Tag Archives: symmetrical triangle

Blue-chips in trouble

Evening all,

I have some words on the local market for today. After a fall starting in September, the STI has regained lost ground, and closed at 3350 on Friday. Two periods of rejection at this region in recent history mean that the STI is testing resistance now. When I look specifically at charts of the component stocks, I see more bearish-looking charts than bullish ones; and this was what I thought a few months back too – which makes me wonder how the STI managed to follow international indices higher. I want to share a few counters that have confirmed their mid-term sluggishness.

This is SIA Engineering – S59.SI. In my last post on this counter https://technicalanalysistalk.wordpress.com/2014/04/10/sia-engg-cruising-at-all-time-high/ – I mentioned my disappointment at SIA Engg failing at an all-time high, and prompted the chance of a downtrend emerging from a consolidation. SIA Engg traded in quite a volatile fashion from August to November before a decisive break down from the range (in black) in the middle of November. The sell-off put SIA Engg 10% below levels seen a few months back. Significantly, SIA Engg is now in a clear downtrend.

sia engg

Next, SembCorp Marine – S51.SI. In my last post on SembMar https://technicalanalysistalk.wordpress.com/2014/02/18/sembmarine-looking-bearish/ – I identified a huge descending triangle. True to theory, SembMar continued downwards. Based on the height of the pattern, SembMar is reaching its target. Incidentally, the downward target from the triangle is where a major low is: $3.10 region.

sem

Finally, ST Engg – S63.SI.

After coming out of a triangle in November of last year, ST Engg went range-bound for almost a year. In August of this year, ST Engg started sliding even lower. A sudden spike sent ST Engg to the 200-day MA but rejection kept the general downtrend intact. The recent sell-off is with heavy volume. The picture looks quite similar to SembMar’s. I see downtrends confirmed in these and other counters.

st

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

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SIA Engg cruising at all-time high – for now

Evening all,

I have SIA Engg, S59.SI for today. Ever since besting all-time highs two years ago, SIA Engg entered into a distribution phase and traded in a fairly wide range between $4.60 and the $5.00 region. A clear support zone formed just above the previous major post-crash peak. In my last post on SIA Engg, https://technicalanalysistalk.wordpress.com/2013/05/02/singapore-market-moving-up-sia-engg-impresses/, I trusted the strong uptrend at that time. But as time unfolded, SIA Engg sold off quite severely – 10% off the peak. Fortunately, I was not in a position.

SIAE

Now, I shall zoom in on the rangebound market – since this is the current state of the market for S59.SI’s shares. I highlight a number of events inside this flat phase. First, you can see the failed attempt at holding the all-time high surge; then, there is a large symmetrical triangle – although not the best-looking, a clear enough zig-zag price action coupled with ideal volume behaviour confirms the pattern; finally, a bear flag portraying the breakout towards the downside of the symmetrical triangle. What seems like a boring flat market is putting SIA Engg on the radar.

One thing to note is that the flag pole of the bear flag is not exactly ideal: there is a gap in it. Also, the flag of the flag pole seems more like the market filling up the gap casually. As a longer-term player nowadays, I will still take the flat market as it is. But in a few months’ time, if SIA Engg is clearly broken down from this range, I just might look at it seriously for a bearish set-up.

siae2

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

Jaya Holdings – is it now?

Evening all,

Short post tonight on an update of Jaya Holdings. ( https://technicalanalysistalk.wordpress.com/2014/01/29/jaya-sailing-high/ .)

Ever since my last post on Jaya, a symmetrical triangle formed. This triangle is quite good-looking seeing how the lower highs and higher lows can be easily identified. When Jaya breaks out, it shall be as in the classical novel, Moby Dick, “there she blows!”

Jaya

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

 

DBS tipping over

Evening all,

I have been watching DBS quite closely since the start of the year. I usually have nothing much to comment on the local banking counters because their charts always seem so uninteresting; however, DBS started showing some signs that prompted a move to my watchlist.

DBS has been in a steady uptrend for quite a while already. In 2013, DBS pushed for highs at the $17.50 region, and went down after every attempt to best the year’s high. This is a sign of a trending stock that is starting to tank: the market not seeing any reason to price the company higher. In making higher lows, though, DBS formed what can be seen as a symmetrical triangle. Price bounced off an uptrending 200-day MA too. Late in 2013, DBS flew up and broke the resistance trend line of the then unconfirmed triangle; this meant a breakout towards the upside. Several flat trading sessions followed before DBS dropped like a stone: the bottom triangle trend line broke quickly (busting the symmetrical triangle), the 200-day MA was pierced, and even a bearish pattern – a bear flag – was formed and was confirmed.

