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

Market Views 24 November 2011

Click to enlarge the table above

ANNOUNCEMENTS

Do take note that today is Thanksgiving Day in the US. US markets are closed on Thursday and have a half day on Friday

IDEAS

Macro
Germany failed to receive sufficient bids at a debt sale, adding to concern Europe’s crisis is worsening and driving away investors from risky assets.
Comment: Germany is considered the safest country in the Euro-zone and government debt is the safest investable asset other than keeping cash itself. If not enough investors are willing to buy German debt, it just goes to show how risk adverse the market is

Flow data suggests
1) More interest in cash than anything else (from the movement in Currencies)
2) There is ONLY interest in buying US Treasuries and not other Fixed Income instruments
3) Negative flows have begun to show in Equities across the world
Comment: We can see where this is going. Previously, we have hypothesized that there may be a switch flows to other asset classes as markets move sideways. However, the situation of Buy USD and Buy US Treasuries seem to be the theme as investors seek to protect their money at least until year's end. Currently there is also a significant -ve flow is AUD while the Australian stock market still sees +ve flow. Investors with a more global outlook may seek to go short on Australian stocks as flows may reverse in-line with the rest of the globe

Sources: Bloomberg, Reuters, WSJ, The Business Times, Analyst Reports, Company Announcements

Sorry for no posts

Announcements
Sorry for not posting in the past 2 weeks. The market has been uninteresting.

Insights and Opinion
In my last post, I mentioned a reversal in both the STI and HSI. It happened but it only lasted for 2 days. The markets have since been down.

STI
The STI has fell in line with the rest of the markets in the first week of August. Fed and Euro rates being held, helped the market to sustain its low levels and not go lower. The past 2 trading sessions have seen strong gains in the DOW but none here. The Prime Minister warns of trying times and a lower GDP estimate. GDP grown rates in Singapore have slightly contracted in Q2 and have aggravated the bleak situation. This has been a case of fundamentals overwhelming technicals. Technically, the short term outlook is good with an expected climb to a the band of 3000 +/- 50. If the DOW and Nikkei post strong gains in the next few trading sessions, it may overwhelm the negative sentiments here and bring the market up a little before more worries set in. That can be an opportunity to exist open positions.

HSI
The recent storm has caused the Hang Seng to close for a day and has not helped the situation as the HSI seems to be tracking the STI in the last 2 trading sessions. I would expect the HSI be a a reactive market in the next few trading sessions.

Nikkei and DOW
The Nikkei has been tracking Wall Street. This makes it relatively easier to chart than the STI and HSI. However, the strong gains of both markets in the last few trading sessions shall reverse on profit-taking as the markets climb towards their short term resistance range.

More substantial views with new charts shall be posted in the coming days. Watch this space ;)

Interim update of the week

Good day, good people!

A little intro, this post to kick start the action and bring a little life at this clean and green site.
Now let's have our market action updates.

Market Action
After 3 trading days as I last wrote about the retracement matter, we see that markets have plunged tremendously, exceeding our expectations of lows. This is partially because the turning points were a little lower than expected. Nonetheless, the expected has happened. We shall now brace for what is to come.

As this is being reported, the STI is at a low of 2886.56, the HSI at 22285.00 and Nikkei at 13159.45 All 3 major Asian indices have fallen considerably since Thursday. On the other hand, Wall street is rebounding from its low.

Insights and Opinion
Moving forward, we have our visual illustrations and opinions on where things are heading.



Starting with the STI, here we see a familiar candlestick. Not that this candlestick is a very special one and that its presence signifies a reversal about to happen, this candlestick after a gap down shows that a reversal is likely to happen. Throughout Tuesday, the market opened much lower and crept up slowly and quite surely, implying short term strength. This
together with our familiar candle is good sign.



On to the HSI. The latest candle is obviously a hammer. Although it is a black one, its presence in a strong bear market is a reversal sign.

Wrapping up, these signs are in line with previous estimates of retracement of the markets and projected short term up trend.

Say tuned for the next update coming soon, within the week, when we confirm this short term up trend and analyse the coming downturn.

Turning Point?

Market Action
Both the STI and HSI shed a bit of yesterday's gains (0.04% and 0.20% respectively) despite Wall Streets gains. The Nikkei is up 2.18% to 13603.31. The Singapore market was supported by gains in the banks, SGX as well as Citydev while other counters closed under the water.

Insights and Opinion
Following yesterday's Ichimoku charts, we have 2 charts on near term support and resistance.


This first chart shows the STI candlesticks. The top and bottom horizontal dotted lines are the near term support and resistance lines while the middle dotted line cuts the level at which a slight reversal is possible. The proportion here exhibits what can be believed to be, sacred geometry. In this case, it is just 1:2, where 1 and 2 are Fibonacci numbers. As the market is currently exhibiting a range phenonmenon, I have assumed the possible length of time this cycle will last.


This second chart shows the HSI candlesticks. The lines drawn here have the same meaning. Notice that the patterns for the HSI are similar to that of the STI. Considering the current macroeconomic climate, it is safe to assume that coupling of the markets shall persist for now.

The circled parts in both graphs give me a basis to believe that a short turning point will occur.

