STI Technical Analysis 8th Jul 2010

Although STI rallied nicely, I don't have a good feeling about this rally.

Reasons:
1) volume is low. The volume over the past few days rally is below the volume 50 day MA. I will only consider it good volume if it is higher than the 50 day MA (i.e. NOL).

2) STI closed with a hanging man candlestick pattern right at the resistance line and the upper bollinger band. Of course, it would be good to see a confirmation candle tomorrow.

Chart:

3) We can see also that the different indicators. CCI climbed to oversold region. So did %R.

4) My Elliott wave count expected an interim top again.

5) However, MACD and Stochastics still look rather good. Again, these are usually lagging indicators.


The looming head and shoulders pattern is very obvious right now. But when a pattern is as obvious as this, more often than not, it will not fully materialise.

To suck more premature shortists into the market, the best way to do so would be to bring a head and shoulders breakdown to almost completion, before totally destroying the pattern to reach a new high. This could happen if my previous Elliott Wave count for STI is correct, that is, we are currently in an intermediate wave 4.

Let's see how it goes. Shopping list for dividend stocks ready! Will STI be obedient?