Sunday, August 19, 2018

STI Analysis -- the next peak and trough ? (23)

Continued from STI Analysis -- the next peak and trough ? (22)

Not a good sign, that the comment on STI at the moment.  The continued selling and weakness has raised the possibility of invalidating the wave count that STI is in Minute wave 2 (P3I5M1M2).  In previous analysis mentioned that should STI fall below the 6th Jul 2018 low of 3176.26, it will invalidate the Scenario 1 and 2.1.  Have to retract that statement as it will not invalidate Scenario 1 and 2.1, it will just invalidate the wave count that STI is in P3I5M1M2 and back track to STI is still in Intermediate wave 4 correction which started since end January 2018.  The Scenario 1 and 2.1 still valid and can only be invalidated by EW rule that Intermediate wave 4 overlap Intermediate wave 1.  There is another Scenario 3 should 1 and 2.1 being invalidated but not getting into detail yet since STI is still in Scenario 1 and 2.1.


Above is the chart to indicate why STI still largely in Scenario 1 and 2.1 as there are many points that fit the guidelines to suggest that.

1. Primary wave 2 is the 2016 low, no argue about that
2. From 2016 to end January 2018, STI has managed to complete Primary wave 3 Intermediate wave 1,2,3.
3. Intermediate wave 3 is an extended wave with Minor 1,2,3,4,5 very clearly defined
4. Minor wave 3 ended very close to the 261.8% Fibonacci Ratio (3344 level) indicating one of the norm that wave 3 = 2.618x of wave 1.
5. Minor wave 5 completes the Intermediate wave 3 with the famous ending diagonal structure
6. The peak of Intermediate wave 3 almost hit 261.8% Fibonacci Ratio (3663 level) further evidence that Intermediate wave 3 is an extended wave
7. Intermediate wave 2 is a simple zigzag correction with a 61.8% Fibonacci Retracement while Intermediate wave 4 develops into a combination correction following the guideline of the alternate nature between wave 2 and wave 4

It just pen out a very "textbook" case for STI at the moment.




The only not so "textbook" case is the depth of Intermediate wave 4 correction.  Theoretically, if wave 2 is 61.8%, wave 4 normally ends at 38.2%.  Unfortunately, in this case STI looks like heading toward the 50% Fibonacci Retracement level of 3157 as shown in the above chart.  A drop to 50% still acceptable given Intermediate wave 2 did a 61.8% so there is still an alternate scenario.  However, the puzzling sign is what if STI Intermediate wave 4 falls to the 61.8% level at 3050 ?  Though in Elliott Wave there is no rule that states wave 4 cannot fall the same amount as wave 2 but the occurrence of that is rather rare.  Should that happen, it is not a violation but rather a rare case.  The one and only violation and that going to invalidate the above wave count is STI falls below 2960, the peak of Intermediate wave 1 resulting in overlapping.  Should that happen, STI will be in Scenario 3 as mentioned previously.

For Intermediate wave 4 correction the picture now looks like the chart below


Both the W and X wave have been formed with the W wave consists of a mini double-three combination.  Present STI is in the Y wave of the double-three formation.  For the Y wave, it can be seen as a 5-wave impulse (wave i,ii,iii,iv,v) or another mini double-three structure.  Should that be correct, the next drop to either 50% or 61.8% Fibonacci Ratio will complete the sequence.  Another interesting statistic that I discovered is :-

For Y wave to be a 5-wave impulse, the total length from start of wave i to wave v if is 261.8% Fibonacci Ratio, that will end around 3057 which is very close to the 61.8% Fibonacci Retracement level at 3055.

Hence, STI 3050 is a very interesting level to watch out for.

Added 20th Aug 2018

It is the 8th consecutive day STI closed in the red.  Despite opening positive and rose to intra-day high of 3222.84, the strength was not there.  To make it worse, the daily volume increases as STI drifts lower.  To be exact, STI is struggling to stay at the 78.6% level (3211) for a Minor wave 2 correction.  That is definitely not a good sign.  The possibility of invalidating the wave count of Minor wave 2 has further increased.  That will revert back to STI still in Intermediate wave 4 correction as described above.

Added 21st Aug 2018

9th straight days closed in the red, that what STI is now.  A gap down on open below 3200 level with a rebound to intra-day high of 3212.14 failed to hold the gain eventually closed 3199.89.  By Elliott Wave rule can't invalidate Minor wave 2 count but now it is just waiting for it to be invalidated and fall back to still in Intermediate wave 4 correction only.  There will be some event namely US-China tariff rolls out, a lower level US-China trade talk and US Fed Jackhole meeting comes end of this week.  Should all those events develop into positive and rebounded STI meaning Minor wave 2 is not invalidated, that will be an interesting situation in term of Elliott Wave count !

Saturday, August 18, 2018

Technology Stock Rally ?

Past few days technology related stocks rebounded and outperformed the STI index, this has given people the impression that they are rally.  Now are they really rally or just a rebound from oversold ?  After looking at several of those stocks, I found mixed findings.  The TA tools I'm analyzing are Ichimoku and GMMA.  Main tool will be Ichimoku and GMMA is used to confirm the trend.  Elliott Wave is not used as not all stocks follow Elliott Wave.

