaper to do so (due to weak USD).

I guess I will continue to list them as expenses on my personal balance sheet so that my actual "useless" expenses could be reduced subconsciously.

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In case you are wondering, the amount is in USD and the free stuff are part of the free gifts provided by iherb.com. It's so much cheaper to order direct from the wholesaler than shops in Singapore who charged a premium for ordering. Some money saving tips here ;)

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Lesson learned from Ying Li's loss

Loss, but I'm happy. The reason being, I learned a valuable lesson in trading.

Sell on emotions ==> the worst mistake a trader can make. I bought near the lows at 0.63, I sold at the low at 0.62, to see it rise to 0.66 in 2 days.

Lesson learned: because I used the daily charts, I should wait for a few days, not just 2 days, before cutting losses. For such short time frame as I have done, I should see the hourly charts in the future, and not the daily charts. My set up was there, but my time frame was wrong.

My reason for purchase was because... Ying Li was at the support of the down channel. The CCI and %R sold severe oversold, and a rebound is due soon. Indeed, it rose today.

Trading is not as easy as seeing indicators and buying or shorting because of indicators. It's also about money management and emotional control... something which cannot be easily learned from books.... I have much to learn :)

STI Updates

Interesting price actions by STI today to destroy the symmetrical triangle formation. Instead, it appears that to be the 3rd wave of v of 5th today.

Closing at 2797, we are likely to see 2800 break very soon. A backtest of 2800 will then be expected before a final actionary wave to end perhaps at around the 2850 region as many of my respected CNA forum members mentioned.

CCI and %R are both on the high end. Shouldn't need to wait too long for the reversal to occur.

Monday, November 23, 2009

Goal 2010

As the year draws to a close, it's time for me to set my goals and visions for the year 2010 so that I have a clear path and direction to take.

My goals for 2009 are here:

Completion Report:

1) Goal of matching my full-time engineer (fresh grad) pay with my tuition income
Goal achieved.

STI Updates

It appears that STI is triangulating now.

We could either be in the iv of 5th wave upwards, or in the ii of 1st wave downwards. I lean towards the first scenario because it seems to fit well with current events, and triangles are more probable in 4th waves than in 2nd waves.

Likely some more upside to come. Shorts should still be held back, not the time yet...

Again, the widest part of the triangle is 40 points, so a breakup at the end should last about 40 points as well...

Elliott waves are indeed interesting :)

Saturday, November 21, 2009

My Money Allocation

A little spider web/mind map on my money allocation.

Savings include funds in money market fund as well.
Profits from trading baskets can be directed to the dividend and investment baskets, or stay within the trading basket.

I trade mainly with the dividends I received. Therefore, any losses would be, to me, a return of profits/dividends to Mr. Market. Of course, prudence is required in trading. No overconfidence, cut loss properly set, etc...

This is the cycle so far which I adopt, and repeat, again and again. Hopefully one day, I would have sufficient funds to include Properties and Bonds as well.

Friday, November 20, 2009

STI Shooting Star

Finally, the candle I was waiting for! A shooting star!!!

Indeed, STI went near 2790 before reversing... If only I was so accurate in my buys as well for Ying Li :(

A shooting star is a bearish reversal single candle. And happening at the point where the 5th of 5th wave is supposed to be?

It would be good for STI to close a little lower than today's open to confirm the white shooting star candle for a definite reversal.

Year end rally coming? Doubt it.
2745 will likely be visited again.... And broken... For intermediate B of Primary B downwards....

Update: Distribution looks to be going on... Be careful of new longs.

Thursday, November 19, 2009

Yet another trading loss

Long Ying Li 0.63, cut loss at 0.62...
Wrong trade, wrong everything. Argh....

Down with another $153.40 again.... Ouch!

Seems like I can't trade pennies well... A different strategy and mentality is required... And this wrong trade is affecting me in my work a little.... Cut loss saves my mind and soul, especially when I'm expecting STI to reach interim top.... I'm just not cool enough...

All in all, mistakes all over my itchy fingers... Serve me right... Chased to buy because indicators were very oversold...

But as usual, Murphy's Law will dictate that Ying Li will rise up the ashes tomorrow because I sold at a loss. Good luck to those still holding...



Wednesday, November 18, 2009

STI Updates -- Just a little more

Appears that I was right in shorting, but my emotions caused me to cover at a loss when I could have profited today. Lesson learned: Leverage is ok if your cut loss point is within your means.

I re-did my wave counts today, and discover that we could have a little more upside. How much more, it's hard to say. However, a minimum target would be to reach at least 2790.

