General Update

Since my last post where i mentioned that we have an intermediate term bottom, STI has been heading north for 3 straight weeks and now we are in the making of a fourth. My HSI longs are well in the money and the index traded as expected. So what's next? I think it is always hard to trade on the long side when the market is overbought, for example right now, i believe many traders have taken profit too soon only to see the market grinding higher.

After 4 weeks of strong initiating buying, i still do not see any signs of extreme bullishness in the media but instead, news like the above after a small pullback. I think there is only one way we are heading which is northwards.

For the time being, i will be looking for short term trades and any upside will be small till the market is back to oversold conditions.

Bank stocks

Despite the STI rallying close to 80 points since breakout at 3000, the 3 banks have not been performing. In fact, the 3 of them are testing support near their respective support lines. The main component stocks that have strapped the STI along the rocket ride are mainly Genting ,Jardine C&C as well as the commodity stocks. Should the banks break below 8.70 OCBC, 13.80 DBS, 18.43 UOB, i believe one should be wary going long for the time being. The correction in financials will take a toll on the index and especially if Genting's steriods run out.

On the other hand, this will be a good opportunity to load up on the bank stocks should the price action prove that the sector finds strength in the pullback to rally further. In that case, the process of playing catchup will mean the upside could be pretty violent. Keep a close watch on the financials.

Update on HSI

I think that the intermediate uptrend that ended the huge decline due to troubles in Europe is still very much intact. Using a very simple analysis, the two upleg within this intermediate trend brought the index up 2000 points, and they are then followed by a retracement of about 1100 points.( give a little more slack for the most recent retracement due to the large bearish crowd formed with regards to the weakening US economy) I think such trends and trading ranges changes very slowly, and this would therefore bring the index to at least 22,200. Right now HSI is pulling back after a 1000 points move up from the 31 August low, and i think it should find support at around 20,880.

Yangzijiang

Strong uptrend is intact. Despite the STI correcting near 32 points at day low, Yangzijiang did not break the short term support at 1.66. Intraday wise, 1.65 was traded but the close was at 1.67, so the support is intact. The next projection will take the stock up to 1.85. Definitely a watch especially with the correction volume being relatively low. The buyers are still holding on to this stock firmly.

Sentimenter

No news is good news. Since last week, reports addressing the pressing problems of the US economy has been diminishing, and the market has been powering its way up. Today, the market opened near yesterday's close and at this time of writing, she has been grinding her way up in the absence of any big news. This is what i call good technicals. I will be on the look out for changes in the general sentiment from pessimism to optimism. At the moment i think we will continue to head north for quite a while judging from the vast amount of negativity in the past 2 weeks. Until i can see a change in sentiment, i will be holding on to my long positions.

STI outlook

Technical Analysis of STI:

Friday's Close on STI was spectacular. The 2970s was tested again with the lower end reaching for the intermediate support and rebounding, closing all the way above 3000. The next level to test is 3014. To maintain on this uptrend, STI cannot close below 3000. No signs of fatigue yet, i believe STI should be able to test 3014 before the next correction. Someone mentioned that STI formed an inverted head and shoulders from May to July, with the neckline being around 2900. Notice how STI reacted when it challenged 3014, with it reversing around 360 points to the low in May. The second try in August resulted in another correction but it was only about 100 points. A new bull market could be coming, especially if we witness the first close above the 3014 level. I believe one should start building long positions and await the next run up.

- P-T Trader

We are just getting started

Let us not forget it was only last week where we were macheted a barrage of poor data  with regards to the US growth and economy and a renewed chance for it to sink into a double dip recession again. I called for an intermediate term selling climax last Friday and look where we are position now. The unemployment data released few moments ago was better than expected and US markets will be opening with another big gap up. i have to admit i was a little hasty and my timing is a little off but my contrarian strategy has once again work well in this merciless game.  Well perhaps i should not be too bothered about the market timing portion as the saying goes, " more money has been lost in the prediction of the bear market than in the bear market itself. " As much as we are able to recognise the major and intermediate trends, there will be an element of randomness in the minor trends that we ought to accept and never, never be fooled by this randomness.

However,for the past few weeks, news triumph over price action with regards to movements in the markets and i would like to see more healthier market action( market grinding upwards on days with little news rather than big gap up before opening) before concluding that we are indeed riding the next leg up.

Job data: US non-farm payroll falls by 54k in August but unemployment rate ticked higher to 9.6%.

Update on HSI; I am expecting it to hit at least 22,200 before we have another intermediate downtrend.

Long HSI @ 20,651

stop@ 20,450