Singtel Technical Analysis (13 Dec 09)

Please note that I am only doing technical analysis for fun and I will never use it to predict the direction of the market. If you are reading this, just take it as a pinch of salt.

As in my previous post titled "Investor, Traders and Speculators Charts", I mentioned that there are three type of charts. Guess which chart Singtel is currently forming? I have put in three blue ovals in the three indicators. See it for yourself whether is it a good or bad point to invest.

STI Chart looks bullish

The STI chart looks bullish and a good time to buy since the graph has touched the lower trend line. Of course like I always say, market cannot be predicted.

3rd quarter 2009 residential price index

URA has released the 3rd quarter 2009 real estate statistics. Click here to go to the URA website. I have done a snapshot of the chart on the residential price index. I draw a blue line to see whether there is any trend. Will the index goes up some more? Is now the best time to buy property?

STI Index movement Prediction (Oct 2009 to 2011)

I always believe in long term trend rather than short term trend. In this post, I am making two predictions for the STI Index from now to 2011. Here are two possibilities pattern that might be slowing forming.

The first pattern is head and shoulder pattern. The diagram below suggested that STI may be reaching 3000 before the next big correction. The correction might send STI back to 1600 again. This is what most of the people will expect now. Remember, if a lot of people have the same thinking, the chances that they are wrong are very high.

The second pattern is double top pattern. The diagram below suggested that STI may be reaching 4000 before the next big correction. Yes, a lot of people might say I am crazy, but see the two blue highlighted circles; they might be similar points for past and current bear market. EXPECT THE UNEXPECTED. The next major correction might also send STI back to 1600 again.

So after seeing these two patterns, what are your views? Which pattern will be forming? Or do you have another pattern in your mind? No one can be sure what will happen next. It is your planning and strategy that will determine whether you are the winner or loser for this game.

STI INDEX (Comparison between 1998-2000 and 2008-2009)

I have done a comparison for STI index between 1998-2000 and 2008-2009 period. You can see that there are a lot of similarities in it. By looking at the picture above, we are in the last phase of the bear rally?

S&P(2007 to 2009) VS NIKKEI (1990 to 1992)

I have tried to align the chart for S&P500 (2007 to 2009) and NIKKEI(1990 to 1992) chart. Can you see the similarity? Guess what will happen to S&P500 in the next few months.

US Dollar Index down & S&P down (21 Oct 09)

This is probably the worse scenario you can have with the market. S&P was down by about 0.9% and dollar index was down about 0.5%(with EURUSD breaking 1.5). This may signifified that reducing the dollar may have little effect on pushing up at the market at this point. So what will happen next when this happen?

US Dollar Index analysis (21 Oct 09)

By looking at the weekly chart of the dollar index, there might be some rebound from now. Question is will the dollar index in the start of the new bull run? We shall see in the next few week.

Why I use S&P500 to find out market direction?

I always use S&P500 to find out the market direction. The reason is S&P500 is based on 500 large-cap common stocks actively traded in the United States. If you study statistics, you will know that the more samples that you have collected, the more accurate is your result. Dow and STI index only has 30 components. So if one or two stocks go up or down by big margin, the index will be affected greatly even though the rest of the stock are unchanged.

EUR/USD 10 years chart

Happen to see this 10 years EUR/USD chart. After looking at it, there might be a possibility that head and shoulder pattern may be forming. The right shoulder is in the midway of completion. Will the pattern play out? If so, what will happen to the equity market?

S&P 500 daily chart (Nov 08 to Oct 09)

The above S&P 500 shows that we might be hitting on the resistance line (blue line). The index keeps increasing from Sep 09 till now, but the volume keeps decreasing. So is it dued for a correction soon?


Let us looks at the weekly chart, S&P 500 is going to hit the major resistance line (blue straight line). You can see that the index is increasing with volume decreasing(see red line).

With these two charts, do you think the index will still go up without any major correction? I remembered what Sun Tzu say, if the odd of winning is low, don't bother to fight. So do you want to risk by buying up now?

True value of S&P 500 based on dollar index (1988 - 2009)

I have drawn up the chart to see the effect of multiplying the S&P500 and dollar index. My purpose is to show why non US investor must know the Dollar Index if they are buying US shares. US Dollar Index is the measurement of US Dollar value compared to other major currencies.