Wave (i): 44.64
So if wave (v) is the same as wave (i), 2745 (today's low) + 44.64 is almost 2790.

Market is toppish... Will we really have a year end rally to even greater heights? I'm starting to believe that there might be, but the contrarian in me says no! Don't follow the crowd!

The news reports are clearly getting very bullish. Is that a good thing? I don't think so. News are generally lagging indicators; stock markets usually precede economic data by an average of 5.8 months according to my broker.

How far will wave (v) go....? I'm unsure. But we have to experience extreme optimism for this to occur.

Shall see how it goes. It's definitely not a good time to take on long term longs. I'm expecting a minimum of 300 points correction soon... It should be time for a nice short term rebound at 2745 resistance turned support line.

STI -- Wave 5 in progress (possibly not ended)

Earlier, I mentioned that we could likely have had a wave 1 extension rally from Mar 09.
Wave 3 is from 2235 to 2700.

According to Elliott Wave Theory, wave 3 cannot be the shortest wave. Since my wave 1 is longer than my wave 3 due to a wave 1 extension, wave 5 must be smaller in length than wave 3! This, we can see from the chart above.

The theoretical maximum would be 2605 + (2700 - 2235) = 3070 (chart not to scale).
Scary proposition for the shortists? (Damn... why didn't I think of this before raising short...)

Any break above that number would prompt a recount.

Looking back in time, at 12 Mar 08 and 24 Jul 08, a resistance was formed near this 3000 mark.
Will the rally extend till then, henceforth killing all the shortists at the current level and fuelling extreme optimism?

Shall see....

Tuesday, November 17, 2009

Monthly expenses vs passive income

One key thing on the route to financial freedom is to be aware of your own expenditure. You maintain your own balance sheet, cashflow and expenses.

So how are my expenses?

Let's have a simple breakdown. I track my daily expenses on an excel sheet, and for the past few months, my expenses on food, phone bills, transports, misc stuff, are <$800. Expenses on food, phone bill, transport, misc: $800 (take the max, although I allow up to $900) For household allowance: $500 CPF Education Loan repayment: $339 Other 'expenses' because of tuition are not included; they are simply deducted from the total amount earned. I consider it a separate entity. So lo and behold, my monthly requirement would be $1639!!!! That seems like a lot :( This is about 23.6% of my take home pay on the better months of tuition (I chose 23.6% because it is a fibonacci retracement number.... lame right?)

STI -- Some more legs?

Made a mistake shorting the market with the previous analysis of 2777. Got slightly burnt by putting the cart before the horse. Just like corrective patterns could be complex and not just a simple A-B-C all the time, impulse waves could also have extensions, leading to a 9 wave rally.

The pattern hasn't been fully formed yet. There are now 2 possible scenarios. Firstly, we might be in the 5th of 5th wave. However, the wave personality doesn't feel like it; it doesn't feel like many people are buying in. In fact, it seems more probable that institutional investors are buying in.

Much as I was skeptical about this initially, it does look as though the market will be heading higher towards psychological resistance 2800, and possibly break it to go higher. Again, being the 5th wave, I'm expecting the rally to finish anytime soon. The main trigger now would be a nice reversal candlestick to form. I'm still waiting.

CCI is indeed high, but there's no stopping of it staying high for a few days, i.e. in the July period.

Moving forward, there might be some pullback or profit taking. Let's see how this will go.

Lost $75 -- mistake detected

Today, I shorted the Philips CFD index today using poems CFD at STI 2773, but covered at 2782 when STI broke 2780 resistance... Fortunately for me, no brokerage charge as it was my first trade.

As milamberz in CNA forum puts it:
Shorting --> Indefinite losses if you cannot control your cut loss pts. Stocks are meant to create wealth and go up with inflation. Since duno how many eons ago, there is no such thing as deflation anymore. If there is no deflation, stocks can only get more expensive. Hence longing is a more logical choice if you believe in inflation rather then deflation. SAY if you shorted at 1900. Are you sure STI will get back to 1800 for you to cover? Pscyhologically you are at a losing end already.

--> Furthermore, there are finance charges for shorting. This is a killer as it means you cannot hold your shorts for long whereas if you long, you can hold the shares as long as you play within your means

---> Even at such a stage, shorting may mess up your mind as it stops you from going long at certain point. There are risk involved.
My emotional maturity clearly is not sufficient to short. I will need to brush up on this.
Going short is much tougher than going long.

