Sunday, February 28, 2010

STI Elliott Wave Update -- Bullish Bias?

I had a second look at STI from the knowledge of Elliott Waves I gained over the past year, and this time round, there's actually a more bullish wave count. Well, perhaps I could still be wrong to change to a more bullish stance after being bearish for so long. But I have reasons to believe my previous counts may not be as accurate as this latest one.

In my updated count below, from the peak in 2007, we might have actually completed 3 waves down, in terms of A, B, C. I have labelled what I thought were the subwaves. The only concern I have here is that the wave iii of C could be way too long, which led me to check up even more on Elliott Waves...

Note that I'm purposely not sticking to what most counters are counting for an alternative view. The count that Elliott Wave international is taking: my A would be their 1, my B would be their 2, my C(iii) would be their 3, and C(iv) their 4, and C(v) their 5, to finish up with a 5 waves down instead, which would look more normal in terms of length.

However, if we consider wave C alone, we can calculate that iii is actually 2.618 times of i, which still fits fibonacci numbers! According to Elliott himself, common objectives for wave 3 are 1.618 and 2.618 multiples of wave1. Eerie?

And when wave 3s are very long, wave 5s are often the same as wave 1. This, we can see from the count of C as well:


Also, "Wave C is typically at least as large as wave A and often extends to 1.618 times wave A or beyond." The wave C I labelled is merely 1.5 times of wave A.

Coupled with the fact that the company I worked in, whose industry is cyclical in nature, is making profits. All these are making me believe that the baby bull could have emerged, that we are in the first Primary wave.

Let's look at the first primary wave. Previously, I mentioned about a 1st wave extension, with a shorter 3rd wave and 5th wave. However, on a 2nd look recount now, using bollinger bands as an indicator to point out possible changes wave terminations, I came up with a 7 counts till 2947 as shown in the above diagram.

Of course, it could be a double zig-zag formation of A-B-C-X-A-B-C to end at 2947, leading to a Primary wave down to break the previous low. But as I believe we are in the first baby bull primary 1 wave. Using Bollinger bands as a guide, what I counted as 2 waves originally is now counted as 1 wave as 3(i).

This gives us a possible 3rd wave extension in the following pattern:

So there's a strong likelihood that we are actually in wave 4 consolidation mode now. Could it be ending soon? Probably. A wave 5 is likely to be in the works, I believe.

What would we expect if this wave 5 really comes? I have the following scenarios in mind:
(i) STI to go near 3000.
(ii) Blue chip caps will lead the charge, followed by mid caps and small caps (duh)
(iii) More pennies fever will be seen.
(iv) A state of euphoria by traders and investors alike

Since wave 3 took so long, wave 5 would likely be symmetrical with wave 1... That means, a near 300 points rise within a period of 1 month... Given the recent low at 2675, STI would perhaps top up at 2975 to 3000....

Would it break the 3000 barrier? I'm not sure. But I doubt it.

In summary, this view, although more bullish bias, still points to an imminent down after the completion of the 5th wave. Again, caution should be exercised.

DISCLAIMER: The contents in this website are my thoughts reflections and describe my path towards my goal towards financial freedom as I plod along. It is for your reading pleasure and must not be taken as a buy or sell advice. You must do your own analysis on top of my postings. By reading this blog, you agreed that i am not responsible for your decisions.


  1. This is a top quality post.. Sincere!

    I think I know the full scenario Liao... Let's wait and see.. For the sake of the greater good.. Let's have a further corrective wave from 2824..

  2. holy, thanks for your compliment!


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