The market fell 24.57 points to finish at 3147.79 today. Intra-day charts show that it fell sharply after 5pm. After 5pm, SingTel lost a good 5 cents bringing index south due to its high market capitalisation.
The outlook of the local market seems to be bleak for now based on current sentiments and the loss in capitalisation of other weights like Capitaland, Wilmar, F&N and UOB today. The 3-month chart shows a chance of a near-term support at around 3000, consistent with previous estimates. Speculating a longer horizon of 2 months, there is a chance of range market behaviour.
Wednesday 30 April 2008
Tuesday 29 April 2008
Tipping Over
I was hoping I was wrong. The market tipped over today finishing 29.27 points lower at 3172.36. Selling was strong. The previous assumption of short selling last Thursday did not hold true.
Yesterday, I mentioned that "the magnitude of the change can well upset the direction of this temporary bull". I hold this view. However, today's fall is what I will call, "in the 'OK' range". This approximately 1% loss probably will not turn the good sentiments around so soon and cause a steep ride to the bottom. However, the near-term support can be estimated at about 3000 points +/- 50.
Today's action can probably be attributed to profit taking from previous lows especially for those who took stock in march and missed the previous high earlier in the month.
As for a longer term outlook, we should not rule out the possibility that this is the early wave of an uptrend. I would suggest people to bargain hunt in the coming weeks when prices hit a cyclic low and go slightly longer on those purchases. I have the following reasons for this:
1) if it runs bull, you profit (of course!)
2) if the market ranges, you profit (much less but still no loss)
3) if the market continues to downturn (more holding power with a longer horizon)
The right stock pick and take your money far.
Yesterday, I mentioned that "the magnitude of the change can well upset the direction of this temporary bull". I hold this view. However, today's fall is what I will call, "in the 'OK' range". This approximately 1% loss probably will not turn the good sentiments around so soon and cause a steep ride to the bottom. However, the near-term support can be estimated at about 3000 points +/- 50.
Today's action can probably be attributed to profit taking from previous lows especially for those who took stock in march and missed the previous high earlier in the month.
As for a longer term outlook, we should not rule out the possibility that this is the early wave of an uptrend. I would suggest people to bargain hunt in the coming weeks when prices hit a cyclic low and go slightly longer on those purchases. I have the following reasons for this:
1) if it runs bull, you profit (of course!)
2) if the market ranges, you profit (much less but still no loss)
3) if the market continues to downturn (more holding power with a longer horizon)
The right stock pick and take your money far.
Monday 28 April 2008
New Support?
The market resonated around 3200 today and closed at 3204.51, up 15.31 points. This was supported by gains in the counters like Wilmar, SIA, DBS and OCBC.
This is a good sign. If the market continues to oscillate around this level, 3200 could become its next support in the event of a breakout. As of now, it is safe to estimate that the support remains at 2800 +/- 100 and the resistance at 3200 +/- 100. I would expect my estimation to hold in the short-term given the limited options for liquid investments.
Even though the possibility of a breakout remains, one can expect the market to plunge thereafter. The reason for this is that current sentiments remain bleak and such a high, sparks of selling. In the case of last week's drop, it is yet to be confirmed if sellers were going short on Thursday. My guess would be that no matter what the case, today's high can be expected to spark a selling spree tomorrow and that cause the market to change direction. The magnitude of the change can well upset the direction of this temporary bull.
As mentioned before, we can well be at the second wave of an upswing but what it looks like at the moment, is a top of a range market. The future is now filled with uncertainty and we can only wait to be sure. My take is to start selling before the selling spree to lock-in profits or cut losses in preparation for the next downswing.
This is a good sign. If the market continues to oscillate around this level, 3200 could become its next support in the event of a breakout. As of now, it is safe to estimate that the support remains at 2800 +/- 100 and the resistance at 3200 +/- 100. I would expect my estimation to hold in the short-term given the limited options for liquid investments.
Even though the possibility of a breakout remains, one can expect the market to plunge thereafter. The reason for this is that current sentiments remain bleak and such a high, sparks of selling. In the case of last week's drop, it is yet to be confirmed if sellers were going short on Thursday. My guess would be that no matter what the case, today's high can be expected to spark a selling spree tomorrow and that cause the market to change direction. The magnitude of the change can well upset the direction of this temporary bull.
As mentioned before, we can well be at the second wave of an upswing but what it looks like at the moment, is a top of a range market. The future is now filled with uncertainty and we can only wait to be sure. My take is to start selling before the selling spree to lock-in profits or cut losses in preparation for the next downswing.
A Late Post
This post is late due to personal reasons. I am just too busy and lack of rest to have promptly maintained this site last Friday.
The Singapore market closed up 11.65 points on Friday after its drastic plunge in the morning after the early gap after the opening. An interesting note is that from 5pm to 530pm, the market was on a downward movement.
The US market was in the green on Friday and I can reasonably expect Monday to be green for us. However, considering the current trend, this moderate upside may not be enough to counter the start of a downtrend as can be expected after Thursday. The HSI closed 0.64% lower on Friday and the movements of our market lately has been tracking that.
If Thursday's selling was sparked by shorting more than profit taking, Tuesday may be the start of a new surge towards the upper limit. My outlook stays at 3250 for resistance and 3000 for support in the short term.
The Singapore market closed up 11.65 points on Friday after its drastic plunge in the morning after the early gap after the opening. An interesting note is that from 5pm to 530pm, the market was on a downward movement.
