Straits Times Index back in red; minor resistance or end of retracement?

Straits Times Index back in loss for 2016

This might be premature since it is just mid-day. The day’s session hasn’t closed yet and neither is this the index’s close for the week but here it is, the Straits Times Index is now back below 2889.23 which is the opening level of the year on the first trading session 04 January. At 1.02pm, STI printed 2877.65, down 22.63 points or 0.78%.

The level is a resistance but more importantly it is a statement of market sentiment. Bulls will be astonished while bears congratulate themselves.

 

“Has stock market bottomed?” seen through different time frames

I encountered many individuals asking if the stock market has bottomed. That rally from February-low certainly looks good through short term indicators. Whoever rode that rally should pat themselves on the back. Long term investors should take a step backwards to the larger picture and ask:

  1. Does a 2-month rally make a trend?
  2. Where is the market placed at the moment in terms of a 6-8-year stock cycle?
Straits Times Index monthly chart 1988 - present

Straits Times Index monthly chart 1988 – present

On a long time frame, that 2-month move is peanuts. The big prize is getting the big direction, target right.

 

Observations from this weekly chart

In the mean time, some observations for traders/investors to consider.

Straits Times Index weekly chart 2011 - present

Straits Times Index weekly chart 2011 – present

  1. 2015 performance terminated previous 2012-2014 bull run.
  2. STI now back into red.
  3. Overhead resistance from prominent 2013-2014 low.
  4. Moving averages print dead-cross last year and indicates current move is retracement only.
  5. At best index is printing lower high.
  6. No prominent bullish reversal/expansion pattern.
  7. Despite the gains from Feb rally, STI has not beaten top of ‘B’ phase described here, therefore still in ‘C’ phase.

 

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Soh Tiong Hum is Director of TerraSeeds Market Technician Pte Ltd. TerraSeeds is a trading educator in Singapore since 2005. Soh Tiong Hum is a member and regular speaker at Technical Analysts Society Singapore events and has a bi-monthly lunch time event at IG Singapore on forex and stock markets. He is an avid blogger on technical analysis topics; his Twitter account @sohtionghum was ranked #23 out of The Top 70 Twitter Accounts To Follow In 2015 by MahiFX. Come find Tiong Hum on Google+
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