Saturday, March 27, 2010

STI- Where is it headed ?

The STI has been consolidating around the 2880-2920 level of late. It is still showing relative strength and is well off the low of 2665 attained on 8 Feb. Volumes have been rather low of late, signalling that many investors are still on the sidelines, waiting for clearer signals before they move in. Will the corporate results in Apr-May provide sufficient strength for the STI to cross the 3000 barrier?

However it is close to overbought territory with an RSI in the 60s. The MACD line isalso almost converging with the signal line. A minor correction could produce a bearish MACD crossover. if the STI fails to cross the previous high of 2950, it could develop a double top pattern, which is rather bearish.

For the STI, I see 3 possible scenarios.

1) Consolidation around the 2850- 2930 level for the next 2-3 weeks, before breaking through the 3000 barrier

2) Consolidation for 2-3 weeks, before experiencing a 3-5% correction to 2750-2800. The uptrend then resumes.

3) The STI experiences a correction of 7-15%, possibly falling to 2500-2600.

I am leaning towards the 2nd scenario. Which scenario do you think is most likely ?

Bearish MACD divergence was also seen on the Nikkei. There is negative divergence on both the MACD and the MACD histogram, both on different time frames. The index made a higher high at 10996.37 on 26 Mar while the indicator failed to make a higher high.

Sunday, March 7, 2010

Capitaland Technical analysis

Decided to do a TA on Capitaland. Any comments would be appreciated.

Do click on the chart to take a better look.

As you can see, prices have broken down from a plateau and double top and are now trading in the 3.62-4.00 region. There is an unfilled gap created on 22 Jan by a large move downwards. It remains to be seen whether prices will recapture that region. I do not think it will be easy as there is some short-term resistance around 4.02 to clear first. 4.02 was tested unsuccessfully after which prices retreated to the 3.70-3.80 level. The more times a resistance is tested, the more formidable it becomes. There is some fairly strong support at 3.60-3.70

Prices are just above the 200-day moving average at 3.89, which should provide short-term support.

As for the indicators, MACD is still trending up above the signal line, which is slightly bullish. RSI is neither overbought or oversold at 53%.

For the next week, I expect Capitaland to retest the 4.00-4.02 region. How it performs after that will depend on whether prices can clear the resistance at 4.02. I expect the possibility of short-term upside to be greater than the possibility of downside.