Capitaland - ready to reverse?

The share price of Capitaland has been dropping steadily since its failure to close above $3.00 on 16 April 09. It has fallen through a rising window's support at $2.66 and is now poised just above another rising window, with support at $2.53. The candlestick formation today looks like the start of the formation of a morning star. For this three-candle formation to be confirmed to be a morning star, the candle on the next day must be a white candle closing above $2.66. The situation based on Western technicals does not look so promising. The MACD lines have crossed downwards. The share price has also fallen below the simple moving average line. These two indications mean that the short term trend of Capitaland is down.



Above is a weekly chart of Capitaland. The medium term chart of Capitaland is still up but its upward momentum is slowing. The only plus point I can see here is that the fall in share price is accompanied by a fall in volume, so it may be that people are simply taking profit. I would suggest waiting for the short term down trend to reverse before taking a long position (buying) Capitaland.

STI - Piercing Pattern?

The behaviour of STI today was very dramatic. It gapped down 41 points to 1833, hit an intra-day low of 1814 points before closing at 1887. Today's candle pattern looks like the formation of a bullish piercing pattern. This is a potential bullish reversal signal during a downtrend (the market was in a downtrend over the past 3 days), then it gapped down. This movement looks like the continuation of the downtrend, but then the bulls pushed the price up past the mid point of the previous day's candle. So, it looks like the green candle 'pierced' the red candle from below. From here, it looks like there will be another test of the resistance at 1959. If the STI manages to break through the 1959 level, the upside target will be 2461. This target is calculated in the same way as i calculated the target for Capitaland. You can see that the STI made a double bottom during the past 6mths (the bottom level was at 1457), with the pivot at 1959). The depth from the pivot to the bottom is 502 points. The upside target if the STI breaks out of 1959 = 1959 + 502 = 2461.

STI - rising window

The STI is fast approaching the key resistance level of 1960. Its ascend was much faster than i had expected. I have been commenting on the weekly chart of the STI as the trend is easier to follow on the weekly chart. However, today, i thought i'd comment on the daily chart as the action during the past week was quite interesting. The STI began the week with a strong gap up, or as the Japanese call it, a rising window. On the next day, the gap was partially filled, but not completely. So the zone between 1836 and 1848 is now a support zone. Notice an almost identical support zone on the first week of Jan09. During that time, the STI gapped up, and over the next two days, formed a bearish 'dark cloud cover' candle pattern, and on the fourth day, closed below the support zone. Once that happened, the STI went into a free fall. This time around, on Thursday, the bears tried to push the STI down and almost formed a bearish dark cloud cover. But the bulls managed to push the STI higher so that the penetration of the red candle was not sufficiently deep enough to form a dark cloud cover. (A dark cloud cover is formed when the red candle closes below 50% of the previous day's green candle). On Friday, the bears were slightly weaker (or the bulls stronger), so that the STI formed a higher low compared to Thursday's session. This showed that the underlying strength of the STI is still positive even though the upward momentum is a little weaker. My view is that the STI will continue on its uptrend unless there is a close below 1836.

Capitaland - Double bottom

i was looking at the chart of Capitaland and wondering what to name the title of this post. I knew that the price was going to break through $3.00 (OK, not knew, but chances are high that it would break through that price soon). I don't really want to call it 'breakout' again as that would be a bit boring. And suddenly I saw it! A double bottom on the weekly chart. And with this realisation, i can now project a price target for Capitaland once it breaks out of the $3.00 level. The projection is computed by measuring the price difference between the pivot (the $3.00 level hit in early 2009) and the line joining the bottoms (which is slightly less than $1.90 since the second bottom is at $1.70, but never mind. i'll use $1.90 to be a bit conservative), giving $1.10 and then adding this to $3.00, resulting in a price target of $4.10. And what a coincidence! $4.10 is remarkably close to a major resistance level of $4.13. My suggestion for an entry into Capitaland would be similar to my suggestion for COSCOCORP: buy upon price breaking through $3.00 on high volume.

