the Juice weekly vol. 1

EDITOR'S NOTE

Volume 1 of the Juice weekly is here on the soft launch of market-juice.

In this weekly note, we shall be covering all the Juice in charts, banters, news and anything noteworthy in the markets.
Do give us your feedback to help us improve this note to you.
Have a great weekend!


FEATURE

Chart of the week

In our first edition, we shall look at one of the leading benchmark indices of the world, the S&P 500

S&P Daily Candlesticks

Click to expand

S&P Weekly Candlesticks

Click to expand

We shall do our charting covering the following factors:
Candles: Dark candle momentum may be set to continue both on the Daily and Weekly
Moving Averages: MAs on the Daily have since give a -ve cross while on the Weekly there seems to be hope for another rebound
Oscillators (RSI and Stochastics): Daily oscillators are oversold while Weekly
Ichimoku Overlay: Price action is trading under the could, -ve signs both on the Daily and Weekly. Chikou Span has had a negative cross which may be set to continue as well

Some basics on the Ichimoku Overlay:
Tenkan Sen (Similar to Shorter term moving average)
Kijun Sen (Similar to Longer term moving average)
Ichimoku cloud (Support and resistance indicator)
Chikou Span (Lagging indicator)

Verdict: Market could have more weakness in the coming week while some strength remains in the coming month. As such, the probability of a large crash moving forward is relatively low while there exists a probability of a short-term bounce in the coming month. However, the strength of bounce may not be strong.

Do note that the above is just technical analysis. A more comprehensive analysis will require fundamental valuation of index components and also the analysis of market behaviour (based on psychology instead of charts). And this is beyond the scope of this section.


Banter
These points are excerpts from a coffee shop discussion with an interest-rate swap dealer:

1) Banks are increasing lending rates and tightening credit limits. They seem to be reducing risk
2) This is not normal as banks would want to lend more if interest rates can be increased. They will make more money getting more interest on their lending. Reducing credit limits are contradicting
3) Highly leveraged individuals or businesses may be more badly affected

Comment: A rather bleak and depressing discussion. The effects of which may only be felt towards the middle of 2012. As for now, let's enjoy the ride in the markets while keeping tabs to conserve for the future

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!