My main mistake here is exactly what I talked about way earlier.... pre-empting the market. Granted, Yahoo charts wasn't working today, so I couldn't check the intra day indicators. However, that's not an excuse.

When trading with Elliott wave patterns, a high probability set up would be to wait for a pattern to be complete before entering the trade. I did not do this. Lesson learned.
Higher probability can be achieved if we couple a complete pattern with trendlines and candlestick patterns.

Going forward, I must remember not to be itchy hand to pre-empt the market..... :(

Monday, November 16, 2009

Portfolio Updates

A short update on my portfolio.

My portfolio is mostly unchanged.

Dividends Basket -- Mainly for dividends
6 lots of SPH @ 3.65
6 lots Capital Commercial Trust @ 0.84
13 lots of CitySpring at 0.51 (7 lots from rights)
16 lots of Macquarie International Infrastructure Fund at 0.305
2 lots of ST Engg at 2.28
10 lots of Starhill Global Reit at 0.54
6 lots of Starhub at 1.895
26 lots of GRP at 0.20

The total cost here is about $64,980 and the expected average monthly dividends is about $444.

Investment Basket -- Mainly because I like the business or for growth
5 lots of Breadtalk at 0.37
2 lots of Capitaland at 1.64 (averaged down by selling 1 lot at $3.50 before)

Trading Basket -- Hoping to sell off
30 lots of Hor Kew at 0.125
20 lots of LC Dev at 0.21
2 lots of Cosco at 2.67
60 lots of Berlian Laju at 0.117
20 lots of China Sky at 0.245
2 lots of Singtel at 2.98

Lost $75 in shorting the index today as well... :(
Bad trade...

Went for ChartNexus Accelerated Learning Program

I went for ChartNexus's Accelerated Learning Program today, courtesy of Philips CFD. It's a basic course covering the following:
  • Understanding the concept of price movement
  • Analysing volume on the charts
  • Trading on support and resistance
  • Utilising important candlestick reversal patterns
  • Money Management: Your key to survival
The trainer was Kelvin.

Saturday, November 14, 2009

STI -- tumultuous times ahead

Today's action prompt me to return to an earlier count of an ascending triangle:


Bulls came back fiercely with a bullish counter-attack candlestick formation against the bearish dark cloud cover, signalling some more upside to come.

It appears that STI is going to complete the 5 waves.

An little update of the wave counts so far:
Wave (i): 2605.1 ~ 2676.95 (71.85)
Wave (ii): 2676.95 ~ 2616.49 (60.46)
Wave (iii): 2616.49 ~ 2745.33 (128.84)
Wave (iv): 2745.33 ~ 2704.93 (40.4)
Wave (v): possibly equals to wave (i) ==> 2704.93 + 71.85 = 2776.78

I mentioned in yesterday's post about the unfilled gap between 2763.42 and 2773.05.
2745 and 2755 could stand in the way, but the expectations is for wave (v) to cover the gap. The market is likely to break past the great bear line at 2755 to trigger some short coverings and bring about even more bullishness. I believe that 2777 is now the most probable terminal point of this wave of intermediate degree. This will also almost satisfy the 5th wave guideline by Robert Pretcher for a triangle occurring in the 4th wave.

In short, a new high could likely be formed again, with this being the 5th of 5th wave. Extreme bullishness will be observed in the market in this final climb, especially with Dow Jones being so green now. Definitely not a time to join the mania of index component stocks.

Meanwhile, I'm still observing if penny runs are common in 5th waves since they usually signal the end...

Friday, November 13, 2009

My Dividends that are coming

Despite all the gloomy analysis about STI reaching an interim peak, on a lighter note, my dividend basket is giving me dividends soon :)

SPH $1080
CitySpring $136.50
Starhub $300
Starhill Global REIT $95
GRP $260

Trading Basket which I'm still holding:
LC Dev $50

That's a total of $1921.50 coming!
Together with AWS (year end bonus) coming, my opportunity funds shall be built up and fortified again by January.

It's so exciting :)

STI Candlestick: Dark Cloud Cover

According to Candlesticker.com
If the black real body’s close penetrates deeper into the prior white real body, the chance for a top increases. There are some Japanese technicians who require more than a 50% penetration of the black day’s close into the white real body. If the black candlestick does not close below the halfway point of the white candlestick then it is better to wait for confirmation following the dark cloud cover; and even if it does, a confirmation may still be necessary. This confirmation may be in the form of a black candlestick, a large gap down or a lower close on the next trading day.