The US market was in the green on Friday and I can reasonably expect Monday to be green for us. However, considering the current trend, this moderate upside may not be enough to counter the start of a downtrend as can be expected after Thursday. The HSI closed 0.64% lower on Friday and the movements of our market lately has been tracking that.
If Thursday's selling was sparked by shorting more than profit taking, Tuesday may be the start of a new surge towards the upper limit. My outlook stays at 3250 for resistance and 3000 for support in the short term.
Thursday 24 April 2008
Bearish Engulfing Candle
We see a bearish engulfing candle today signifying a likely peak to the recent upswing. The market hit a high of 3235.24 in the morning and tumbled all the way back to 3177.55 at its close. The 3180 mark seems to be a temporary support for now while the momentary peak seems to be close to 3250, as I have predicted.
Looking at the charts today, in particular the after trading hours trend, I would expect the market to continue in a very short-term downward path. As I have mentioned, this is likely to be a second-wave upswing. This upswing is not without perturbations and corrections. The major fall would likely hit close to the 3000 point support in the short term.
Since November 2007, international markets have been closely correlated. Today's phenomenon marked a strong deviation from this close correlation. As one interesting news article suggests "every day, traders start their guessing game". Today it seems, traders here have made their own mind, in either taking profit or going short, sparking a selling frenzy.
The reason why I do not think this bear market is going to persist is because the current trends suggest good upside and in the worse case, a range market. In these cases, buying will come back when the market feels that stocks have become cheaper or when short positions need to be covered. However, in the former case, the upward trend will take a longer time when buyers are more conservative in their increments than they are at liquidating their holdings at whatever gives a good profit.
Looking at the charts today, in particular the after trading hours trend, I would expect the market to continue in a very short-term downward path. As I have mentioned, this is likely to be a second-wave upswing. This upswing is not without perturbations and corrections. The major fall would likely hit close to the 3000 point support in the short term.
Since November 2007, international markets have been closely correlated. Today's phenomenon marked a strong deviation from this close correlation. As one interesting news article suggests "every day, traders start their guessing game". Today it seems, traders here have made their own mind, in either taking profit or going short, sparking a selling frenzy.
The reason why I do not think this bear market is going to persist is because the current trends suggest good upside and in the worse case, a range market. In these cases, buying will come back when the market feels that stocks have become cheaper or when short positions need to be covered. However, in the former case, the upward trend will take a longer time when buyers are more conservative in their increments than they are at liquidating their holdings at whatever gives a good profit.
Wednesday 23 April 2008
Camel Back
Market action today was an undulating camel's back. The market soared to a high at 12pm only to continue lower after lunch. This beautiful camel back shape seems to be a rare sight.
Anyway, the market has broken the 3200 mark. Current trends in the 1-year chart seem to imply that there is further uptrend. The lines suggest that the market has entered the second wave in its upswing. Considering such a trend, previous speculations by analysts of a V-shaped or U shaped recovery seem to be possible. If that is the case, we can expect to see about 5 months more of bull market to go. The basis for this is that the market started its decline from October 2007 and this lasted until March 2008. This gave it an approximate 6 months of bear market. Negative serial correlation suggests a general bull market in the 6 months after, March 2008 to September 2008.
Even though the 6 month outlook may look good, care must be taken in stock-picking. Some stocks have been captialising very quickly on the current upswing and hence may reach their peaks prematurely before the general market does.
A general way to judge whether or not a counter falls into the above category, is to look at its bottom support (lowest possible price for the moment) and upper barrier (highest possible price for the moment). Estimates can be done from looking at the past highs and lows. The way to use these values is to use them as limits of the counter movement together with, the price where the counter is now. For example, a counter has a bottom support at $5 and a barrier at $10, if it is $8 now, there is lesser upside than downside (+$2 and -$3). If we vaguely put our judgment accuracy at 50:50, then our expected return will be, E(X) = 0.5(2) + 0.5(-3) = -0.5. This means that you probably may not be able to make a good return considering the risks. You should not buy the stock. When E(X) > 0, the risk you take is justified and you have a better chance of success.
Anyway, the market has broken the 3200 mark. Current trends in the 1-year chart seem to imply that there is further uptrend. The lines suggest that the market has entered the second wave in its upswing. Considering such a trend, previous speculations by analysts of a V-shaped or U shaped recovery seem to be possible. If that is the case, we can expect to see about 5 months more of bull market to go. The basis for this is that the market started its decline from October 2007 and this lasted until March 2008. This gave it an approximate 6 months of bear market. Negative serial correlation suggests a general bull market in the 6 months after, March 2008 to September 2008.
Even though the 6 month outlook may look good, care must be taken in stock-picking. Some stocks have been captialising very quickly on the current upswing and hence may reach their peaks prematurely before the general market does.
A general way to judge whether or not a counter falls into the above category, is to look at its bottom support (lowest possible price for the moment) and upper barrier (highest possible price for the moment). Estimates can be done from looking at the past highs and lows. The way to use these values is to use them as limits of the counter movement together with, the price where the counter is now. For example, a counter has a bottom support at $5 and a barrier at $10, if it is $8 now, there is lesser upside than downside (+$2 and -$3). If we vaguely put our judgment accuracy at 50:50, then our expected return will be, E(X) = 0.5(2) + 0.5(-3) = -0.5. This means that you probably may not be able to make a good return considering the risks. You should not buy the stock. When E(X) > 0, the risk you take is justified and you have a better chance of success.