Once again, click on the charts to have them enlarged.

一目均衡表

Announcements
The inconsistent posting is regretted. Be sure to check this space every week. I will update it once a week from now on. No point updating everyday as I am not a reporter.

Market Action
Notice I dropped the "Today". I suppose it is more useful to share a boarder view.

The market seems bullish in the short term. However, near term correction is highly possible. Regional markets like the Nikkei and Hang Seng have had strong gains since last week. As of today, the STI gained 88.32 points to finish at 2978.32. In the region, the HSI gained a whooping 607.07 points to reach 23134.55 and the Nikkei also climbed 127.97 points to 13312.93.

Insights and Opinion
I have had comments that my insights needed to be a bit more "insightful". As I endeavour to upgrade the content on this site, here is the first invention to roll out. Introducing, Mao's Ichimoku.

The 一目均衡表 (Ichimoku Kinko Hyo) was invented in 1935 by a Japanese writer named 細田悟一氏. It is technical indicator used in technical analysis. Its full definition can be found at Investopedia.

For the purpose of my research, I have customised the Ichimoku for my analysis. I have attached 2 diagrams below to illustrate my findings using Mao's Ichimoku. The customised Ichimoku here has had its variables changed even though the lines are used for the same purpose. Mao's Ichimoku is used best to gauge quarterly (3-month) outlook. Click on the pictures to enlarge them.



Here we have the STI Candlestick chart with Mao's Ichimoku overlay. The Blue line is the Tenkan Sen, Red line is the Kijun Sen. These work like moving averages over a period of 8 and 21 days respectively. The Baby Blue line and Pink line are the Senkou Span A and Span B respectively. The area between the lines are the Ichimoku cloud which is a gauge for support and resistance.

From this chart, the STI is likely to retrace when it reaches 3030 to about 2940 levels. The retracement process will take 2 to 3 trading days. After this, it is likely to go all the way to a resistance at 3150. 3150 is the part just above the cloud. Due to the current state of the economic fundamentals, it is not likely to see the market break very much above the cloud. Technically speaking from the trend in the chart, it is unlikely that it will not reach for the resistance level in the short term.



Now for the HSI. The HSI is likely to retrace when it reaches 23300 to about 22400 levels. The retracement process is likely to happen within the next 2 trading days and will take 2 to 3 trading days to complete. After this, it is likely to go all the way to a resistance at 24500. Again, 24500 is the part just above the cloud. Economic fundamentals and technical indicators that apply to the STI are applicable here as well.

Hope you enjoyed this post and found the information useful. Feel free to comment :)

The Plunge

The market plunged lower today. The near term looks more bleak than expected. The market has reached 2906.79, down 40.75 in a single day. Although this 1.38% loss cannot be compared to the more than 2% losses 3 months ago, it is rather significant in bringing the market closer to its March levels.

Counters-wise, the 4 winning components of the market were out-numbered by the 26 losers. It is interesting to note that SembMar is now more expensive than Sembcorp. I would expect the price of the parent to be at least a bit higher. SingTel fell to 3.57, the tip of its previous bottom leg in the past month. Looking at the big black candle today and the dark cloud yesterday, SingTel can be expected to fall lower, bringing the index with it. The Banks, interestingly, are just starting to go "bear" from their RSI falling out of the 40% - 60% range.

My near term revision of "the bottom" is at 2900 +/- 50 now, shifting only 50 points downwards. The rationale here is that Wall Street indices are showing signs of a rounding bottom in the near term. The chances of yet another significant plunge is not likely in the near term unless oil prices continue to surprise us as they did last week. Regional indices like the HSI and Nikkei as carefully coupled as well. On the part of the counters here, most index counters have hit their lows. Further downside is possible but may not be very significant. This shall play a part in supporting the index numbers.

Buy period can be soon. I shall be carefully monitoring the situation and providing my reports. Keep watch daily these few days to get up-to-date highlights.

A weekly update indeed

As I mentioned, there shall be weekly updates on this site. There will be. Thank you, the readers.

The Singapore market has seen a little intra-day spike today, in line with the Dow and Hang Seng. The Nikkei seems like it is beginning to decouple however, there is no clear indication of that in the near term.

Blue chips that I have been watching on the local market have dipped significantly with counters like Kep Corp now under $11 and F&N in the $4.50 range. Popular Yangzijiang shipbuilder has fallen approximately 10% in the past few weeks.

The Fed's "hold" stance on Fed funds rate has caused a short live exuberance to the market until the realisation that required rate of return shall remain low or the time being. This has made equities less attractive in this inflationary environment.

Back to the market, today's little "tombstone" candlestick could well spell the death of optimism that started just yesterday. The near term can be expected to be down. However, considering the Singapore market's coupling with the US and regional markets, I would not consider revising my target of 2950 +/- 50. The DOW has reached it's March levels. Market sentiment there is negative but March's recession fears have been softened. Significantly further downside is unlikely. Japan has been doing better than Hong Kong and Singapore, a slight divergence has been noticed in the past month. Hong Kong has been moving very closely in line with the Singapore market which can be observed to be taking cues from the US.

I am currently watching for a bottom, buying spree.