Friday, May 28, 2010

STI Technical Analysis 27th May 2010

STI staged a nice rebound. My primary count is that we have completed wave A of Primary 2, exactly at the 23.6% retracement line.

The rise from 1455 to 3037 represents my Primary 1 with a 3rd wave extension. Primary 2 begun at 3037, and would usually achieve at least 50% retracement. That could possibly mean STI to reach 2243 in a few months time after this technical wave B rebound.

There are alternate counts that Primary 2 has ended, and we have begun Primary 3. I beg to differ as
1) 23.6% retracement is too shallow for Primary Wave 2
2) Timeline is too short
3) Bollinger Band has not closed up to signify end of Wave A and beginning of Wave B ==> which means wave A might not have ended yet.

Wave B could possibly form the right shoulder in a giant Head and Shoulders formation, before commencing the C wave of A. Being a Primary Wave 2, my expectation would be a simple A-B-C correction, with wave C perhaps 1.618 times of wave A. Wave A took 389 points (3037 -> 2648), so wave B could take 38.2% retracement to probably 2800, before a wave C to bring us to 2200 region at 1.618 times of wave A, for a final 50% retracement of Primary Wave 1.

My strategy: I might sell Capitaland at the top of Wave B, and use the profits to perhaps cut loss on Berlian Laju. Berlian Laju announced rights, and I'm extremely reluctant to subscribe for the rights. My paper loss at Berlian Laju amounts to 3.4k at the moment, not a small amount. Capitaland is a high beta stock that doesn't give a lot of dividends, although it's about 6.4% at my average price. Shall see how it goes here.

The other strategy would be a turtle, and ride all these fluctuations out, while storing cash for the ultimate load up at the 22xx region for Primary 3 wave.

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