Tuesday 22 April 2008
Charts and data
First of all, I would like to state the inconsistency of my sources. Yahoo Finance is a good source of free data however, yesterday's its data was a bit misleading as already stated once before. Yesterday, Yahoo Finance stated that the market opened at 3162.94 with an intra-day range of 3162.94 and 3201.38. The market closed at 3171.09 according to yahoo and this led to my conclusion of a shooting star. However, today's chart shows a big white candle with a long wick and no leg making it less of a shooting star. Apparently, the market opened lower than reported.
That does not change my outlook for the time being, however, it would have changed the predictions of today. Given that yesterday was not a shooting star, today would not be a down. In fact, it is not. Today the trend was up.
Today the market closed in a white candle gaining 16.14 points. It has now reached the level at which it was at its last peak. Considering the onset of a new cycle, I would place the following supports. Low at 3000, High at about 3250. Not a completely bullish estimate.
That does not change my outlook for the time being, however, it would have changed the predictions of today. Given that yesterday was not a shooting star, today would not be a down. In fact, it is not. Today the trend was up.
Today the market closed in a white candle gaining 16.14 points. It has now reached the level at which it was at its last peak. Considering the onset of a new cycle, I would place the following supports. Low at 3000, High at about 3250. Not a completely bullish estimate.
Monday 21 April 2008
Shooting star?
The market opened higher this morning and continued trading upwards until 11am. High prices sparked a selling trend that persists throughout the day. The market finally closed at 3171.09, up 46.22 points.
Today's candle stick resembles a shooting star, a short white candle with a long wick and no leg. If today's selling continues, which can well be the case, the market shall continue a downtrend. However, looking at charts 6-months and a year, a new market cycle seems to be starting. Even though the general sentiment is negative, volatile counters are relatively more stable than before and the winning ones are increasing steadily. Some of these counters, I have noticed are index weights and this is a positive signal for the general market.
Considering the possible shooting start today and general fundamentals, I upgrade my near-term support to be at around 3000. Even though the very near-term remains Bear, there is a chance of the market rebounding into a Bull phase of a new market cycle in the next 6 months. Buying at a low would mean, buying at the breakout of the next down swing because the market can be expected be climbing upwards thereafter.
Today's candle stick resembles a shooting star, a short white candle with a long wick and no leg. If today's selling continues, which can well be the case, the market shall continue a downtrend. However, looking at charts 6-months and a year, a new market cycle seems to be starting. Even though the general sentiment is negative, volatile counters are relatively more stable than before and the winning ones are increasing steadily. Some of these counters, I have noticed are index weights and this is a positive signal for the general market.
Considering the possible shooting start today and general fundamentals, I upgrade my near-term support to be at around 3000. Even though the very near-term remains Bear, there is a chance of the market rebounding into a Bull phase of a new market cycle in the next 6 months. Buying at a low would mean, buying at the breakout of the next down swing because the market can be expected be climbing upwards thereafter.
Friday 18 April 2008
Yet another roller coaster day
The market is ranging, intra-day at least. Today's roller coaster ride seems to show just that. The market opened slightly lower and finished 1.43 points down. There are steep drops and steep climbs throughout the day in 2 complete cycles.
Candlestick wise, today's action could either be a hanging man or a hammer. Here is my basis of this ambiguous analysis:
Hanging man
A look at the 3-month chart shows a peak in a range or bear market. In this case, our hanging man marks the summit and a downswing that comes next.
Hammer
A look at the 6-month and 1-year chart shows a glimpse of the start of a new market cycle. This makes our like black candle with a long leg a hammer to mark a potential upswing next.
Fundamentally, economic news that hovers around have been less pessimistic than a month ago. Considering this shift in economic sentiment. It is likely a new market cycle is starting. Bullish people can start pyramiding on their long positions while the risk adverse ones can start to cash in on their gains and prepare to make new purchases.
Candlestick wise, today's action could either be a hanging man or a hammer. Here is my basis of this ambiguous analysis:
Hanging man
A look at the 3-month chart shows a peak in a range or bear market. In this case, our hanging man marks the summit and a downswing that comes next.
Hammer
A look at the 6-month and 1-year chart shows a glimpse of the start of a new market cycle. This makes our like black candle with a long leg a hammer to mark a potential upswing next.
Fundamentally, economic news that hovers around have been less pessimistic than a month ago. Considering this shift in economic sentiment. It is likely a new market cycle is starting. Bullish people can start pyramiding on their long positions while the risk adverse ones can start to cash in on their gains and prepare to make new purchases.
Thursday 17 April 2008
Hovering at a high
The market is up! Opening higher and hovering high today, the market lost a bit of steam at the end to close at 3126.30, up by 38.81 points. The markets in Asia and in the US have been linked relatively closely as I have mentioned before. This part of the world takes the cue from the US and how it closed. The US closed 2% higher yesterday which could have fueled buying today.
I would suggest that this phenomenon is not long lived. Looking at the 3-month chart, the top seems to be near. I do not expect to see the market breaking its previous mark of about 3186.
