Sunday, May 23, 2010

STI Technical Analysis 21st May 2010

It looks like my maximum downside target has been reached. That was where I entered AIMSAMPIREIT. AIMS isn't an STI component stock, so it will not be affected too much. On hindsight, I should perhaps enter STI ETF instead for a probable 300 points rise (30 cents on STI ETF).

Mentioned in an earlier post on 2nd May 2010 was a mini Head and Shoulders. A larger Head and Shoulders formation appear to be forming. With this expectations, there is high probability of the market bouncing up from here towards 2945 (>61.8% retracement), a previous high.

Another indicator for me is that many are getting bearish. I love to be contrarian, and turn short term bullish at this moment, with my chart below:

5 waves down have been observed. It could either be the minor 1 of intermediate A of Primary 2, or just intermediate A of Primary 2 itself. I'm going with the former because the time frame appears to be too short for an intermediate wave.

My eventual expectations of the intermediate waves for this correction would be something like this:
And we are only done with the first wave of A.

However, we have to take note too that when a pattern as obvious as this is on the charts, very likely, the market will like to go with a less obvious pattern. Unfortunately, I have yet to identify a less probable pattern at the moment.

The expectations of 2945 is also valid at the moment with EW counts. I'm expecting a minor wave 2 upwards. By EW rules, wave 2 should normally achieve at least 50% retracement of wave 1, but as per the cardinal rule, not exceed wave 1. 2945 satisfies both criteria.

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