Singapore FTSE Straits Times Index (FTSTI): Expected to gain short rally from rebound

The Singapore market was in a very volatile mode. Banking and finance stocks faced heavy selling pressure. Singapore is technically in a recession. Despite technically being heavily oversold, the FTSTI was sent to an unexpected low of 1,473.77 points recently, lowest since August 2003 after easily breaking the support level of 2,100 points. It also rebounded sharply to close at 1,794.20 points in the same week. It was a roller-coaster month for Singapore investors.

The STI is still highly oversold because the short term 30-day average is at 2,100 points. The weekly chart on the STI has formed a bullish candlestick reversal pattern called piercing lines and therefore a short rally is expected from this rebound. Furthermore the RSI indicator shows a bullish divergence which means that the down trend is rather weak on the daily chart. With the trend is still strong downwards in the longer term, the rally is expected to be short with a resistance at 2,100 points. While the 1,473 low becomes the immediate support level, stronger support level only exists at 1,200 points.

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.

Hong Kong Hang Seng Index (HSI): may form short rally upwards

It was a very volatile month for the Hong Kong equity market. On the 27th of October, the HSI was three times lower than its peak of 32,000 points just one year ago. The HSI was at 11,015.84. However, a strong rebound followed and the HSI is currently at 13,968.67 points. The Hong Kong market was highly affected by the performance in the US and China markets. The Shanghai Stock Exchange Composite is currently three and a half times lower than its peak last year.

The HSI short term average is currently at 15,950 points. Therefore the HSI is still oversold. A bullish divergence is formed on the daily chart by the RSI indicator and this indicates that the short term down trend momentum is weak. The rebound formed this week may form short rally upwards. However, it may face heavy resistance and the first one is the above short term average. Support level is at 11,000 points.

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.

US Dow Jones Industrial Average (DJI): May just stay sideways

It was a price tsunami in the US equity market. The average range jumped to 800 points this month compared to the previous month. The DJI broke the immediate support level at 10,000 points found a strong support level at 8,000 points. This level was being tested for three times before it rebounded and close at 9,325 points today. Americans are now observing how the US$700billion going to be used to support ailing financial institutions and gave mixed reactions. The presidential election on November 5 is also another important date for financial investors.

DJI is now near the short term 30-day average while the longer term average is at 10,500 points. Investors may be more cautious this month and the result of the election may set new course for the equity market. The DJI may just stay sideways because investors and traders may want to wait and see what can the new President do to revive and restructure the financial markets. The trading range is expected to be between 8,000 points and 10,000 points.

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.

Gold price into correction likely, with downward bias

The rise in gold from a low of 681.50 on October 4/08 up to the present has some characteristics of a correction rather than the beginning of a strong new trend.

If this up move is a correction, the rise will probably be limited the resistance zone between 800-826.

If the market breaks the low at 681.50 before rising above 844., expect a drop to the S2 area between 656. and 646.


Gold chart as at 30 October 2008 using NextVIEW Advisor

R1 – 776.
R2 – a zone of resistance between 800-826.
S1 – nearby support at 681.50
S2- 656.646 (not shown on chart).

MACD – rising, following price.
EMA210 sloping downwards around R1, and creating some resistance to upward movement.

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Article and Commentary by Don Schellenberg. A trader and trading coach, he is a noted expert on Market Structure, Elliott Wave and Fibonacci. He trades the forex market.

US dollar moderate bias to the downside against Chinese Yuan

This past week has primarily been marked by sideways action for this currency pair. The long spike down on October 24/08 may or may not have represented genuine price action (not confirmed).

A drop below the minor rising trend line on the chart will generate a down move that may reach 6.7737 or lower.


USD/CNY chart as at 30 October 2008 using NextVIEW Advisor

TECHNICALS

NextView RSI – this indicator has generated a week sell signal.
Stochastic – has made an unconfirmed sell signal at time of writing.

R1- 6.8404
R2- 6.8702
S1 – 6.8147
S2 – 6.7737

Moderate bias is to the downside.

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Article and Commentary by Don Schellenberg. A trader and trading coach, he is a noted expert on Market Structure, Elliott Wave and Fibonacci. He trades the forex market.

Euro/Dollar moved too vertical to be sustained

The Euro began a strong rebound against the US dollar, at the 1.2326 low. That’s slightly higher than what I expected. My “more distant target” for the week started at .12100. By one type of measure 1.2326 is almost exactly 50% of the move up in the EURO that began January 1, 2002, and topped out July 15, 2008.

The upward bounce has been virtually vertical, so far reaching a high of 1.3298. That is precisely at the convergence of at least three important Fibonacci ratios, creating a level of relatively strong resistance.

This move up has been too vertical to be sustained. The market must travel downwards, but the question is “how far?” and “how fast?”

Following are a couple of possible scenarios.

Scenario #1 – The market, meaning price movement on the chart, has convinced me that the down move over the past 3 ½ months is no regular correction. If this view is correct, the low at 1.2326 will eventually be broken to the downside.

Although the current move up has equaled the previous large correction (from Sept 11/08 to Sept. 22/08, it unlikely to come down so fast. A period of downward and sideways action for several more days is more probable. And then the market will tumble down, testing the low.

Scenario #2 – The down ward correction is complete and the market will eventually rally to test the July/08 high.

How will we know which of these two scenarios is most likely? For me, a rally that closes above 1.3881 would make me lean more towards scenario #2. A failure to do that will make me favour scenario #1.


EUR/USD chart as at 30 October 2008 using NextVIEW Advisor

TECHNICALS R1 – Immediate resistance at 1.3298
R2 – 1.3590
R3 – 1.3881
R4 – 1.4867
S1 – support at the last low at 1.2326
S2 – 1.1733 (not shown on the chart).

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Article and Commentary by Don Schellenberg. A trader and trading coach, he is a noted expert on Market Structure, Elliott Wave and Fibonacci. He trades the forex market.