US markets could be rolling over

Since my last post 2 months ago warning that markets could be topping out, there have been pockets of hope as rebounds came just as intensely.  However, the huge volatilities that have plagued markets for most of this year is usually an ominent sign that markets could be toppish.  

Early this month, US and China announced a trade war truce for 3 months and a few days ago, China announced that it is cutting US car tariff to 15% (a whopping reduction from 40%).  All these should bring cheer and optimism to the markets and yet it did not. The warning signs that all is not well are there.  We will need to see a major lift from current levels before we know the worst is over.

The charts of various major markets indices speaks for itself.  Most are poised to roll over. Perhaps only the Chinese and Hong Kong markets (which had been beaten down to low levels now) may not suffer as much and maybe even be finding their footings.  

Will STI follow the East (China and Hong Kong) or the West (US and Europe)? It remains to be seen.  Watch for the critical support level for STI at 3000.  Any breach of this level means it's better to stay safe and stay out for now. (Unless you are an astute short term trader :) )

Straits Times Index

Dow Jones forming a Double Top (potentially bearish)

Nasdaq forming a Head & Shoulders (potentially bearish)

German Dax is already in bear territory

Nikkei 225 - Formed a Double Top (potentially bearish)

Hang Seng Index - Bearish but could be bottoming out

Caution - Markets Could be Topping Out

11 October 2018

The US market has been hanging on the verge for the past 5 days before finally giving way to a whopping 3.15% plunge last night.

A closer look reviewed that the Dow Jones is forming a potentially "Double Top" while the German Dax has formed a "Head & Shoulders", both of which are "bearish" formations.

Where does that leave STI?

STI hit the top on 2 May this year and has been on a slow decline since.  What looked like months of
"consolidation" for which I was looking for possible near term support around 3040 might be in danger of breaching at the moment, a breach of which could bring it towards 3000, if not 2500.  Caution!

The STI is vulnerable to external shocks.  Expect more volatility in the days ahead.

Potentially bearish Double Top forming in DJ and S&P.   Whether the neckline holds remains to be seen.

Dax is on the verge of breaking down the H&S neckline and if it does, then the ball is set in motion for the bear to continue towards the 10000 level at least.

Where is STI's major support in this sell down?

The US market have the 2nd major sell-off within 2 months and STI is not spared. 
Are we turning bearish? or is it an opportunity to pick up the good stocks (eg banks)?

I am watching out for STI's major support at 3340.  Should our market tested this level and start to rebound from here, then we could be in a "correction" rather than a "bear" mode.

Should STI breach 3340 and did not rebound above it within 2 days, then we need to err on the bearish side, until we see a noticeable change in the overall trend.

STI's support is now at 3340

YZJ head & Shoulders target hit

On 9 Feb 2017, I noticed that YZJ has formed a bearish H&S pattern.  However the ideal opportunity to short this counter came only on 27 Feb when it broke down from the neckline and then rally back up to test this neckline before failing the next day.   From there (about 1.50), it was a 30cts (20%)move towards the H&S target at 1.20 which was hit on 25 March.

In theory, this trade worked out as expected though in actual, it is not easy to sit through ont the way down as it took almost a month with some minor rallies in between. 



YZJ 



Cosco - Poised for a breakup

Cosco is likely to have more upside this coming week.  It's weekly has just formed a Morning Star pattern (it has formed a similar Morning Star pattern on 5 Jan this year which subsequently propelled it from 0.435 to a high of 0.525 over the next 2 weeks+ (a 20% move).  Will be interesting to watch if this move plays out in the coming weeks.



Cosco weekly



Morning Star Pattern - Bullish

Candliesticks - Morning and Evening Star Patterns

Morning and Evening Star patterns are popular patterns to trade as the probability of success is rather high.  However do note that candlestick patterns are best for short term prediction and I would not rely on it for predicting a long term trend.

A Morning Star pattern is bullish and a follow through to more upside is expected over the next few candles while an Evening Star pattern is bearish and we expect more downside to come over the next few candles.

There are a lot of info about these patterns.  You may like to read more about them here:  https://www.babypips.com/learn/forex/triple-candlestick-patterns

SingPost - on the road to recovery

Singpost caught my eyes recently as it has formed an Adam & Eve bullish reversal pattern.

A recovery to around 1.70 is plausible for a start, if it is able to rise above 1.70, I will be looking around 2.00-2.10 next.  However, nothing is guaranteed, trail your exits. 

 

Singpost - Adam & Eve (bullish)



Some STI Stocks Coming into Short Term Support levels

There are quite a number now and here are just a few.  However it is likely to be still volatile in the next few weeks. 



Keppel Reit

Keppel Corp

UOB

 

Frasers Property

 

 

 

A Look at S&P and Crude

The US market (Dow Jones, S&P and Nasdaq) have been seeing some buying coming in on Friday night and it looks like we could be heading for some rebound next.  However, whether this is the final low remains to be seen.

A more concrete confirmation that a low has been in place is when either Scenario A or B (as illustrated in the chart below) happens.




S&P



Crude Oil - bottoming yet?

The Markets Had a Big Sell Off, what's next?

The free fall in the markets that started a week ago on Friday (2 Feb 2018) which cumulated to a low on Tues (6 Feb 2019) was a rather huge plunge of 12% for the US markets and 7.5% for STI.

For a fall of this magnitude, I am cautious that the "perma" US uptrend has been disrupted and we can expect volatility ahead. I am still expecting a rally/rebound of blue chips in the coming days and where the next rally ends will give a clearer picture of whether what is happening now is just a much needed correction or a sign that the market is getting toppish.

The market could be finding some support now and I am looking for possible short term upside in the charts below. However, should any of these significant supports be breached, then I will cut and stay out until the dust settles.

(click on the charts for a larger view)



S&P - Finding support at 200 Day Moving Average?

 Straits Times Index

OCBC Bank

 

SATS

On the Flip side, not all stocks are equal.  Some stocks like YZJ have confirmed a bearish Head and Shoulders formation and could be heading lower in the coming days. 

 



 

 YZJ

Disclaimer:

Any view, analysis or opinions expressed here do not constitute an investment advice nor inducement to trade. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of this information. Investments are subject to investment risks including possible loss of the principal amount invested.