To simplify the chart, I am using one value for each year taken from the beginning of the year. Please note that I have used Oct 09 value for year 2010. Let make a assumption that the movement of your share price is tied to S&P500.

We can see that during year 2001, the product of S&P500 and dollar index is the highest. It means that if you are a non US investor, you will buy or sell US shares at the peak. In 2007, we can see the S&P500 have reach 1438 which is higher than 2001, but the product of S&P500 and dollar index is lower than that in year 2001. It means that if you buy US shares in year 2001 and sell share in 2007, you are in fact making a loss.

The chart also shows that the value of US shares is getting weaker since 2001. The recent bear rally has only reached the value during year 2003. So don't you think US shares are still considered very cheap now? The question now is will it get cheaper or it is worth to buy US shares?

Taiji Symbol VS S&P 500 (25 years chart)

The above is the 25 year chart for S&P 500
Based on my Taiji Symbol analysis:
Red portion: Body of white fish
Blue portion: Eye of white fish
Green portion: Head of white fish
Yellow portion: Tail of black fish.
So what is next? Will body of black fish come next? If that happen, the index may break 600, and that is terrible.

There is a Technical Term called "M pattern" which is showing in the chart and that is a very bearish pattern. After "M pattern" it will be followed by a "V" pattern up (Currently forming), and next will be a "A pattern" down.

Taiji Symbol VS US Dollar Index

In the last post, I have said that Taiji Symbol is my favorite symbol. For this post, I am using Taiji Symbol to analyse US Dollar Index. US Dollar Index is the measurement of US Dollar value compared to other major currencies. It is important for non-US investors to know this index when they invest in US stock markets. Why? If their stock goes up 10%, but dollar index goes down 10%, basically they are not making money.

Red highlighted portion of both charts represents the tail of the black fish in Taiji symbol. The index started to weaken slowly at this stage.

Blue highlighted portion of both charts represents the body of the black fish in Taiji symbol. The index falls a lot at this stage.

Green highlighted portion of both charts represents the eye of the black fish in Taiji symbol. The index starts to rebound strongly at this stage.

Grey highlighted portion of both charts represents the head of the black fish in Taiji symbol. The index will again fall at this stage. It is hard to tell whether will it break new low but the fall is significant.

The two charts above show my two predictions. The first prediction shows that Dollar index will go up very soon (starting the tail of the white fish). The second prediction shows that Dollar index will still go down (continue the head of the black fish) and break new low before it will go up.

Taiji Symbol VS S&P 500 Chart (Sep 07 - Oct 09)

The above shows the S&P chart from the start of current bear market to now. For Oct 07 to May 08, signified the start of the bear market(tail of the black fish of the Taiji Symbol). For May 08 to Mar 09, signified the bear market is in the mid stage(body of the black fish). For Mar 09 to now, signified that some recovery on the way(Eye of the black fish). My guess the last stage will be a downtrend that will bring the index lower than Mar 09(Head of the black fish). This is just my own interpretation, so there is no right or wrong for it.

This symbol tells me that everything will have a slow start, accelerated growth and peak. Remember the important point is slow start, whether it is a bear or bull market. If you can identify the start points, you will be slowly be rich. For market that goes up or down too quickly, there will be a reverse in direction in no time. If you see that, it is important to clear your postion(whether long or short) before the reverse in direction.

GOLD VS SGD Chart. Why Gold might be a good investment in Singapore?

In my last post on gold, I mentioned that gold might provide a good hedge to the dollar. I am using SPDR GOLD SHARES for this example. Gold are traded in USD. I will combine the USD/SGD and GLD/SGD so as to see whether is gold stills a good hedge. Instead of taking all individual values from both charts, I just take values from beginning of each year. Please note that the 2010 values are estimated values from OCT 09.



I multipled USD/SGD and GLD/USD values together to get GLD/SGD. You can see that gold price keeps going up from 2005 to 2009 Oct. Even though market crash from 2008 to 2009, the value of gold in term of SGD still go up. Isn't it a safe haven investment? From $70 to $140, is about 15% compound annually.

Click here if you are interesting in how to buy gold.

Update: GOLD VS SGD (20 Nov 09)