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Friday, February 10, 2012

Stock Index Chart Patterns – Jakarta Composite, Singapore Straits Times, Malaysia KLCI – Feb 10, ‘12

It has been almost two months since the Asian index chart patterns were last analysed, and it is quite interesting to see how they have fared during the global liquidity-led rally since then.

Jakarta Composite Index Chart

Jakarta_Feb1012

The Jakarta Composite index had been one of the best performers in 2011. Despite the sharp correction during Aug and Sep ‘11, the index did not technically enter a bear market – as can be seen from the behaviour of the 50 day EMA, which bounced off the 200 day EMA and started rising again. The ‘death cross’ that confirms a bear market never happened.

But the rally seems to have run into strong headwinds. The index has dropped to its 50 day EMA, and may fall some more. The technical indicators are looking bearish. The MACD is positive, but falling below its signal line. The ROC is below its 10 day MA and has dropped into negative territory. The RSI and the slow stochastic are sliding and are below their 50% levels.

Singapore Straits Times Index Chart

Straits Times_Feb1012

The Singapore Straits Times index technically fell into a bear market in Aug ‘11, as confirmed by the ‘death cross’ of the 50 day EMA below the 200 day EMA. The index has recovered smartly by rising above its 200 day EMA on strong volume support and formed a bullish pattern of higher tops and higher bottoms, but the 50 day EMA is still below the 200 day EMA. The big gap formed in Aug ‘11 hasn’t been filled yet, and may provide resistance to the rally.

The technical indicators are beginning to correct from overbought conditions. The MACD is positive and above its signal line, but starting to turn down. The ROC has dropped below its 10 day MA, which has made a bearish rounding top pattern. Both the RSI and the slow stochastic are in their overbought zones, but starting to slip down.

Malaysia KLCI Index Chart

KLCI Malaysia_Feb1012

The Malaysia KLCI index is technically back in a bull market. The ‘golden cross’ of the 50 day EMA above the 200 day EMA has confirmed that. After spending the month of Jan ‘12 in a rectangular sideways consolidation, the index broke out upwards on a rapid increase in volumes and filled the gap formed in Aug ‘11.

The MACD is positive and above its signal line. The ROC is above its 10 day MA in the positive zone, but turning down. Both the RSI and the slow stochastic are in their overbought zones. The rally may still have some steam left in it.

Bottomline? Strong liquidity-driven rallies have changed the technical complexion of the Asian index chart patterns. The bulls have gained the upper hand, but the bears are not yet out of the picture and may make a last ditch effort to turn around their fortunes. Use any dips to buy selectively.

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