In Ichimoku, a bullish is defined by the following conditions :-

1. Tenkan (Conversion) line cut above Kijun (Base) line
2. Senkou A cloud is above the Senkou B cloud
3. Both Tenkan and Kijun lines are above the Senkou (cloud)

Failing to meet all the above 3 conditions have to be very careful and it may just hit resistance and resume the downtrend.

In GMMA, a bullish is defined by the following conditions :-

1. Short-term GMMA line (red) spreading out, trending up and above the long-term GMMA line (green)
2. Long-term GMMA line (green) spreading out and trending up

Any other cases meaning the up could be risk hitting resistance and down again.

AEM
Rebounded from the low of $0.64 on 13th Aug 2018, up for past 4 days on higher volume.


The Ichimoku condition for bullish is not fulfilled.  Tenkan (Conversion) line is turning up but still a fair amount of distance before it can cut up the Kijun (Base) line.  Senkou A is below Senkou B,  Both Tenkan and Kijun lines still below the cloud.  Should the Tenkan line manages to cut up the Kijun lines going forward and that happens when they are still below the cloud is not a bullish sign either.  The first resistance will be at the bottom of the cloud which is about $1.08.  The short-term GMMA looks cutting up the long-term GMMA but the long-term GMMA lines are not trending up.  For the long-term GMMA lines to trend up, it will first have to compress and at the moment there is no indication of that happening.  Another not so positive sign, as the price moves up, volume declining creating a divergence.

Hi-P
Hit a low of $0.96 on 13th Aug 2018 and since then rebounded.  Unlike AEM it was not up for the past 4 consecutive days and volume indication was weaker than AEM.



The Ichimoku bullish condition is not fulfilled.  In fact, its Ichimoku signals are relatively weaker than AEM at the moment.  No sign of Tenkan line cutting up the Kijun line either.  The only positive over AEM is the Tenkan and Kijun lines and the stock price are nearer to the cloud than AEM.  Hence, should both Tenkan and Kijun lines turning up, the possibility of a crossover could happen inside the cloud or above the cloud.  The first resistance is the bottom of the cloud which is about $1.24.  Like AEM, the GMMA signals are not bullish either.

Sunningdale Tech
Hit a low of $1.25 on 6th Aug 2018 and since then did a "strong" rebound.


Sunningdale Tech has a more positive outlook than AEM and Hi-P at the moment.  Though not all the Ichimoku bullish conditions are met but most of the conditions are there.  The only lacking is for the Tenkan to stay above the Kijun line.  The cut up actually happened back in Jul 2018.  The GMMA signals also showed more positive outlook than both AEM and Hi-P.  The short-term GMMA has cut up the long-term GMMA and trying to fan out.  The long-term GMMA is compressing and should be a positive sign.

UMS
For past days was supported at $0.74, though rebounded but it appears to lack the strength going forward


Compared to AEM, Hi-P and Sunningdale, UMS is the weakest.  The Ichimoku signals are weaker than those 3 too.  Tenkan line has cut down Kijun line on 6th Aug 2018, a bearish sign and no indication that going forward it will cut up.  The cloud in which Senkou A is below Senkou B is a relatively thicker and no sign of thinning.  On 15th Aug 2018, the price tried out move into the cloud area but was resisted and fell back, another negative sign.  The long-term GMMA line still fan out in downtrend.  The short-term GMMA lines at the moment are compressed but were below the long-term GMMA line and show no sign of cutting up the long-term GMMA line.

Valuetronics
Hit $0.62 on 6th Aug 2018 and staged a very strong rebound after it announced its 1Q18 earning.


By all means Valuetronics is the strongest in term of bullishness so far.  The Ichimoku conditions for bullish is also better than the rest, almost there.  Tenkan line has cut up Kijun back in Jul 2018 and managed to stay above that throughout.  Now both these lines are trying to move above the cloud and if that happens, the Ichimoku bullish conditions will be fulfilled.  The GMMA signals also showed more positive sign than the rest.  Short-term GMMA lines cut up long-term GMMA lines and fanning out.  Long-term GMMA is compressing which should be trending up by the look of it.

Venture
One of the index stock but unfortunately it is not the strongest at the moment.  Hit a low of $16.07 on 16th Jul 2018 but it appears to be going nowhere at the moment.


It does have a more positive outlook than UMS but still lag behind Sunningdale and Valuetronics in term of bullishness.  The only positive sign for the Ichimoku signals is that the Tenkan line has cut up Kijun line around end Jul 2018 and managed to stay above it.  They together with the stock price are trying to move into the cloud area.  Short-term GMMA line is being compressed at the moment but shows no sign of cutting the long-term GMMA line and in fact still lying below the long-term GMMA line.  Long-term GMMA line still fan out in downtrend direction.  It can become more bullish if the Tenkan & Kijun lines and the stock price move into the cloud area with the short-term GMMA line cutting up the long-term GMMA line coupling with a compression in the long-term GMMA lines.

Of the 6, Valuetronics is the strongest followed by Sunningdale Tech in term of bullishness.  The weakest UMS.  The rest I should say is a 50-50 case that they will turn bullish.