Tactics we can apply now are, selling to lock our gains and buying them back on the correction. This would be similar to shorting on your own holdings. The rule of thumb to make this profitable is to make sure the difference of the sell and buy price in this "pseudo-shorting" is greater than the total cost of this transaction (sum of sell cost and buy cost). This will give you a higher return than holding on to your current holdings for a longer period (if you are expecting a positive return). Also, your risk is cut when you have "locked-in" your earnings on your gains.
I would suggest that this phenomenon is not long lived. Looking at the 3-month chart, the top seems to be near. I do not expect to see the market breaking its previous mark of about 3186.
Tactics we can apply now are, selling to lock our gains and buying them back on the correction. This would be similar to shorting on your own holdings. The rule of thumb to make this profitable is to make sure the difference of the sell and buy price in this "pseudo-shorting" is greater than the total cost of this transaction (sum of sell cost and buy cost). This will give you a higher return than holding on to your current holdings for a longer period (if you are expecting a positive return). Also, your risk is cut when you have "locked-in" your earnings on your gains.
Wednesday 16 April 2008
On Moving Averages
The market closed 1% higher after a gain of 31.00 points after a higher gain at the beginning of the day. Gainer beat losers 348:260. An analysis of the 3-month chart gives very near-term promise of a short ride upwards if tomorrow ends finishes in a 3rd white knight.
Today's topic is on Moving Averages. These values are obtained by taking the average prices of the past days. A more detailed definition and explanation is given here.
I shall provide the value-add by sharing my knowledge about Moving Averages. When reading charts, some traders chose to use Fibonacci numbers as they represent sacred geometry. Fibonacci numbers that can typically be used are: 5, 8, 13, 21, 34, 55, 84 depending on your investment horizon. Notice that 5 days = 5 trading days and not 5 calendar days. Hence, 5 trading days cover a week.
It is useful to compare a shorter term with a longer term. My choice, from when I learnt this is to use MA8 and MA55. The former in measures slightly more than a calendar week and the other, close to 3 calendar months. The rule-of-thumb here is to BUY at an intersection of MA8 and MA55. However, in my opinion, it matters what direction the lines are heading too. Below is a summary of the characteristics.
The reason for this is that if MA55 is heading down, the general trend tends to be a bit bearish. So in order to cut risk, prudence has to be exercised before a BUY. Conversely, In a bullish market, even though general optimism is there, prudence is also to be exercised to reduce the chance of irrational actions.
Moving Averages is possibly the simplest technique in technical analysis. It is beneficial take them into consideration when investing.
Today's topic is on Moving Averages. These values are obtained by taking the average prices of the past days. A more detailed definition and explanation is given here.
I shall provide the value-add by sharing my knowledge about Moving Averages. When reading charts, some traders chose to use Fibonacci numbers as they represent sacred geometry. Fibonacci numbers that can typically be used are: 5, 8, 13, 21, 34, 55, 84 depending on your investment horizon. Notice that 5 days = 5 trading days and not 5 calendar days. Hence, 5 trading days cover a week.
It is useful to compare a shorter term with a longer term. My choice, from when I learnt this is to use MA8 and MA55. The former in measures slightly more than a calendar week and the other, close to 3 calendar months. The rule-of-thumb here is to BUY at an intersection of MA8 and MA55. However, in my opinion, it matters what direction the lines are heading too. Below is a summary of the characteristics.
| MA8 | MA55 | BUY? | |
| Direction | Up | Up | Yes |
| Down | Up | Yes | |
| Down | Up | No | |
| Down | Down | No |
The reason for this is that if MA55 is heading down, the general trend tends to be a bit bearish. So in order to cut risk, prudence has to be exercised before a BUY. Conversely, In a bullish market, even though general optimism is there, prudence is also to be exercised to reduce the chance of irrational actions.
Moving Averages is possibly the simplest technique in technical analysis. It is beneficial take them into consideration when investing.
Tuesday 15 April 2008
Roller Coaster
The market went through a roller coaster ride today to a higher finish. However, a 13.53-up close was not insignificant in this downtrend.
An article in the Business Times today quoted a near-term support at 2994. I concur to a near-term support around 3000 considering that the market hovered around that region for about 2 weeks last month and is almost within 3000 +/- 50 currently. In a further short term, I still would expect either a lower downtrend or a slow and steady climb from the near-term state if a bear market is to come.
An article in the Business Times today quoted a near-term support at 2994. I concur to a near-term support around 3000 considering that the market hovered around that region for about 2 weeks last month and is almost within 3000 +/- 50 currently. In a further short term, I still would expect either a lower downtrend or a slow and steady climb from the near-term state if a bear market is to come.
Monday 14 April 2008
Creeping at a low
The market crept at a low after it gapped lower in the morning. It finished at its lowest in the past 8 sessions at 3042.96. This followed Friday's drop in the US markets.
A 6-month chart of the STI shows a downtrend that would probably find its way down to around 2800 points. No fret here. A range market seems to be highly probable, unless the market breaks its support of around 2750. If the Bear is in, it shall be slamming the market below its support.
Looking on the bright side, buyers can look forward to another buy session coming soon in May. Technically, from a wave principle perspective, this could be the last bump in the Bear trend. There is also a good chance that Leather (or Beef) shall be in vogue thereafter and last for a good few months for us, small fries, to surf on a wave.
In contrast to employment trends, the stock markets are leading economic indicators. Fundamentally in the news, the US expects to pull out from this momentary recession in the second half. This positive sentiment may well bring a ray of hope to the markets to fulfill this self-fulling prophesy.
