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!

Straits Times Index & SGX Update

Straits Times Index (STI)

Since the last World Markets Update calling for an upwards breakout, STI has moved up almost 5%. The suggested target was 2880 & a reversal. Friday's action saw it close at 2881.

Will it go all the way to the highs of 2950? Nothing is impossible in the world of stock markets, but we can expect some sorta struggle around here. Will it make new highs and keep going upwards? Unlikely, as the fall from 2950 was in 5-waves. Expecting consolidation next week before anymore big moves.

Singapore Exchange (SGX)

The barometer stock! Since my last post SGX short-term: Ready for liftoff! at 7.60, prices have moved up handsomely on relatively higher volume to a high of 7.88.

So what's next? 7.9 area is stiff resistance, so expecting a struggle here. Will we go all the way to the upper trend channel? Watch the consolidation. If it moves sideways and not sharply downwards, a move higher becomes likely. A break below channel line however, makes a move towards 6.8 more likely.

SGX - A Barometer or a Warrant?

Now for the fun part. Those following my posts have observed, that i refer to SGX as a barometer for the financial weather of Singapore. Simply because, activity on Singapore stock market is directly proportional to the growth of the economy. Higher activity is higher revenue for SGX, and vice versa. Also, have a look at the chart below:

SGX tends to act like a leveraged warrant on the STI - at least in the recent past. Based on that observation, might be fun to keep this chart handy. SGX has crossed below STI for now, whatever that means!

Summary

There might be upside left for STI & SGX, but in the very short-term expecting consolidation. I will present an elliott wave review of SGX at a future date, once there's enough evidence.

Good luck, and your views are always welcome!

CAUTION: Refer to the last part of this earlier post, for caveats as to why technical analysis on SGX might not always be reliable.

SGX: Analysis of Singapore's barometer

SGX is the listed name of the Singapore Stock Exchange. Although not a high volume stock, it is an excellent barometer of the financial weather in Singapore, and the region. To start off, take a look at this beautiful long term chart:



After a breath-taking parabolic rise in 2007 to a high of almost $17, came a nasdaq style plunge that took it to unbelievable lows below $4, in a span of just over an year. A nice study of sentiment right here. Rational and efficient markets, anyone?

The retrace since Mar-09 seems to have stalled just below the 38.2% fibonacci level, indicating lack of strength. Now lets take a look at a medium term chart of SGX:



The price has gapped down through a crucial support level in the 7.80 range, and sitting on the lower consolidation channel line(cyan) and minor support at 7.60. Also, note the rise in volume during the latest downtrend.

Elliot Wave Analysis

Applying elliot wave analysis, the BIG decline from 2007 was in 5 waves. So we'd expect a A-B-C retrace up. Taking the most obvious count, it looks like we did complete a 3-wave move up (with B being the sideways action from may to july). The top of this move was probably in Sep09 at 8.75. If so, a 5-wave move down has begun.

Alternate view (lower probability): The move up since march was A move, and now in a consolidation B down, with a higher C to come.

So what's the weather forecast for SGX?

Short Term: 7.6 is minor support, and 7.8 is resistance. There might be a weak rebound or sideways consolidation next week, to test resistance and support.

Medium term: A break-down is likely towards good support at 6.8 (38.2% retracement)

Longer term: A 5 wave move down to at test the lows of 3.8 is possible.

Caveat & Disclaimer

1. Elliot wave analysis & Finonacci retracements work best in high volume trades (stock indices, forex), and are not reliable for individual stocks. SGX being an important barometer, merited this post.
2. Convincing break of the blue downtrendlines in the short term negates my views.
3. The numbers quoted above are general ranges, and not exact levels.
4. This is a personal view. Please do your own analysis before executing your trades.

Your constructive comments and views are welcome. :)