Before last weekend, DBS looked set to fall; now, it has already accelerated downwards with a gapped candle for today’s trading. One very interesting pattern that surprised me initially is a lopsided head and shoulders. The recent slide confirms this pattern too. All these signs are telling me to look for further downside in DBS. As a pattern trader, this chart presents quite a few different set-ups for trading. As a longer-term player, I will be waiting for a retracement upwards if all these bearish, confirmed patterns turn out to be successful. Let us see how this goes.

dbs1

dbs2

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

Local bourse looks dull

While I was on hiatus in the latter months of last year, I still monitored the markets. The general story went like this: US markets soar, European markets take cue, and Asian markets disappoint (“ex-Japan” – as they like to say).

spsti

Singapore counters did not give much reason for cheer. I remember vaguely seeing a potential inverted head and shoulders that should have been on the radar of some chartists. It is not the best-looking of its kind but the general idea is there.

failedihs

The then unconfirmed pattern resulted in a downward breakout. It can be seen as a successful downward breakout actually. But I will not go into it anymore.

For an index like the Straits Times Index – STI, one way of analysing it is to look into the constituent components. After a brief look at all of the charts, my simple view of the local bourse is that many counters are either range-bound or trending lower. Property counters were downright bearish quite a while ago, and the picture does not look very different now; the telcos look like they have finally reached a fair level after years of the market pricing them higher; and, the Agris look either flat or in downtrends. The only sector that may surprise is banking. (Even then, my analysis in future may point in the opposite direction).

In the charts below, you will see a similar story: major support breached, and a clear case of what seems like more than the start of a downtrend.

e5h c31 s63 c07

While western markets resume their upward trajectory, I think the large-cap local stocks will continue to disappoint. Some are even presenting downtrend trading opportunities. However, I do see some of the second-, third-tier counters that look promising. As the weeks and months go by, I will upload some of those charts.

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

Eu Yan Sang in possible triangle

Evening traders,

I have a short post for today. This is Eu Yan Sang, E02.SI. Year-to-date, Eu Yan Sang’s share performance is noteworthy – having risen about 25%. In recent months, however, Eu Yang Sang has been consolidating in what looks like a possible symmetrical triangle. It is not the best of small triangle because of candlestick wicks sticking out, but the general psychology of a consolidation after a big move is there. I will keep a close eye on Eu Yan Sang in the next few days.

Eu

 

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

Contel consolidating in a triangle

Good day all,

Short post for this evening. I found a good-looking symmetrical triangle on the chart of Contel, OJ4.SI. This triangle is forming after a good uptrend that has been in place for quite a while. The trendlines that form the triangle look good, and volume behaviour gives confirmation of the pattern. Of course, I need to see a breakout first to determine direction.

Let us see how this goes.

contel

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

 

IndoAgri past the point of no return

Good day to all,

Hope you are all having a good weekend. I will get straight down to business here. This is IndoAgri, 5JS.SI.

I covered this counter several times in the past. In my last post, IndoAgri posted a bearish pattern on the chart and price tumbled significantly. For quite a long time – throughout the whole of 2012 – IndoAgri found itself in choppy waters with a clear support at about $1.15. In April of this year, IndoAgri broke through the strong support level. Also, you can make out a triangular pattern of some sort because of the consolidation last year. It will be considered a very large triangle, and volume is not perfect. I will not trade it as a pattern play, but I think at this juncture, it is quite clear that I am a bear on IndoAgri.

One characteristic I have noticed about local counters is this: after the recovery from 2008-2009 lows, a stock may go on a long run-up. Then, the tide changes for the reasons that may be, and the stock starts selling down. Halfway down, the stock may find a period of consolidation. From here, either the stock gets ready for a move back up to post-crash highs or it will languish and drift down towards crash lows. Breaking down past $1.15 signals the point of no return for IndoAgri, as such, I sound out the bearish alarm once again.