A 6-month chart of the STI shows a downtrend that would probably find its way down to around 2800 points. No fret here. A range market seems to be highly probable, unless the market breaks its support of around 2750. If the Bear is in, it shall be slamming the market below its support.
Looking on the bright side, buyers can look forward to another buy session coming soon in May. Technically, from a wave principle perspective, this could be the last bump in the Bear trend. There is also a good chance that Leather (or Beef) shall be in vogue thereafter and last for a good few months for us, small fries, to surf on a wave.
In contrast to employment trends, the stock markets are leading economic indicators. Fundamentally in the news, the US expects to pull out from this momentary recession in the second half. This positive sentiment may well bring a ray of hope to the markets to fulfill this self-fulling prophesy.
Saturday 12 April 2008
Trading with Candlesticks
Another day of market info and knowledge sharing!
I have decided to add some fun facts to complement each day's analysis. This is to spice things up. I did like to differentiate myself from the regular columnists in the newspapers.
Before I begin my column on Candlesticks, Friday's market bounced back rather well. The STI closed up 62.27 points to finish at 3126.87 and closing in on what it lost in the past 2 days. This is either a clear sign of a range market or a show of regained strength in a very early part of a new market cycle. We shall continue tracking the performance and sentiments of the market to know for sure. My outlook stands at "Range" in the short-term for now.
Now for Candlesticks.
I have mentioned Candlesticks many times in my daily analysis but have never explained it properly. Candlestick charts are an option for technical analysis of charts. This option can be found in your internet trading account or sites like on Yahoo! Finance.
Now what makes a Candlestick?
A candlestick of each trading day is formed using 4 prices: Open, Close, High and Low. The Open and Close prices make the body of the candle. The gap between opening and closing prices determines the height of the candle. If the day closes higher than it opened, a white candle is formed. A black candle is formed in the opposite situation. The High price determines the point of the top wick and the Low price determines the point of the leg. For example, a counter opens at $2, hits a low of $1, rises to $5 and closes at $4. A white candle of $2 in height is formed, it has a top wick of $1-high and a $1-long leg.
How to use candlesticks?
Candlesticks can be used to judge market sentiment, giving rise to buy signals or sell signals. This is to put it simply. One of the better free resources that I have found is the Candlestick Trading Forum. Here you can find out what candlesticks mean and much more information on candlestick patterns which I shall not repeat here.
I shall be covering other topics regarding technical analysis and simple techniques that are commonly applied to chart reading. Watch this space!
I have decided to add some fun facts to complement each day's analysis. This is to spice things up. I did like to differentiate myself from the regular columnists in the newspapers.
Before I begin my column on Candlesticks, Friday's market bounced back rather well. The STI closed up 62.27 points to finish at 3126.87 and closing in on what it lost in the past 2 days. This is either a clear sign of a range market or a show of regained strength in a very early part of a new market cycle. We shall continue tracking the performance and sentiments of the market to know for sure. My outlook stands at "Range" in the short-term for now.
Now for Candlesticks.
I have mentioned Candlesticks many times in my daily analysis but have never explained it properly. Candlestick charts are an option for technical analysis of charts. This option can be found in your internet trading account or sites like on Yahoo! Finance.
Now what makes a Candlestick?
A candlestick of each trading day is formed using 4 prices: Open, Close, High and Low. The Open and Close prices make the body of the candle. The gap between opening and closing prices determines the height of the candle. If the day closes higher than it opened, a white candle is formed. A black candle is formed in the opposite situation. The High price determines the point of the top wick and the Low price determines the point of the leg. For example, a counter opens at $2, hits a low of $1, rises to $5 and closes at $4. A white candle of $2 in height is formed, it has a top wick of $1-high and a $1-long leg.
How to use candlesticks?
Candlesticks can be used to judge market sentiment, giving rise to buy signals or sell signals. This is to put it simply. One of the better free resources that I have found is the Candlestick Trading Forum. Here you can find out what candlesticks mean and much more information on candlestick patterns which I shall not repeat here.
I shall be covering other topics regarding technical analysis and simple techniques that are commonly applied to chart reading. Watch this space!
Friday 11 April 2008
Inflation and you
Inflation. The topic that has everyone talking recently. People are getting more concerned about the value of their money, their assets, their pay and the list goes on. Thursday, the STI closed in a black candle. I have not much to comment on that given that I have no change in my outlook for now. I shall use this entry to discuss a topic which I promised to discuss.
I guess everyone knows what is inflation. Basically, the prices of things go up. Consequently, the money we possess buys us less things.
Inflation is the reason I invest my money. One has to do something to my money in order to maintain its value. A savings account that gives me a 0.25% return annually means that my savings devalues at the rate of (Inflation rate - 0.25)%. This is not good because at a rate of 4%, it will half in 20 years and become a quarter of its current value if I retire 40 years later!
This covers the first 2 concerns listed above and now for the third...
Inflation causes people to panic about their pay. "My earning power is reduced if my pay does not increase more than the inflation rate!" people say. The cruel reality is, that if people maintain the same level of disposable income in a high inflationary environment, prices will continuously be driven upwards. Businesses will find it expensive to produce and supplies do not increase as drastically as demand. This leads us to another cruel reality when it comes to increments. If the proposition above holds true, businesses have no reason to give better increments for 2 reasons: 1) that the inflationary environment will continue and, as a result, drive up operating costs and reduce profits. 2) Profits will be further reduced if human capital costs increase due to increments. There will be no sense in giving staff more than the business can profit. For example, if my profits are 5% before budgeting for increments, there is no reason in giving my staff increments greater than 5% because my business has not been growing that rapidly.
