S&P500 short-term: Surprising Strength!

Last post called for a target of 1210, although i have to admit, i didn't believe it myself! Last session prices hit a very overbought 1210. Here's the hourly and 5-min charts with trendlines:

The 5-min chart above neatly illustrates the title of this post - strength! Surprising, because we're so overbought on every time frame. Notice how after a week of dragging its feet, the slope of the trend suddenly steepened upwards.

Supports

Expect some sideways consolidation here, possibly followed by another high. Supports are at the rising trendlines, and the following levels: 1200, 1192, 1176. More importantly, although very close to a medium-term top (sentiment readings support this), short-term trend is still up. Other than day-trades, not the place to go aggressively long or short, yet.

All the best!

SGX: Escape Velocity?

In a previous post - SGX short-term: Ready for Liftoff? - the below chart was presented, proposing an imminent launch for SGX with a target of 8.3.

Well, prices hit a high of 8.31 in heavy volume today, before closing at 8.26 - a gain of 8.5%.

Escape Velocity?

Ok, so we have liftoff! The question is do we have escape velocity, to clear earth's orbit? The big clue is in the volume spike. No guarantees, but i am expecting a breakout, followed by a back-test and consolidation, as prices are currently in the overbought region.  Alternatively, consolidation could occur just below the upper channel line, before an eventual breakout.

Resistance & Support levels

A breakout will meet immediate resistance in the 8.8 region, but could go for an eventual target of 10.8 (50% retracement level) in the medium-term. A rejection here, on the other hand will find support at the bottom channel line initially.

Implications

Remember, SGX is a barometer for Singapore and the region. Although, i am expecting a pull back for Asian markets short-term, a breakout for SGX above 8.8 (if & when it happens), might have bullish implications in the medium-term for SE Asia markets in general.

Strap on some oxygen tanks folks, the air is thin up here. All the best!

Shanghai Composite Very Short Term: One more move UP!

A quick note in the very short-term. SSEC has reached the bottom of the parallel trend channel, and should make one last move up towards 3200, to end Wave D of the Triangle. Then most likely a Wave E drop, dragging into May, followed by a thrust. Refer to previous posts, for the larger picture.

Hang Seng Index Short-Term: A breakout?

Last post on HSI proposed overhead resistance, from the downtrendline connecting the two previous highs. I expected prices to consolidate a bit before an eventual break upwards. Well, last session, prices gapped above the downtrendline instead, and  reached a high of 22249.

A Word on Technical Analysis

I'm glad this happened. This event illustrates nicely the whole essense of technical analysis. At this point, one might say: 'technical analysis failed'. What one fails to realise is that technical analysis is a game of probabilities, and price action is king. There are no certainities, and we have to adjust our trading positions and sizes, as the 'future' unfolds!

A lot of people going around bashing Elliott Wave Theory. The last word says it all - it's a Theory. No one, no theory, and no system can predict the future with 100% certainity. You can have all your wave counts, all your complex indicators, but in the end price action is all that matters. The danger is when we try and get the price action to fit our counts and indicators. Personally, I employ Elliott Wave Theory quite often to generally identify the stage of the market, and high probability setups in conjunction with a few indicators.

My posts on this blog are humble attempts to identify and share with you those setups, mainly to help my own trades.

What's next for the HSI?

Well, first of all the breakout needs to be tested in the next few sessions. Currently in the overbought region and at the upper channel line. We can expect some some consolidation soon. If the trendline holds, there is a high probability that the prices will move higher.  Strong resistance areas are 22600, followed by 23000.For now, the short-term trend is UP.

On the other hand, a sustained break back below trendline is bearish, and chances are we will test support around 20600 area.

All the best!