Notice that the dark cloud cover did closed more than 50% into the white body, signifying a potential reversal.

Coupled this with
1) Elliott waves showing that a major top is near
2) MFI has not broken new highs, signifying negative divergence
3) high CCI
4) Nearing the top of the bollinger band
5) Nearing the big bear line at 2755

Also, 2745 was a support tested twice on 22nd Jan 2008 and 17 Mar 2008 before it was finally broken through. It's possibly a strong resistance.

Finally, between 18th Aug 2008 and 2nd Sep 2008, there's an unfilled gap between 2763.42 and 2773.05, which could be the next resistance if 2745 and 2755 are broken through. Will STI want to rise to cover this gap before the down?

With so many potential stops ahead, it's hard to see how STI can push much further. If we want the rally to continue, STI had better be green tomorrow to break the dark clouds.

Thursday, November 12, 2009

STI -- Climbing a huge wall

A strong performance by STI today. The feeling is so bullish... It just feels like.... if we don't jump in now, we will miss the boat to STI 3000 and beyond!

But is that really the case?

Volume was still rather low. MFI hasn't broken new highs (I use MFI instead of RSI as it takes into account volume as well).

The CCI is also crossing the 100 mark.

STI is approaching 15 years resistance line at 2755, as calculated earlier by linear regression.

Selected fresh longs should have been collected last week, not today. Example, my Starhub collected at $1.88 on 4th Nov 09.

It just feels so right, yet so wrong.

I really wish I'm wrong, and the rally goes on forever towards STI 4000; I still have some counters stuck in the red. But in reality, can this be achieved without any significant correction? I doubt so. What goes up, must come down... this is a law of nature.

We are entering dangerous waters now. Tread the treacherous path with care.

Wednesday, November 11, 2009

STI Updates -- Last stage of rally?

I certainly hope this is not the last stage of the rally... But... my wave counts seem to say so...

Yesterday's count was quite accurate. An update

Of mini waves:
Wave i: 2605.1 ~ 2676.95 (71.85)
Wave ii: 2676.95 ~ 2616.49 (60.46)
Wave iii: 2616.49 ~ 2726.9 (110.41, ~1.5 times of wave 1)
Wave iv: 2726.9 ~ 2697.89??? (29.41, slightly more than 23.6% of wave 3)
Wave v: ... a final 5th wave to reach 2755?

Notice that wave 1 took 17 days, wave 2 took 17 days. Wave 3 took 9 days, wave 4 took 11 days.
Wave 5 could possibly take between 9 to 11 days as well perhaps give and take few more days. Today is the 9th day... The first possible date could be 12th Nov, 11 days for wave 5... Let's see how... I was thinking how it seems impossible to reach first target 2755 so soon... But the last 3 days' price actions seems to go up very fast to help achieve it...

The A wave of Pri B should be ending soon, within a few trading days. If my wave counts are correct, we could probably see STI break 52-week high within the next few trading days, but that could probably be the last and final mini rally. If this count is correct, then the B wave could bring a correction of between 23.6% to 38.2%, which means a correction of between 300 to 500 points.

Point to note: If the final portion is 5 waves up, then this is not an ending diagonal of 3-3-3-3-3.
I will have to observe as it unfolds and learn from this. It's a great learning opportunity again!

Tuesday, November 10, 2009

STI Updates

On hindsight, today's price action should be expected. That's if, I had done a parallel line check. (I'm a very maths person :p )

The chart below is my preferred count on the 5th wave of STI.

The dotted line is parallel to the resistance line at the top. Hence, since the support line is at a higher angle, this could mean a rising wedge is being formed, although it is a rather mild one.

Everything seems to start falling in place, or so I hope. The great bear resistance line of 15 years stares down at 2755 region. In a possible 5th wave scenario, the 5th of 5th wave might not reach the resistance line, but instead fall short of it at 2755.

Now that a rising wedge is determined, this fits with what went through my mind yesterday (and also in yesterday's post) about an ending diagonal for the 5th wave.

So here we have, 5 wave counts of a larger degree A of Primary B, as shown in this post. A mild rising wedge that has the potential to break in mid Nov.

As for the mini wave counts (which I'm often wrong), the first wave of the 5th of 5th wave started on 29th Oct 09, 2nd wave ending 2 trading days later, and now we are in the midst of the 3rd.

Wave 1: 2605.1 ~ 2676.95 (71.85)
Wave 2: 2676.95 ~ 2616.49 (60.46)
Wave 3: 2616.49 ~ ????? =========> 2732.34? (1.618 of wave 1)
Wave 4: A possible 2732.34 to 2687.93 as 38.2% retracement before....
Wave 5: ... a final 5th wave to reach 2755?