The markets have been uncertain and crawling at a low. The outlook for the coming months is not very bright either. What will you do if you own a business?
I guess everyone knows what is inflation. Basically, the prices of things go up. Consequently, the money we possess buys us less things.
Inflation is the reason I invest my money. One has to do something to my money in order to maintain its value. A savings account that gives me a 0.25% return annually means that my savings devalues at the rate of (Inflation rate - 0.25)%. This is not good because at a rate of 4%, it will half in 20 years and become a quarter of its current value if I retire 40 years later!
This covers the first 2 concerns listed above and now for the third...
Inflation causes people to panic about their pay. "My earning power is reduced if my pay does not increase more than the inflation rate!" people say. The cruel reality is, that if people maintain the same level of disposable income in a high inflationary environment, prices will continuously be driven upwards. Businesses will find it expensive to produce and supplies do not increase as drastically as demand. This leads us to another cruel reality when it comes to increments. If the proposition above holds true, businesses have no reason to give better increments for 2 reasons: 1) that the inflationary environment will continue and, as a result, drive up operating costs and reduce profits. 2) Profits will be further reduced if human capital costs increase due to increments. There will be no sense in giving staff more than the business can profit. For example, if my profits are 5% before budgeting for increments, there is no reason in giving my staff increments greater than 5% because my business has not been growing that rapidly.
The markets have been uncertain and crawling at a low. The outlook for the coming months is not very bright either. What will you do if you own a business?
Thursday 10 April 2008
2 black crows and counting...
In a time of crisis, capital markets are closely correlated i.e. their betas with respect to one another tends to "1". The markets have been heading south at the same time. The market indicators in my Tiger Dashboard show 5 blue-chips and 5 major indices all in the red for Tuesday and Wednesday. In Asia, markets have been falling with the Hang Seng at the lead, losing 1.35% and the Nikkei close behind with a 1.05% loss on Wednesday.
The STI shed 40.70 points on Wednesday after a good morning of treading above the water. It has been 2 black crows and I expect to see another one coming. The next resistance point to break is 3000 points. Once it starts trading consistently below this mark, I would expect it to remain below for a few months to come.
The STI shed 40.70 points on Wednesday after a good morning of treading above the water. It has been 2 black crows and I expect to see another one coming. The next resistance point to break is 3000 points. Once it starts trading consistently below this mark, I would expect it to remain below for a few months to come.
Wednesday 9 April 2008
Unemployment and the market
Today, I shall skip chatting about the 51.50 point loss in the STI by writing on a more interesting topic of employment.
Unemployment rates have increased recently and this tells a good sign. Economists use employment rates as a gauge of market conditions. When the economy is good, there is more work to be done, hence more jobs and a higher level of employment. In a downturn or recession, the opposite happens. Interestingly, as businesses take a little time to respond to market changes, there is a lag between the market and employment. Employment rates can hence be a lagging indicator of economic and market conditions. When unemployment rates show an all time high, i.e. employment is low, this will be a lag from a low in the markets. This implies that market lows are over and we can expect a better outlook. However, the assumption that employment has reached an all time low is questionable.
Globally, we see that hiring has slowed down and that businesses are keeping a tight budget for manpower. We can expect this phenomenon to sustain for the next 12 months as annual business cycles determine such measures.
I shall be covering the topic of "Inflation" in the coming days if the markets show no interesting signs. Today's big black candle does not affect my outlook as it is still within range of the market movements of the past 5 trading days.
Unemployment rates have increased recently and this tells a good sign. Economists use employment rates as a gauge of market conditions. When the economy is good, there is more work to be done, hence more jobs and a higher level of employment. In a downturn or recession, the opposite happens. Interestingly, as businesses take a little time to respond to market changes, there is a lag between the market and employment. Employment rates can hence be a lagging indicator of economic and market conditions. When unemployment rates show an all time high, i.e. employment is low, this will be a lag from a low in the markets. This implies that market lows are over and we can expect a better outlook. However, the assumption that employment has reached an all time low is questionable.
Globally, we see that hiring has slowed down and that businesses are keeping a tight budget for manpower. We can expect this phenomenon to sustain for the next 12 months as annual business cycles determine such measures.
I shall be covering the topic of "Inflation" in the coming days if the markets show no interesting signs. Today's big black candle does not affect my outlook as it is still within range of the market movements of the past 5 trading days.
Monday 7 April 2008
Keep on movin'
The market finished up 26.36 points to close at 3181.92 after a relatively gradual climb from its morning low of 3125.70. The bulls seem to have quickly overcome the bears from today's "tick-like" intra-day movement.
A note on current sentiments in the media, today's front page of the Business Times has an article on "A 'V-shaped' Recovery". Analysts are thinking otherwise that this could be a rebound in a bear market. For general information, the charts that represent "V-shaped" recovery and technical rebound differ in the time scale (and hence the gradient of the swing). Currently, it is hard to tell as the phenomenon is just starting.
Another notable point is that "V-shaped" recoveries that recur end up in range markets. Just go to any good chart provider and look at charts in general. You'll see that bull market upswings are less "V" until the later stages. In the later stages when rebounds look "V", the later finish tends to be higher than the previous peak hence, showing the up-trend.
