Wednesday, January 27, 2010

Straits Times Index Elliott Wave Update

The tide has changed. This is my updated count of the last two waves, wave 4 and 5, for Straits Times Index:

We have now an A-B-C flat instead of an ascending triangle. STI was in a rising wedge, and this wedge has now been broken down. Counting this, STI could possibly have reached a top near the 61.8% retracement level of 2968.... by touching 2947... The start to a multi-month correction could be in the works. On a more general picture, the rally from March will be recounted as Primary Wave 1. Hence, we could expect a A-B-C correction beginning...

In this bearish wave count, the interim top has arrived. STI should complete the first stop soon, with the 61.8% retracement level to be at the 2718 region. This is near the 100MA support line, and the multi-month support line. Wave 1 of A downwards wouldn't have the strength to mount a super bear strike on these supports.

A few other indicators to support the rebound. %R is at a low, CCI is very low, stochastics appear to be crossing positive. A rebound to around 2860 region could be possible to lure in more bulls thinking that 3000 will be broken in the interim. This region would be a 61.8% retracement from 2718 to 2947, assuming that it being a wave 2 of A. In addition, 2860 marks a place near to the resistance of the multi-month channel in the chart.... giving STI a good excuse to finish wave 2 of A at that region.

Let's assuming all the counts are correct... wave 3 of A will be scary... Wave 1 of A has already taken 207 points... Assuming wave 3 of A is 1.618 times of Wave 1 of A, then we could see a 300++ points drop to the 2500 region... Overall, to complete this multi-month correction, we could truly bottom around STI 2000 region....

Indeed, it's time to offload some stocks if possible, and it's not a time to go long for the long term at all.... 12 days for wave 1 of A? Wave 2 of A will be quick...

Really hope I'm wrong about the bearish counts :( But circumstances don't seem to support non-bearish views at all. Unless STI breaks 2947 for new highs, this seems like the case....


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