Update on IEV- The descending wedge was rendered invalid after a couple of drifting bars, but the stock broke out from the resistance line from the previous top. The volume is huge also, which supports the breakout as an institutionally backed move. However, the stock did not close nearer to the day high, which may tempt some traders to profit take on monday. I expect some inside day trading before the stock attempts to break 1.02. Looks promising.
IEV Holdings is a volatile stock to trade, but the momentum has been on the upside thankfully. The stock has not seen any exhaustion yet, based on the bull flag that it is forming right now. If a breakout occurs beyond 0.95, 1.02 is the immediate target.
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STI is converging into the tip of the Ascending triangle, usually a bullish pattern. However, i believe traders should exercise caution as the momentum has been diverging and the volume has been dipping. The index has also started to make lower highs which is indicative of a possible trend reversal.
The US data released recently suggest a recovery in place and the firming up of the Greek bailout plan has boosted sentiments. However the news should be priced in by now and the index is ripe for profit taking. It is too early to take a strong stand in either direction for the medium term, but for the short term the way now, is down. Look for the 2905 support. A good basing pattern is the signal to pick up some good blue chips for the next leg up.
Happy new year to all!
Lets move straight to the analysis. Genting has been consolidating after the fall in November 2011, showing the typical signs of exhausted selling and good buying setups. Friday's closing placed the stock at 1.595, a breakout from both the cosolidation period as well as from the initial fall in November. The stock is ready to move up.
The immediate target for next week is 1.64, which is a gap fill. There should be profit taking after that. I believe traders can wait for a pull back after hitting this level to load for the next run up to 1.74. There is currently obvious institutional interest in this stock and it could be due to the upcoming result release. Nevertheless, the chart definitely looks good.
The whipsaw seen during the last trading week was fustrating for both the bulls and bears, as both sides are forced to take shorter duration trades to adapt to the market. There are convincing arguments for both sides of the market now. The long- stronger corporate profits in US, undervalued stocks. The short- non-sustainability of yet another US bailout; Euro collapse, global recession.
In my opinion, this is still a range bound market until both extremes have been tested with significant chart patterns. The short term volatility will continue to kill traders unless very wide stops are used. For now, the market seems inclined to break below 2825 support. A persistent sell off from here will see the market testing 2700 lows again. The USD is experiencing a rally, which traditionally causes the market to sell off. Hence we do have a downside bias, but i think one needs to exercise caution in initiating new shorts.
Friday's non-farm payroll disappointed the markets, triggering more than 200 points dip for the US market. S&P fell back down below 1183 support but on significantly lower volume. There is still plenty of uncertainty and any of the cards (US Bank Failure, Greece, US economy) can potentially trigger yet another round of sell down.
For STI, the earlier days of the week is likely to be down, and i suspect the recent uptrend support will be tested. Watch for a break below the support on heavy volume- if the day closes back positive, this is a bullish signal. The reverse scenario will be a retest of the 2700 lows. The outlook for next week is certainly not bullish yet, hence i reiterate sideline or short.
The next act should be unveiled soon if QE3 takes the headlines. The move should be viewed positively by the market as it creates more liquidity (or take some water out of the sinking boat) for a while longer. In summary, for the aggressive, get short. For the risk adverse, wait for a buying opportunity for the next rebound.