Outlook in the next few days is rather uncertain even though current trends are indicating further upside. By stance on the markets remain.
Those trying to recoup or cut losses in the previous downswing can look forward to an exit point soon. This may sound foolish. However, from a risk management point of view, you did rather take a small loss and cut your risks considerably than a keep your stakes high in an uncertain market. Your expected return for the moment may be greater by doing the former.
A note on current sentiments in the media, today's front page of the Business Times has an article on "A 'V-shaped' Recovery". Analysts are thinking otherwise that this could be a rebound in a bear market. For general information, the charts that represent "V-shaped" recovery and technical rebound differ in the time scale (and hence the gradient of the swing). Currently, it is hard to tell as the phenomenon is just starting.
Another notable point is that "V-shaped" recoveries that recur end up in range markets. Just go to any good chart provider and look at charts in general. You'll see that bull market upswings are less "V" until the later stages. In the later stages when rebounds look "V", the later finish tends to be higher than the previous peak hence, showing the up-trend.
Outlook in the next few days is rather uncertain even though current trends are indicating further upside. By stance on the markets remain.
Those trying to recoup or cut losses in the previous downswing can look forward to an exit point soon. This may sound foolish. However, from a risk management point of view, you did rather take a small loss and cut your risks considerably than a keep your stakes high in an uncertain market. Your expected return for the moment may be greater by doing the former.
Friday 4 April 2008
White Knights meet a Black Bird
Today's title sounds crude. Well, sensationalism is what makes writing interesting.
The white candles in the past 3 days have been overcome by a black one. No fret. The market looks like it is going to have good upside in the short term. Congratulations to those who bought in the upswing in the previous days to take advantage of the panic or better, at the bottom about a month ago.
The market took a turn today going down in 2 large swings. Sellers overwhelmed the buyers later in the day to cause the lower finish. Heavy weights like the banks have seen good upside in the pass few days. It is no wonder that a "sell spell" is being cast. Today's black bird is probably the result of reluctance to buy in a time of uncertainty. The general outlook remains bleak, with the US likely to declare H1 shrinkage.
Back to longer term charts, the 2-year STI chart shows an interesting twist. The market seems to have began trading in a range phenomenon. Thus, I upgrade my next 2-month outlook from "Bear" to "Range". Closer scrutiny shows a good chance of range market behaviour between 3400points to 2800points. I shall keep to 1 or 2 significant figures as higher precision, to me, makes no sense. How can anyone estimate a peak or bottom to such precision? Market sentiment changes and it is not surprising that even professional analysts change their stance frequently.
Keeping the current range outlook in mind, I foresee more potential upside in the Singapore market. I would expect to trigger my "stop-loss" measures in the coming weeks and wait for the next low to pick up stock. The rationale here is trading ups. Greater risk takers can try short positions on the dip. A very important point to note is, that shorting is much more advanced technique. I suggest we leave it to the pros.
The white candles in the past 3 days have been overcome by a black one. No fret. The market looks like it is going to have good upside in the short term. Congratulations to those who bought in the upswing in the previous days to take advantage of the panic or better, at the bottom about a month ago.
The market took a turn today going down in 2 large swings. Sellers overwhelmed the buyers later in the day to cause the lower finish. Heavy weights like the banks have seen good upside in the pass few days. It is no wonder that a "sell spell" is being cast. Today's black bird is probably the result of reluctance to buy in a time of uncertainty. The general outlook remains bleak, with the US likely to declare H1 shrinkage.
Back to longer term charts, the 2-year STI chart shows an interesting twist. The market seems to have began trading in a range phenomenon. Thus, I upgrade my next 2-month outlook from "Bear" to "Range". Closer scrutiny shows a good chance of range market behaviour between 3400points to 2800points. I shall keep to 1 or 2 significant figures as higher precision, to me, makes no sense. How can anyone estimate a peak or bottom to such precision? Market sentiment changes and it is not surprising that even professional analysts change their stance frequently.
Keeping the current range outlook in mind, I foresee more potential upside in the Singapore market. I would expect to trigger my "stop-loss" measures in the coming weeks and wait for the next low to pick up stock. The rationale here is trading ups. Greater risk takers can try short positions on the dip. A very important point to note is, that shorting is much more advanced technique. I suggest we leave it to the pros.
What it should have been
What it should have been...
First, I would like to make a correction on the past 2 entries. The opening values of the 1st and 2nd of April, that I have stated on those days, may not be accurate. Reading the 3-month candlesticks on Yahoo Finance reveals that the candle bodies are longer than I quoted. This is due to the lower opening values. I am puzzled why the "Open" value is quoted as such. Anyway, just to share with everyone to be more careful when reading such open-source statistics.
Another weird thing about Yahoo Finance is its "Index Value" and "Trading Time". These 2 may correspond to each other but they don't correspond to the actual day. Please be careful.
Now for the analysis of today...
The market showed strong gains on Thursday, going up by 46.94 points in a choppy session. Nonetheless, there seems to be promise of the market going higher these few days.
Considering the oversight I made on the opening values earlier, the outlook, in the short run of the next few trading days, is not as bleak as previously expected. However, in the longer run of the next 2 months or so, I am still with the Bears. The basis for this is that, on the fundamental front, more businesses are less confident of meeting their targets this year. This translates into a less favourable market sentiment. Moreover, the likelihood of the US declaring a recession due to 2 consecutive periods of negative growth remains probable. This may further lower expectations.
