As of writing STI is down 2.2% at 3185 on 6th Jul 2018. Investors might be shouting where is the bottom for STI after today big drop but today presents a clearer view of STI to me.
First, I have re-adjusted the correction wave count. In previous analysis, I mentioned about a triple-three but after the re-adjustment, STI still doing a double-three. This is because I used a more consistent 3-3-3 (w-x-y) structure to define the pattern. Normally for the x-wave most people treated it as a simple zig-zag (a straight line in most case) but in Elliott Wave the x-wave is defined as "Any Three" that is it could be a simple zig-zag, a simple flat or a simple triangle). As such, the 2nd drop to 3338 is W-wave, the peak in April is X-wave and now STI is in the Y-wave. This is the wave count for Scenario 1 and 2.1
The blue-colored Fibonacci Retracement level is for Intermediate degree Wave 4 correction measured with respect to Intermediate degree Wave 3. The red-colored Fibonacci Retracement level is the depth of the current correction starting in January 2018. The red colored down trend channel is the Y-wave for this correction (for Scenario 1 and 2.1).
In last analysis after from introducing Scenario 3, I have pointed out 3 regions (R1, R2, R3) to monitor. Today STI fell into region R1, also the bottom of the red-colored down trend channel, near the blue-colored 50% Fibonacci Retracement level and the red-colored 161.8% Fibonacci Retracement level. These 2 levels have some significant meaning if you know how Elliott Wave is functioned. The region R1 as I mentioned in last analysis could be a possible bottom. Should STI not breaking down of the channel then the possibility is there. Should it break down then STI looks like shifting to Scenario 3.
STI 3338 (as circled in the chart above) is of another significant meaning for this correction. This is the breakout point for the down trend channel or to me a first level confirmation of the correction is done. The more interesting part is the green line I added inside the down trend channel. The green line might make no sense to most but is a signal to me. Should STI not breaking down of the down trend channel and able to move above the green line next week, to me is a sign that worse is over or bottom has been reached. What can caused STI to move back above the green line next week ? Bargain hunting and gust of short-covering.
In the last analysis there was a reader who posted a comment on "paralysis through analysis". Actually, I do not quite understand what he is trying to say from that. I presume he is referring to the many scenarios that I have put up. Well let put it this way. Whether it is Elliott Wave principle or any other Technical Analysis indicators, these are all just tools in analyzing. One has to plan and strategize of how to use this tool to your advantage. For each of the scenario that I have put up, I have a strategy of what I suppose to do. Should that scenario become invalidated and fall back to another scenario, I also have a strategy of what to do during the transition phase. So in a way, it is not "paralysis through analysis". If you have followed the monthly portfolio tracking in my blog, you can sometime find I acquired some share at $0 through strategic action. This is the result of having many scenarios with each having a strategy being planed out
After more than 2 decades in stock market and having paid school fees to the market in the early phase, the one and most important lesson I learned is "You read the market and not let the market reads you". The only way to do that is to have all the possible scenarios and each one tag a strategy along.
Added 10th July 2018
As of now STI is 3272 and moves back above the green-colored line within the down trend channel. Should it able to stay above that for rest of the week, this should be the first sign that last Friday was the bottom. A breakout at 3338 will be the first confirmation of the present correction is over.
STI closed 3274.83 on 10th Jul 2018, above the green-colored line within the down trend channel. More interesting is 3274 is the red-colored 123.6% Fibonacci Retracement level for this correction depth.
Added 11th July 2018
Second salvo of the US-China trade war, STI was down to hit an intra-day low of 3220 but closed at almost intra-day high of 3249.08. More importantly, the drop to 3220 hit below the green-colored line within the down trend channel but closed above it. A very encouraging sign as consistently staying above that line will be positive biased to the upside.Added 12th July 2018
STI closed 3253.01 staying above the green-colored line within the down trend channel. There is suspicious that the present correction has bottom on 6th Jul 2018. Apart from the breakout at 3338 level to confirm, another method is going into the sub-level of Elliott Wave ie the Minor and Minute levels to track for it.
The chart above pen in a textbook case of a complete Elliott Wave Minute degree cycle of Minor degree Wave 1 of Intermediate degree Wave 5 of Primary degree Wave 3. Coupling with the Fibonacci Retracement level, this forms a textbook guide for the possible trajectory of signaling the correction is already bottomed. While the actual STI performance going forward might not be precise to the Fibonacci level as shown in the chart, the overall pattern should be the same (maybe minus the correction wave a-b-c) if indeed the correction is over. This would be a useful guide to track the progress of STI going forward.