COSCO - An update

I am not sure what to say about COSCOCORP. Its performance over the past month has been nothing short of breathtaking. Most of the time, i could only watch with disbelieve as i witnessed an unending stream of buyers snapping up whatever shares the sellers were offering. It has broken through key resistance levels of $0.775 and $0.905 and is now soaring towards the next resistance of $1.16 at higher volumes.



Above is a daily chart of COSCOCORP at a much wider time scale just to show you where $1.35 is with respect to its current price. I suggest buying COSCOCORP once it breaks $1.16 on high volume.

Capitaland - Nearing key resistance

It is only the second day of the week, and already the action is getting fast and furious. Above is a weekly chart of Capitaland. The medium trend is up as indicated by the rising MACD lines and the upturn of the Simple Moving Average line between the Bollinger Bands. The key level to take note is $3.00. Capitaland closed today @ $2.92 on quite high volume. The volume on the weekly chart is falling, but take a look at today's volume on the daily chart:





A huge bullish candle, on high volume, bouncing off support of $2.70 and reaching for $3.00. I think a good trade would be to go long once Capitaland closes above $3.00.

STI weekly - spinning top

It was a short trading week last week due to a Good Friday holiday for most markets. Above is a weekly chart of the STI. I titled this blog 'spinning top' because last week's price action resulted in the formation of a spinning top. (A spinning top is a candlestick formation with a short real body). It indicates indecision in the market. The STI has been closing higher for the previous four weeks, but last week, the bulls and the bears were about evenly matched so that the STI only closed marginally higher that the previous week. The trend is still up, but i suspect we will see some consolidation next week.

DBS - An update

I have not commented about DBS for about 2 weeks, so i thought i should write a little about it now. In my last commentary, i showed a monthly chart and mentioned that a hammer was forming, but that i was not sure as i had to wait til the end of th month to be sure. It is now a little past Mar09, and while Mar09's candlestick is not exactly a hammer as it has an upper shadow, nontheless, it is a bullish candlestick signal with its long lower shadow and a close above the middle of the previous month's candle.



Looking at the weekly chart, DBS appears to be a stuck just below the $9.20 level. Since the weekly trend is up, i would suggest buying DBS on price weakness. A breakout above $9.20 should see the price heading towards the $10.30 level.

STI - Elliot Wave

Today i watched a video in which a guy fits Elliot Waves into an S&P500 weekly chart. He managed to fit three waves and mentioned that the S&P500 is currently on the fourth upwave and that the fifth wave down will take the S&P500 to the 500-point level. (It is currently at 842). For this view to be invalidated, the S&P500 needs to trade above 930 (or around there). I wonder if this is the case for the STI. I pulled up the STI weekly chart and drew in what i think are the major up and down waves. (The lines are in thick yellow). Voila! I managed to draw five waves!; three major down waves and two minor counter trend waves. (If i read Elliot Waves correctly, the theory says that a major trend consists of five waves; three in the direction of the major trend and two counter trend waves. Thereafter, a reversal?) According to what i managed to draw, the STI completed its five waves down and is time for it to rally. Really?

Maybe some people will draw the waves differently and conclude that we are only at wave four. i suppose they are, or maybe were, busy shorting the market at every rally, hoping to be early in catching the major fifth wave down, but finding themselves caught at the wrong side of the trade and having to close their short positions. I believe this is one of the reasons that this 'rally' that we are seeing since early March is so strong. People who went short discover to their horror that the market is racing ahead and so they close their short position by going long. People at the side watching the market roaring ahead cannot stand waiting at the sidelines anymore, and so they too jump in and go long, thus adding more fuel to the 'rally'.

Be wary of people hyping up the current market conditions by saying that this is a bear market rally, or that we are only at the forth leg of Elliot wave and that a major fifth wave down is coming, or that we are now in an 'overbought' situation and that a correction is imminent. Look at the chart objectively and as far as possible, go with the trend. Of course you may trade counter trend, but you need to be much more nimble in getting out when the trade goes agains you.