Friday, January 14, 2011

SENSEX: Trendline Watch

Since my last update on the SENSEX, price has rebounded and stayed range-bound. In the process, a significant trendline (blue) from 2009 lows has been broken. There may be minor trendline support at current levels as indicated on the chart, failing which 18000 area should offer solid support. While the SENSEX is still in its teens, it's twin brother the KOSPI is making better progress towards adulthood.

S&P500: Approaching Multi-Year Congestion

While the trend is still up, here's a multi-year chart showing significant resistance ahead for the SPX.

"Wave 1 = Wave 5" is a common relationship. Counting the 5 waves from the July lows, this gives us a target around 1295. Also note that price is approaching the upper trendline. We already talked about the very overbought oscillators and extreme bullish sentiment.

Trying to trade a top or bottom can be a deadly exercise. The more prudent approach would be to wait for a significant trendline break, before taking action with a suitable stop. All the best!

Monday, January 10, 2011

Asia: Some Bullish Breakouts!

Hello folks! Here are some recent bullish breakouts in Asia, you may find profitable, if played well.

1. South East Asia - Since my last update around the all-time highs, a nice breakout - as suggested!

2. Malaysia KLSE - First time covering this index. Also a nice breakout above 2007 highs.

3. Korea KOSPI - Overtaking its maternal twin, the SENSEX, KOSPI has looked increasingly bullish and maybe about to break its 2007 highs. What Korean conflict??? Shows exactly why markets are hardly driven by news.


As all the markets above are in overbought territory, my strategy will be to stay long these markets, and add upon corrections, with a stop loss just below the breakout levels.