State of US Economy and the US Dollar

This is a video done by Stansberryresearch, an independent investment research firm. They have a lot to say about the US Economy and an impending collapse of the USD. Well i understand not every investor buys the doomsday scenario, but it is an informative session nonetheless.

Personally, I got out of a USD denominated insurance linked savings policy about 6 months ago. I bought it a few years ago as one of my baby steps towards financial planning, but my belief right now is that the insurance linked element is already bad enough, what more with a devaluating USD. I am not going to continue paying in the hope of "non-guaranteed" and "projected" returns. Just my 2 cents worth. Anyway here's the link.

http://www.stansberryresearch.com/pro/1011PSIENDVD/PPSILC89/PR

Ezra


The stock has reentered uptrend channel. 1.64 has been tested 4 times and a solid support base has been established. The signs that i look for in an uptrend stock are present:

1) Above MA
2) Trading within uptrend channel/ imminent break of downtrend channel
3) Support tested and rebounded off
4) Sentiment/Correlation with index and commodity

Oil is trading at USD91 a barrel, and Ezra was one of the few stocks that turned up before STI the last few days. Conventional knowledge- index down, stock down, normal. Index down, stock up, strength. The technicals suggest more upside to come.

Bank Stocks


DBS is Trading below MA, in a descending wedge. Although the descending wedge usually indicate a reversal of trend (bullish in this case), my assessment favours the downside more. Confirmation is needed in the form of a red bar to show that a bounce off the resistance has occured rather than a breakout from it.

UOB is the weakest of the 3, returning to its previous triple bottom region via a breakdown from the triangle, and subsequently a downtrend channel- All weak signs.
Will the support hold? Again i favour the downside, as the chart clearly shows that the previous selldowns were sharp, and the rebound from the support came quick also. However, the last 3 months was a sluggish and slow drift to the support.

OCBC is the strongest of the three, showing a clear uptrend amidst the underperforming bank stocks. It is in fact this that gave me more conviction of the impending selldown. 2 clue i picked up- Symmetrical triangle breakdown; A fallback to the channel after an upthrust.
My shorter term indicator also pointed out a price rejection from 9.85 resistance. A close below 9.72 is the sell signal. The significance is higher as there was a breakout 3 trading sessions ago above 9.85, and it hit the day high slightly below 10.00, which coincidentally is the resistance line for the triangle. Classical TA setup of failed breakout on the short term, and breakout on the medium term.

STI update






Looks like STI is not 'giving face' to the US side this time round. The rally has been unconvincing
for the local market at least. Although it is very tempting to buy into the year end window dressing, the techincals suggest that a flushout could occur before the buying opportunity comes. STI has been forming a H&S with declining momentum over the last week, and has traded into the MA. This is not a good sign especially if the US is showing all the 'strong economic fundamentals' that indicate recovery.

SnP is approaching 1250- the level prior to the big selloff in 2008. Will investors be haunted by the ghosts of Lehman Brothers? The technical evidence point towards a downside. For the STI, a 50-80 point break seem to be in the cards. 3152 is the support. A break further will bring the STI to the 3120s region.

Drawing reference from the SIMSCI post i made earlier, there were several attempts to cross 377.3, but the market has not held on to the level as a support. The correction may turn out to be deeper.

MSCI


The rally on Wednesday burned out many bears. I mentioned a while ago while the market was on its way up, that the media was selectively focusing on news that were in line with sentiments. The Euro crisis was a backdrop that did not receive any attention, until coincidentally when the market peak formed.

Although it came quick and scary, i conclude that it is a correction rather than a trend reversal.
My strategy for the next two weeks is to get on the long side above 377.3 while staying out if it falls below (not short). If my position is triggered, stop@ 370.9 (below MA)