Let's see how STI behaves.

Could there be any other much much more bullish alternate counts?

Monday, November 9, 2009

Intro to REITs Investment

What are REITs?
REITs stand for Real Estate Investment Trusts. They are specialized companies that invest in commercial, industrial, residential and healthcare real estates. Examples on the Singapore Stock Exchange includes CapitaCommerical Trust (Commercial), Cambridge Industrial REIT (industrial), Saizen REIT (residential) and Parkway Life REIT (healthcare). These companies buy and manage properties including shopping malls, offices, hotels, hospitals.

REITs usually pay a generous dividend because they are required by law to distribute most of their earnings to shareholders. In exchange, they receive tax incentives.

STI Updates

An interesting on chart, yet boring day on Friday. Straits Times Index was trapped within the 20 MA and 50 MA.

It does look as if that STI has touched support in this post here, and might follow the green target to my eventual target of 2755 (updated from 2790) 15 years resistance line. If this plays out, I will have to reconsider my wave options. The symmetrical triangle was also invalidated because there was no significant increase in volume traded.

However, we still have not broken past the wave (i) of the previous post
There's thus a chance for STI to follow the red arrow down.

It's a sideways market at the moment, with perhaps a very mild uptrend. Let's see how the next week goes.

Meanwhile, I would have to read up more on possible types of 4th and 5th waves as I'm rather confused how it would play out. The waves look similar to a 3-3-3-3-3 ending diagonal, yet there's no rising wedge observed at the moment. I wonder if this is possible.

Will update as I read up more.

Friday, November 6, 2009

STI Updates -- Bear rally ended?

Has the rally ended?

I thought I saw some impulse waves down from 2739.

A symmetrical triangle is observed, with the vertex terminating within these few days, probably tomorrow. In layman terms, we will very likely observe a bigger movement tomorrow, on 6th of November 2009, Friday, as compared to the last few days.

With charts also showing negative divergence, MACD pointing towards bearish, my initial expectations is downwards. Let's see how the waves unroll before recounting again. With Dow Jones +174 as I type now, I might be wrong. Will the market be kind enough to let me run road for some pennies?

It's time for quick and nimble trades instead.... The feeling is reminiscent of March 09... We might have another rally.... But it will likely be short-lived.

Wednesday, November 4, 2009

Bought Starhub and GRP

I bought in 3 lots of Starhub at $1.88 (nice round number) and 26 lots of GRP at $0.20 for 9.5% and 10% yield respectively. These will be added to my dividend basket.

GRP was a heads up from MusicWhiz's blog (see Blogs I visit).

However, with this, my opportunity funds has dwindled to near zero :(
===> This is banking on the fact that AWS is coming in a month's time, along with dividends from SPH, Starhub, CitySpring coming in December. My opportunity funds should be built up by then.
===> I have also 3k cash in Poems CFD waiting... If any cheap valuations come along, I might use it to buy and hold instead.

Linear Regression Analysis on STI

Since I'm teaching H2 Maths tuition, I will be using linear regression analysis in H2 Maths to assist in calculating the most accurate resistance value. For anyone interested in finding me for tuition for A level physics and maths, please see Strategic Tuition and ExamWorld.

The data I will be using would be the points labelled graphically in an earlier post.

We have here the following data from the monthly charts:

Mar 1994 (zeroth month): 2482.9
Feb 1996 (23rd month): 2504
Mar 2000 (72nd month): 2582.94
May 2006 (145th month): 2666.33
Mar 2008 (168th month): 2745.96

In my linear regression analysis, the variable x shall represent the number of months after Mar 1994. The variable y is the value of STI, excluding inflation.

A simple excel calculation when we consider the linear chart:

A simple excel calculation when we consider the logarithmic (base 10) chart:

As we can see, both linear and log charts point to 2754~2756 as the resistance for this month, Nov 2009.

The linear product correlation for both the linear and log charts stands at a high 0.989, signifying a very strong linear correlation between the Straits Times Index and time line.

Well, isn't that expected of trend-lines? :)

So to me, anything between plus minus 10 from the region of 2755 could potentially be a dangerous zone, or a reversal point. In fact, with this calculations, 2739 might have been the peak.

Any new long-term investment in index stocks now would be 'scraping the bottom of the barrel'. An interim peak looks near.

