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Keep an eye on these stocks if STI continues to sour

STI 9.2% off the top, bearish signals

The Straits Times Index is slightly over 9% off its recent top at 3549.85. 10% is the usual number associated with market corrections but sentiment could worsen if the stock index goes further South. This is how Investopedia defines ‘correction’.

A reverse movement, usually negative, of at least 10% in a stock, bond, commodity or index to adjust for an overvaluation. Corrections are generally temporary price declines interrupting an uptrend in the market or an asset. A correction has a shorter duration than a bear market or a recession, but it can be a precursor to either.

However 9% is not all. The index has broken a significant trend line drawn since bottom of 2009, it has fallen below 2010 high and MACD has printed not only a bearish divergence but a bearish cross as well on the monthly chart. All this happening in the context of a stock market crash in China as well as a crisis in the Euro with Greece in the crosshair.

Straits Times Index monthly chart

Straits Times Index monthly chart

 

Prominent price patterns in these blue chips

The star of this blog post however is not the Straits Times Index but these three SGX-listed blue chip stocks. In these three, I can find familiar concepts that I have brought up time and again inside this blog. These are all big patterns so price action may not unfold immediately but should be of concern to a long term investor. As always, price setups require confirmation. When in doubt, consult a qualified financial advisor.

 

Starhub 

Starhub weekly chart

Starhub weekly chart

  1. Breaks 2-year consolidation.
  2. Breaks 2-year trend line.
  3. New 52-week low.
  4. Consolidations and 52-week lows were brought up here and here.

 

Singtel

Singtel weekly chart

Singtel weekly chart

  1. Potential head and shoulders chart pattern.
  2. Head and shoulders is not confirmed until neckline is decisively breached.
  3. Who could not know the most popular of bearish reversal patterns? This one even has a lower ‘armpit’.

 

City Development

City Development weekly chart

City Development weekly chart

  1. Price falling on rising volume is not a good sign.
  2. Read this article for 4 different price-volume setups.
  3. To provide context, CDL fell with high volume weeks ago because it was going to be removed from a FTSE index for global real estate.
  4. Question for retails to ask: so who buys/sells stocks based on inclusion/exclusion from indices.

Director, TerraSeeds Market Technician Pte Ltd. Trader, investor. @sohtionghum was picked ‘Top 70 Forex Twitter in 2015’. Operates multiple strategies.

“Dear reader, I do not have a financial license to give advice. I do not know you the reader. Your financial objective and risk tolerance may be different from mine. I am not responsible for any consequence of your action.

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