Thursday, April 14, 2011

Straits asia: facing selling pressure

Today straits asia closed at 2.54 with above average volume of 7.8 million shares.

The full black candlestick with no shadow indicates that selling pressure is still strong. The closing at 2.54 is just below the confluence of the 20MA and 100MA. Straits Asia had been trending up on the upper Bollinger band until recently. The 100MA at 2.50 may also provide some support.

RSI is trending down and MACD is on the verge of a bearish crossover which will probably happen if another down day occurs tomorrow.

Straits asia also appears to have broken its uptrend channel which is a bearish sign. Expect more downside if the uptrend channel cannot be recaptured.

Strategy : Watch whether the 20MA at 2.55 can be regained, if not it is quite likely that the support of 2.50 will be tested, followed by 2.40. Be cautious as MACD is about to form a bearish crossover.

Friday, April 8, 2011

STI: Still going strong

On Friday STI closed at 3187.31 , the 8th consecutive day of gains, and 13th positive day of the last 15. The gain from the yearly low on March 15 of 2919.98 is 267.33 points or 9.15%. The index is still some 3.8% below the 9 Nov 2010 high of 3313.61. It is also worth noting that April is quite a bullish month for STI with 7 of the last 10 Aprils resulting in gains.

The top blue line on the chart shows where STI is at now.

Indicators are nearing overbought territory with the RSI near 70 and closing near the upper bollinger band. However today's close at the high of day shows the bullish strength of the rally and indicates that the index could even move past the 3200 level after a correction.

I am expecting a brief correction for STI to the 3120-3150 region. Support at 3110-3120 should be especially strong as 3110 is the neckline of the double-bottom pattern and 3120 has been tested successfully before. In a more bullish scenario STI might only correct to 3150, consolidate and resume trading in the next band at 3180-3220. Stronger resistance is at 3220. A good thing is that there are no negative divergences..

Strategy: Reduce holdings as STI is currently overbought and refrain from taking more long positions until there is a correction.

NOL : Out of downtrend ?

Today NOL closed at 1.99 with good volume of 27 m shares traded. Prices touched a high of 2.01 which was again not sustained into the close..

Things seem to be brightening up for NOL as it seems to have moved out of the downtrend channel and into a slight uptrend(see chart). Also it managed to close above the 20MA. Sustained closes above 20MA would indicate that the trend is indeed changing. Important resistance is at 2.02 as this level was tested unsucessfully several times in the past. If 2.02 is taken out, 2.10 will be a possible target. Immediate support is at 1.94, However STI is currently overbought and I think the price is likely to see consolidation for a few sessions before moving higher.

I also noted that the Bollinger bands are tightening, indicating that a large move is near.

Why I bought NOL at 1.93 last Friday?

1) Gentler slope of downtrend indicating that selling pressure is easing

2) Slight positive Macd /RSI/Stochastic divergence as seen in the chart. Prices made a new low but Macd/RSI/Stochastics edged up.

3) Strong support at 1.87-1.92 region (Aug 2010 low, Fibonacci support)

All these factors indicated that the downside is minimal and so I took a small position.

Watch the next few sessions. It will be a good sign if the price can maintain above 20MA and 1.92 is not broken.