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Friday, December 9, 2011

Stock Index Chart Patterns – Jakarta Composite, Korea KOSPI, Taiwan TSEC – Dec 9 ‘11

Jakarta Composite Index Chart

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Two weeks back, the Jakarta Composite index was under a bear attack and had slipped below the 200 day EMA. The technical indicators were looking weak and the index was expected to fall some more. But a ‘reversal day’ pattern (lower low, higher close) on Nov 25 ‘11 led to a quick rally above all three EMAs.

The rally seems to have stalled at the 3800 level. The index is technically still in a bull market, but the bulls and bears appear to be equally matched. The immediate hurdle on the upside is the Oct ‘11 top of 3875.

The slow stochastic is climbing towards its overbought zone. The MACD is above its signal line and slowly rising in positive territory. The ROC has entered the positive zone. The RSI is struggling to cross its 50% level. Expect some more sideways consolidation.

Korea KOSPI Index Chart

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The Korea KOSPI index broke the bear shackles with a sharp recovery and a gap up jump above the 1900 level to the 200 day EMA, where the bears put up a stiff resistance. The index tried valiantly for a few days to climb above the long-term moving average. It finally appeared to give up the fight today, and closed below the 1900 level.

The technical indicators are showing weakening signs. The slow stochastic is inside the overbought zone. The MACD is positive and above the signal line. The ROC is also positive, but turning down. The RSI is above the 50% level, and also turning down.

The stock has failed to get out of the bear market but is trading above its 20 day and 50 day EMAs. May not be for long.

Taiwan TSEC Index Chart

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The Taiwan TSEC chart looks the weakest of the three Asian indices. Though it recovered nicely from its two year low of 6751 and had a gap up jump above its falling 20 day EMA, it started correcting almost immediately and closed below the 6900 level today.

All three EMAs are falling and the TSEC is trading below them. It is likely to fall deeper into a bear market. The technical indicators are bearish. Both the slow stochastic and the RSI are below their 50% levels. The MACD is touching its signal line in negative zone. The ROC has failed to enter positive territory.

The Nov ‘11 low may be tested and broken.

Bottomline? All three Asian indices staged rallies, but with different consequences. The Jakarta Composite chart looks the strongest, as it is trading just above all three EMAs. The Korea KOSPI chart is above its 20 day and 50 day EMAs, but below the 200 day EMA. The Taiwan TSEC chart is the weakest, trading below all three EMAs in the depths of a bear market. Conserve cash and wait for lower levels to enter.

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