IndoAgri

 

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

 

Guthrie GTS in symmetrical triangle

Good day all,

This is Guthrie GTS, G33.SI. Guthrie has been in a very long uptrend coming out of the 2008 crash. This uptrend is very strong, evident by the rising moving averages and price action. Right now, Guthrie is just about trading at all-time highs. Stocks that produce very steady and strong trends leading to an all-time high attract my attention. I have a specific method to trade such a situation.

guthrie

The interesting thing about Guthrie’s chart is that a small pattern has been in the making over the last couple of weeks. After a strong surge in February, Guthrie took a breather and retraced down to the low 70s. Then, it started consolidating in that region – also flirting with the 20-day moving average. The recent price action brings about a small symmetrical triangle. It is still an unconfirmed one with no breakout in sight. I like volume behaviour – huge at the beginning of the triangle before tapering off in the formation of the triangle. All that is left is for a breakout.

guthrieg

 

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

 

Stopped in Shanghai, still short on Shanghai?

Evening all,

Equity markets are off to a good start to the new year. The general mood is more positive now, with most investors believing the Europe crisis is slowly dissipating, and the feared fiscal cliff disappearing from the face of financial media – though some will say the timer for these ticking time bombs were reset. Sometimes I do not know what to believe – whether a catalyst for underlying problems will emerge and shatter markets or another leg in the multi-year bull run that markets are in. But if you are a regular reader, you know what my bias is.

Outside of the western world, we have the huge chinese economy, which is still considered “emerging”, that  provides us with a kind of wild card. Along with global indices, the Shanghai Stock Exchange (SSE) experienced a sharp rally in the last few weeks. If you need to visualise how the SSE’s chart looks like prior to the recent rally, think of a white space, and a bold, red arrow (or if you are from China, green) pointing diagonally downwards like the hour hand when a clock reads 4 o’clock. This recent rally in SSE caught me totally off guard. Has the chinese market finally made a bottom?

To put things into perspective, look at the chart below. Ever since the top in 2009, the SSE has been in a long-term downtrend. Volatility is present for sure, but you can make out a clear, long-term trend channel. So, the recent rally looks like a healthy short-term correction.

SSE

For long-term set-ups, the downtrend is more or less intact still. The recent run-up shuld be seen as a good window of opportunity to sell into. I am not buying into the recovery camp but I am sure the SSE will have more room for upside especially if the buying pressure continues into February. For longer-term outlooks, I want to see some sort of consolidation or pattern that signifies a bottoming phase. Only then can I be sure, as a chartist, that a market is turning. For now, I am still bearish on SSE.

If you refer to my past posts on the SSE, you will see that I sounded the bearish bells because of a straightforward breakout towards the downside from a triangle pattern – the triangle was very large. https://technicalanalysistalk.wordpress.com/2011/09/10/sse-broken-down-from-triangle/

I get skeptical of my own analysis when I encounter enormous patterns. Are they really going to work? In my experience, some do, some do not – much the same as “regular”, smaller patterns. Anyways, I traded the SSE accordingly. I will not go into the specifics of my trades in products acting as proxies to the SSE, but I admit that I was stopped out at least once. In retrospect, I did not plan out my trades as well as I should have. Yes, stops were in – I already learn my lesson years ago – but could they have been wider to allow for more volatility that matches the duration of the trade I made (planned time horizon)? This is yet another case where the analysis turns out right but weak money management skills and trading strategy (or an insufficient amount) causes the trader to lose money.

At thas point, I can tell myself not to trade with stops – but I know better than to come to that conclusion. Two loss-making trades in the Shanghai Stock Exchange (CFD instruments) gave me some lessons on stop placement and trade selection. However, something happened to the price action of the SSE that reinforced my faith in money management.

Sometime in the last two months of 2012, I was feeling sore from getting stopped out in some of my trades in the SSE. How do you lose money shorting the SSE in 2012? (More an exclamation than a question). I was itchy for a “long-term, straightforward short in a weak market”. After watching the market for a few days, I set out the trading parameters and got a short in. To my surprise, the SSE got on a launchpad and flew skywards. My stop, which I placed in a position I put much thought in, was hit. The SSE continued to rally to where it is now. This time round, I had no sore feelings. I was better prepared with the short, and knew what kind of trade I was making. As I look at where the SSE is trading now, I can only feel happy that my loss with taken early. I made other CFD trades throughout the same period, and good money management skills meant my profitable trades far exceeded the losses I made on the SSE.

SSE1

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.