Dow Jones chart analysis

 

After the QE3 annoucement, the Fed had pushed the Dow Jones index to the top channel of the bear flag. With one month to go into the US election, will Dow Jones break out of the top channel or will it retract back to the lower channel?

STI condition before Fed QE3 announcement

I am looking at the chart of STI before Fed's decision on whether to release the QE3.

It is forming an inverted cup pattern which is very bearish. Currently at 10.55am (13th Sep), STI is trading at 3017. Whether the Fed announce it's QE3 or not, the picture does not look good for STI. Will STI rally after Fed announce the QE3? or no QE3 at all? According to the chart at the moment, it does not look to have a bright picture.

Dow Jones index

It was such a long time since i last updated thus blog. It has been a great upride to 12800 for DJ. At this junction, it will be a real test.

As refer to the above chart, it is travelling nicely along the 10DMA line. It is due to a pullback or correction now. Please exercise real cautious for those who are buying.

US market

Tonight US will release it's job market data. I feel that tonight's data will be the most important indication for the market. Let's take a look at it's chart.

Currently, Dow Jones index is sitting just below the major downtrend line. If tonight's job data delight the investors, it may break the downtrend line and things may turn over to the bull side. STI may follow on Monday, a gap jump above the downtrend line. But if tonight's job data disappoint the investors, we may face extended period of under the downtrend line.

US markets lead the way. What's worry me is that current futures are indicating the bets are siding the bull side. When everyone is betting on the green side, it usually doesn't turn out to be green. Will this happens again tonight?

Market analysis, Capitaland

The analysis is for my friend, Joe. Let's take a look at STI situation first.

For the downtrend wave to reverse, the major downtrend line stated in the chart (started from August) have to be broken. It looks like at around 2800. Currently, the inverse H&S formation looks like going to form. This is a bullish formation but it needs further confirmation. For example, it breaks the neckline of 2905 or breaks the major trendline. At immediate short term, it has not broke the 10DMA of 2723. Any rallies may just be a short term rebound.

Capitaland

Currently, Capitaland still refuse to break $2.54 even Dow Jones rallied 293 pts yesterday. This price is the short term 10DMA. So i feel that the rally is not strong enough. Personally, i will only buy it as near to $2.35. The risk will be lesser. Another point of entry will be the breaking of $2.54, the formation of inverse H&S may happen.

This is just my point of view, Joe. You may have a different view.

Dow Jones

From the above DJ chart, we can see the status of the market at the moment. It is trying to break out of the critical trendline. 12200 will be a key breakout at the moment. It seems like waiting for something to trigger the breakout. The Asian markets had been lagging behind the US market.

Please take note of the breakout, it may mark the end of recent downfall.

Capitaland

Sell Capitaland at $2.74 on 31st Oct 2011; Buy at $2.49 on 23rd Sept

Trade decision conditions:

1. Expect a pullback from STI after rallied for more than 300 pts
2. Time to log some profit from Capitaland as i faithfully held it for a month

Profit: 10%

Dow Jones analysis

Dow Jones index rallied 330 pts last night. It is a very important rally, breaking the downtrend channel. Please refer to the below chart.

Shortists may need to practice extra cautions. The 50 DMA was broken, the first resistance will be 11716. If broken, the 200 DMA will be challenged. Personally, i do not expect DJ to rally consecutively 8 days to touch 11716. I expect a sideway channel to happen at the moment. November month will then be the key period.

Noble Group

Sell Noble Grp at $1.355 on intraday trade; buy at $1.31 on 6th Oct 2011

Trade decision conditions:

1. Astonishing profit made in 1 hour;
2. Take profit at 10DMA;
3. This trade helps me to recover all the SembMar losses and ended up with a slight profit

Profit: 3.4%

Noble Group

Buy Noble Grp at $1.31 on 6th Oct 2011

Trade decision conditions:

1. STI triggered a rebound
2. Looking for it to challenge 10DMA ($1.35)
3. Potential target price at $1.47 if 10DMA is able to clear; it may be just an intraday trade

Stop: $1.28

SembMar

Sell SembMar at $3.22 on 6th Oct 2011; buy at $3.13 on 5th Oct 2011

Trade decision conditions:

1. STI pushed for a rebound.
2. I want to switch cheaper stocks for longer term (important skill sets in trading)
3. Recover some of the earlier losses

Profit: 2.5%

SembMar

Buy SembMar at $3.13 on 5th October

Trade decision conditions:

1. DJ made a remarkable turnaround; short covering at the last hour
2. STI may have reached a temporary bottom of 2531; expecting volatility at 2530 and 2600
3. Third attempt on SembMar; i trade like a hunter, never give up on the prey.

Stop: $3.05

SembMar

Sell SembMar at $3.07 on intraday trade; buy at $3.12 on 4th October

Trade decision conditions:

1. Stop price is hit; follow the rules stricitly
2. STI look like going for 2380 which i feel is the bottom

Loss: 1.5%

SembMar

Buy SembMar at $3.12 on 4th October

Trade decision conditions:

1. Successfully defend my stop price at $3.10; buy back at $3.12
2. STI make another new low again
3. Still no signs of government announcing retrenchment and paycut

Stop: $3.07

SembMar

Sell SembMar at $3.08 on 4th Oct 2011; buy at $3.19 on 3rd Oct

Trade decision condition:

1. STI dropped to an unknown territory of under 2600
2. SembMar stop is hit;

Loss: 3.6%

SembMar

Buy SembMar at $3.19 on 3rd Oct 2011

Trade decision conditions:

1. STI hit a new low of 2605;
2. SembMar hit a new low of $3.15; the chance of a rebound is higher after making 2 new lows in 2 trading days
3. Still no news of retrechment and pay-cut news; meaning that it is just a correction

Stop: $3.10

STI status

As i was posting this update, STI created another new low of 2614. At this point, STI had entered into the bear territory. The news and papers are fuelling the public with a lot of bad news, draw the picture as bad as possible. The plight of our country entering recession, send the fear to everyone's heart.

Personally, i am still holding on the Capitaland position, strongly believe that it is just a big correction. The reasons are that i only see a slow down in the growth; there is no pay-cut across the boad; there is no major retrenchment in the job market. Why there is no posting of thousands of jobs lost in the news like the one in 2008? If we are to go back to the 2008 crisis, you will see real bloodshed in the market. This means that most of us will lose our job and pay-cut scheme will be among the hot topic.

Current market situation is a very tough situation for novice traders. But it provides a good opportunity for us to test our skills. Traders with traditional way of trading will fail in this fast and volatile environment. We will need to upgrade ourselves and this market provide us this opportunity.

Capitaland

Buy Capitaland at $2.49 on 23rd Sept

Trade decision conditions:

1. STI had 2 consecutive huge selldown and created a new low of 2659 which i believed that it may be the lowest.
2. The risk to take a position minimized
3. Capitaland defended it's 2 week's low despite the major selldown
4. Property sector is due to a rally

Stop: $2.30

Genting

Sell Genting at $1.71 on 16th Sept; Buy at $1.645 on 14th Sept

Trade decision conditions:

1. STI rallied for consecutive 2 days; expecting a slight pullback
2. Genting touches the resistance price of $1.72; expecting difficulties at this level

Profit: 3.5%

Genting

Buy Genting at $1.645 on 14th Sept

1. Defend it's 10DMA of $1.64
2. STI hit a new bottom
3. 3th down day for STI, minimize the risk

Stop: $1.63