Saturday, March 2, 2019

STI Analysis -- the next peak and trough ? (40)

Continued from STI Analysis -- the next peak and trough ? (39).

On a bigger picture, there isn't any change to the wave count of STI but on at lower level in particular the Minor degree, there appears to develop an alternate scenario.

The above snapshot was from the previous analysis whereby STI is now in Minor wave 3 with target to be 3633.006.  This wave count so far still remain valid as no Elliott Wave rule violations were found.  The only suspicious thing is the sub level Minute degree wave count.  Should this case be valid, the Minute degree wave count should be doing Minute wave 2 correction with possible target to be around 3105 (61.8% Fibonacci retracement from 3286.08).  However, the time line for this scenario appears to be getting a bit long for a Minute degree.  This result in an alternate scenario for Minor degree.

The above is the calculated Elliott wave count for the alternate scenario.  The difference between this and the previous is wave 5 extension.  For this scenario, Minor wave 3 ended at 3286.08 with STI now undergoing Minor wave 4, either completed at 3202.02 or still ongoing.  Thereafter, it will continue the Minor wave 5. 

The above chart shows the 2 scenarios (blue = previous and red = alternate).  For the alternate scenario to remain valid, M4 cannot overlap M1 (3192.88).  In Elliott Wave unlike wave 1 extension, 5th wave extension is not uncommon just that it is usually overshadowed by 3rd wave extension that all.  In fact, one of STI component stocks, Genting just completed a 5th wave extension when the price bottom out at $0.855 to hit $1.13.

The above is the snapshot of the wave count of Genting doing a 5th wave extension.  The difference between 5th wave extension and 3rd wave extension (or normal wave count) is the Golden Ratio.  In 5th wave extension the Golden Ratio is 0.382 : 0.618 instead of 0.618 : 0.382.  That the part of the Elliott Wave Calculator in which all possible scenarios could be accounted for.  The corrective wave count for Genting as it is still ongoing have to be blanked out to prevent people trying to take advantage make a quick punt of profit for it or fish for the bottom.

Now, since STI has 2 possible scenarios to complete the Minor degree wave count, all perspective views have to be taken to try to make sense which of the 2 scenarios is the most possible case.  STI is made out of 30 component stocks, by examine the behavior of these 30 stocks could provide some clue as to which scenario STI Minor degree is heading.  More of the 30 index stocks are already in corrective wave with possible coming to an end or completed their respective correction.  Selective few on the other hand are still have a bit of upside to go before their respective correction kicks in.  No explicit detail of which of the 30 component index stocks belong to which scenario shall be present here to prevent others from taking advantage to short punt for profit or bottom fishing.  This situation could signal STI corrective phase could be bottoming out.  This shall suggest STI is more biases towards the 5th wave extension scenario whereby it is now either in Minor wave 4 or just completed that -- downside limited.

The top figure is the STI REIT index chart showing it is doing a wave 5 phase now.  The bottom is the snapshot of the Elliott Wave Calculator of the Elliott Wave count for STI REIT index.  The 2016 - 2018 wave count ended very much conform to the Golden Ratio of 0.618 : 0.382 ( 0.634 : 0.366) and the present wave count indicates a wave 5 possible target.  Again, the after wave 5 correction calculated data have to be blanked out to prevent people from taking advantage to punt for quick profit or trying to fish bottom.  Why STI REIT index ?  Apart from some of the STI component stocks are Reits, STI REIT index most of the time serves as an opposite indicator to the direction of STI.  This is mainly because of risk on and risk off perception.  Money will switch out of Reits (a defensive option) to stocks when risk is on and vice versa.  The short-term peaking of ST REIT index could signify a possible bottoming for STI which justifies the corrective phase STI is in now.

The question now is whether STI is in a Minute 2 or a Minor 4 correction.  Though no rule violations so far for both scenarios, it appears STI is biases towards the Minor 4 case as majority of the STI index stocks appear to be near the corrective bottom and a time line suspicious for the Minute wave count in the previous wave count.