One can proceed with "stop-loss" measures in the coming days. Trigger them when the roller coaster starts to tip over. However, don't forget to keep watch of your "stop-loss" targets and move them incrementally to maximise gains. Going into cash is safer for the moment despite rising consumer prices.
First, I would like to make a correction on the past 2 entries. The opening values of the 1st and 2nd of April, that I have stated on those days, may not be accurate. Reading the 3-month candlesticks on Yahoo Finance reveals that the candle bodies are longer than I quoted. This is due to the lower opening values. I am puzzled why the "Open" value is quoted as such. Anyway, just to share with everyone to be more careful when reading such open-source statistics.
Another weird thing about Yahoo Finance is its "Index Value" and "Trading Time". These 2 may correspond to each other but they don't correspond to the actual day. Please be careful.
Now for the analysis of today...
The market showed strong gains on Thursday, going up by 46.94 points in a choppy session. Nonetheless, there seems to be promise of the market going higher these few days.
Considering the oversight I made on the opening values earlier, the outlook, in the short run of the next few trading days, is not as bleak as previously expected. However, in the longer run of the next 2 months or so, I am still with the Bears. The basis for this is that, on the fundamental front, more businesses are less confident of meeting their targets this year. This translates into a less favourable market sentiment. Moreover, the likelihood of the US declaring a recession due to 2 consecutive periods of negative growth remains probable. This may further lower expectations.
One can proceed with "stop-loss" measures in the coming days. Trigger them when the roller coaster starts to tip over. However, don't forget to keep watch of your "stop-loss" targets and move them incrementally to maximise gains. Going into cash is safer for the moment despite rising consumer prices.
Thursday 3 April 2008
Long-legged Doji
The market gapped higher in its opening on Tuesday at 3123.35 and closed at 3124.61. The intra-day high was 3130.39 and the low was 3112.39. This made a 1.26 point white stubby candle with a 10.96 point leg and a 5.78 point top wick - a long-legged Doji.
In candlestick analysis, the market has lost its direction. The bulls were winning most of the day countered by short but deadly bear-slams. Kind of like the bear being poked in the bum and turning around to pin the bull down only to have the bull making a comeback and starting all over again.
I have no change in my forecast of an imminent downtrend approaching soon. RSI (Relative Strength Index) shows that the market is possibly going to turn around and either range or go lower, in the mid-term. Fibonacci retracement ratios indicate a similar trend.
So far, 3 techniques of vastly different basis agree with one another. We should get the message.
In candlestick analysis, the market has lost its direction. The bulls were winning most of the day countered by short but deadly bear-slams. Kind of like the bear being poked in the bum and turning around to pin the bull down only to have the bull making a comeback and starting all over again.
I have no change in my forecast of an imminent downtrend approaching soon. RSI (Relative Strength Index) shows that the market is possibly going to turn around and either range or go lower, in the mid-term. Fibonacci retracement ratios indicate a similar trend.
So far, 3 techniques of vastly different basis agree with one another. We should get the message.
Tuesday 1 April 2008
False Impressions
The market opened a little higher as expected and closed in what is called, a "Hanging Man". Even though it closed higher, climbing all the way up from under 3000 points during lunch-time, the "Hanging Man" is a bad sign especially when it appears after an engulfing dark cloud yesterday. Like a ghostly figure in the air, the "Hanging Man" is a signal that the reversal is near.
The bears are gaining control of the market. We saw it crash at mid-day and fortunately climbing all the way back up from 3pm. This could be due to buy-backs to stablise the market. Even though buy-backs work for large investors of particular counters and company treasuries trying to kept the price afloat, it generally does have a lasting effect on the general market.
Today's, "Hanging Man" was a small stubby white candle with a long bottom wick. Some may think it is a "Hammer" but "Hammers" appear at downswings. In this case, the market was up these few days and so this little candle is a "Hanging Man". The last 2 "Hanging Men" appeared in October 2007 and December 2007. These were around the pinnacles of the the previous peaks. However, due to the fluctuations at the peaks, the market did not crash immediately the day after appearance the "Hanging Men".
On the above basis, it is rather hard to tell what is going to happen tomorrow. There is a likelihood of the market opening up or down and there is likelihood of it closing higher or lower. Regardless of which, the idea is to cash out soon before the big dip. You did rather take a small loss than a bigger one.
The bears are gaining control of the market. We saw it crash at mid-day and fortunately climbing all the way back up from 3pm. This could be due to buy-backs to stablise the market. Even though buy-backs work for large investors of particular counters and company treasuries trying to kept the price afloat, it generally does have a lasting effect on the general market.
Today's, "Hanging Man" was a small stubby white candle with a long bottom wick. Some may think it is a "Hammer" but "Hammers" appear at downswings. In this case, the market was up these few days and so this little candle is a "Hanging Man". The last 2 "Hanging Men" appeared in October 2007 and December 2007. These were around the pinnacles of the the previous peaks. However, due to the fluctuations at the peaks, the market did not crash immediately the day after appearance the "Hanging Men".
On the above basis, it is rather hard to tell what is going to happen tomorrow. There is a likelihood of the market opening up or down and there is likelihood of it closing higher or lower. Regardless of which, the idea is to cash out soon before the big dip. You did rather take a small loss than a bigger one.
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