STI - momentum is on a downtrend

above is a daily chart of the STI. The STI has had a strong run up since Nov 2012, peaking at 3320 on 4 Feb 2013. However, after that, the STI has not been able to test that level again. The runup now looks tired, and we can see that the MACD peaked sometime in early Jan 2013 and made a lower high when the STI made a new high. This is bearish divergence and my guess is that the STI will come under selling pressure every time it attempts to rally. The 21-day moving average provided some support during the last correction and it looks like the STI will test that support around 3250-3260 if the STI consolidates further. Major trend is still up, but it looks like the STI needs to shed some points before buyers come in again.

STI - key resistance reached

Above is a weekly chart of the STI stretching all the way back to 2007. We had a major market crash in july 2007, which bottomed out in Oct 2008 and Mar 2009. We have been in an uptrend since then, which peaked in Oct 2010, then a correction until late September 2011. Since then, we have been chopping around and from Jul 2012 the upward momentum started to get stronger. And since we have been focusing on the downside, with all the talk about the weak global economy, we have failed to see that we have hit the previous high in Oct 2010. At this juncture, i see that the upward momentum is very strong. In fact, much stronger than the time in 2010 when the STI hit a high of 3314. So i think that this rally still has much going for it, and i would advise going long on any pull back. Next resistance levels are at 3600 and 3900.

a look at STI and selected counters

Above is a weekly chart of the STI. I am showing a weekly chart to give us a better feel of the major trends. The STI had quite a remarkable runup since mid November 2012 and is has been trading sideways for about 3 weeks now. Support is strong at 3200 with resistance at 3238. The major trend is up, and you can see that since Oct 2011, we have been making higher highs and higher lows. Any weakness in the market should be a good opportunity to go long.

Here is a daily chart of Noble Group. Consolidating after a huge runup in December 2012. Looks poised for another leg up. Support is 2.15. Resistance is 1.25, then 1.265 (the start of the huge gap down).

Genting is also consolidating after a runup in December, but the upside potential appears to be rather huge. Support is at 1.420 and resistance is at 1.635. There is also a bullish divergence between the MACD and the price between the july bottom and the Oct bottom, which is playing itself out now.

STI - great start to 2013

Above is a weekly chart of the STI. The STI has powered up strongly since late November 2012 and it does look like a minor correction is taking place. So far the support at 3172 has yet to be tested. Today, the STI went to a low of 3185 before rebounding strongly to close above 3200. The major trend is still up, but i think this is the start of a minor correction. I expect the STI to drop to 3150 before retesting the year's high of 3242. Any pull backs would be good buying opportunity, especially property, oil and gas, and commodities stocks as the outlook for the China economy going forward is positive.

Direction of the STI

Above is a weekly chart of the STI. I think it gives a much better picture of the trend of the STI. We can see that after the great volatility in 2011, the STI has been much more subdued, trading well within the high and low of 2011. I thought we were in for a serious down move after the STI broke a key pivot at 2977 (which also happens to be below psychological level of 3,000 points), but the STI managed to claw back to close above 3000 points so far this week. And despite a weak Europe opening as i write this, the STI sill managed to close at the day's high. Key resistance is around the 3020 level, while 3000 points looks like pretty good support. On the weekly chart, we can see that we have just broken out of the series of lower highs and lower lows over the past 8 weeks. If we can maintain this gain, chances are, we will have a good December.

a look at the STI

Above is an end of day daily chart of the STI. I thought that the STI would come crashing to 2903 after it broke 2976, but surprisingly, 2953 proved to be a rather good support. The STI did close below that for about 3 days, but after holding steady for 2 more days, proceeded to spring up to close to 3000 points. We have closed above 2976 for 2 days, which is a good sign, but now we see it struggling to hit 3000. So what is the big picture? China and US are starting to pickup. I am not too sure about Japan, but its stock market has been rallying hard, so perhaps it also is expected to pickup. EU is in a very bad shape. The bitter medicine that Germany is forcing Greece and Spain to take is obviously not working. Austerity alone is not going to help a dying economy. Let us hope that wisdom will prevail amongst the EU leaders. For the STI, the trend has turned down since it made a lower low 7 days ago. We are now bouncing up towards resistance at around 3020 where it may resume its downtrend.

critical juncture for the STI

Oh, oh. The STI is at a very critical juncture. It has broken down from the 144-day moving average and is right at the previous low of 2977. If this level fails to hold, then we are looking at a retracement to around 2900.