Friday's strong closing came after days where market teased to the downside. I was definitely looking at a break to the downside, however market holds steady. The fact that it can holds steady despite Dow keeps going lower is a cause of concern for my shorts. I just checked the Dow's chart, still as ugly only thing is again it is in the state of oversold a rebound is likely. Even on STI, i wouldn't immediately call it the reversal. There are methods to identify reversal and the born of an uptrend and i will rather wait for these tell tale signs.
The rebound on Friday brought many China stocks near their resistance. I will be waiting to see, what to see? If any of those China shares that went up with high volume start to show weakness. Because if you were to look at most of their charts, it is easy to see those strong volume rally fizzles out and give us a lower low.
It is interesting to note that STI, Nikkei & HSI have not broken the Mar'08 low while Dow Jones has broken that low and now threatening to break lower. The ADX shows that the current downtrend in STI is losing strength as we can see the ADX line lacklustrely turning down along with -DI. Further observation of trend weakness can be seen from the positive divergence developed in the MacD Histogram. The probability of a rebound is strong and we can expect resistance from the price gap at 3084 level.
DISCLAIMER: This is not an inducement to buy or sell. You should do your own analysis on top of my postings.