All I hope is for prices to rise sufficiently for me to exit my pennies with minimal losses, of which paper losses have ballooned from 1k to 3k :(

STI Updates

The recent price actions prompted another recount. This recount was part of the wave options mentioned recently which I had earlier thought as secondary.

In this count, it appears that wave 5 has already started, but it is in a very slow moving channel.

Let's add on the fact that the great 15 years resistance line stares down at near 2725, as pointed out by Jingwei in his earlier comment. Thanks Jingwei! This is his chart:

It explains well the reversal at 2739 recently. I shall take the critical points and do a little regression analysis tomorrow to determine the exact value.

So, it does appear that we are well in wave 5. Take note too the negative divergences seen on the oscillators since the supposed wave 5 started.

So now, my puzzle is how the subcounts are in this final 5th wave. Supposed we still have a final 5th wave, we could possibly have a failed 5th wave occurring at the great resistance line... Or we could already be in the first wave downwards, and be waiting for a 2nd wave upwards to near this resistance line to allow us a respectable exit. In both cases, a bullish rebound is to be expected.

The possible trigger for the next sell-down could be the release of the actual US GDP data on 23rd November.

Let's see how it goes.

Meanwhile, I will be buying dividend stock GRP (noticed due to MusicWhiz's blog post) to keep long term for dividends. The fluctuations for this stock isn't that high, and the dividend yield is 10%. :)
A FA play in which TA thoughts on STI will be ignored.

Tuesday, November 3, 2009

STI Updates

Today's price action sort of hinted with a higher probability that the 4th wave has ended on 2605 on Thurs.

A zoom into the 4th wave of yesterday's post:

Note that for this count, wave 1 is larger than wave 3. The rules of Elliott waves state that wave 3 cannot be the shortest wave of wave 1, 3 and 5. This means that, wave 5 will be a shorter wave than wave 3, i.e. we cannot expect a smooth path upwards.

Again, posting for another time, triangles like the one above are usually corrective waves, and always occur in the position prior to the final actionary wave in the pattern of one larger degree, i.e. wave four of an impulse, wave B of A-B-C, or final wave X in double or triple zig-zag or combination. And when a triangle occurs in the fourth wave position, wave five is sometimes swift and travels approximately the distance of the widest part of the triangle.

The calculations done and posted earlier shows 2784 as the probable end for wave 5, which coincides with 2790 on the 15 years resistance trendline. So that's my expectation of the tipping point.

Today likely marked the end of wave 2 correction at 2616 (near to 78.4% fibonacci retracement of the 2605~2676 move). In the intra-day chart, we can observe 5 motive waves and 3 corrective waves today:

Tomorrow is likely the beginning of the 3rd wave of wave 3. How it would goes, we will have to see. However, as mentioned yesterday, I'm still expecting a mini bull run to 2790 before the tipping point.

Perhaps I will have multiple chances to offload some pennies, and also to sell Singtel away for profit.

Good luck trading.

Sunday, November 1, 2009

STI Updates

The following is a wave count (more bullish view) which has been at the back of my head for quite a while.

A wave 1 extension will go in the following pattern:

It appears that the A wave of Primary B is nearing to an end (not the C wave as commonly counted, and as counted earlier in this blog). This means that Primary B might not be ending any time soon.

The reason is because the correction in June retraced about 23.6% of the rally from March to June, and this is a little too shallow to be a wave B. On the other hand, it retraced about 61.8% of the extended 5th wave of the first wave. Hence, I lean towards the count at the top of this post as of now.

My only puzzle left for this count is whether the 4th wave has ended on 19th Aug 09 in a simple zig-zag, or 29th Oct 09 in an ascending triangle, or whether we are still trapped within wave 4. Reason being, we can view that STI as being in a rising channel since 19th Aug 09. These 3 wave options will be in head as STI unravels more waves.

However, with this count, the conclusion is the same. Any of the 3 possible wave options tells that STI is likely to have one last impulse wave upwards (which must be shorter than wave 3), before a major downturn.

Turning to candlesticks, STI closed with a gravestone doji (almost) at the 50 MA on the daily chart. It seems bearish bias here. With USA having dropped so much on Friday, tomorrow might open up extremely red.

The first line of defence on my chart's triangle (or up channel) for STI is 2607 region. We will have to see how it goes after that.

My strategy:
Ride out the volatility, and wait to accumulate more of Starhub at a lower price for investments. Meanwhile, I might raise CFD shorts or try warrants again (PW this time) to hedge against my long positions when the eventual downturn (which everyone is waiting for) comes.