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Friday, June 15, 2012

Stock Index Chart Patterns: Jakarta Composite, Singapore Straits Times, Malaysia KLCI – Jun 15, ‘12

Three weeks back, chart patterns of the Jakarta Composite, Singapore Straits Times and Malaysia KLCI indices were reeling under strong bear attacks. Straits Times was already trading below its 200 day EMA; Jakarta had just closed below its long-term moving average and KLCI was trying to bounce up from its 200 day EMA.

Jakarta Composite Index Chart

Jakarta_Jun1512

Jakarta Composite tried to cling on to its 200 day EMA for a couple of days before dropping sharply to touch an intra-day low of 3635 on Jun 4 ‘12 – its lowest level since Oct ‘11. An equally sharp pullback found twin resistance from the 200 day EMA and the falling 20 day EMA.

Such pullbacks provide good opportunities to sell. The index has been consolidating sideways between the 3800 level and the falling 20 day EMA. A bear market will be technically confirmed by the ‘death cross’ of the 50 day EMA below the 200 day EMA.

Technical indicators have corrected oversold conditions but are still looking bearish. RSI and slow stochastic are below their 50% levels. MACD is just above its signal line, but deep inside negative territory. ROC has resumed its fall inside the negative zone. The index may fall to much lower levels.

Singapore Straits Times Index Chart

STI Singapore_Jun1512

Singapore’s Straits Times index is trying to form a ‘rounding bottom’ reversal pattern, which is clearly visible in the slow stochastic and the MACD signal line. The index is facing resistance from the 20 day EMA, and needs to move above all three EMAs to return to bull territory.

Technical indicators are beginning to look bullish. Slow stochastic and RSI have climbed towards their 50% levels. MACD is negative, but rising above its signal line. ROC is straddling the ‘0’ line. All four technical indicators touched higher bottoms as the index dropped to a lower bottom of 2712 on Jun 6 ‘12. Positive divergences in all four indicators may help to push the index upwards.

A small entry can be made, with a stop-loss at 2712.

Malaysia KLCI Index Chart

KLCI Malaysia_Jun1512

Malaysia’s KLCI index successfully withstood a bear attack by bouncing up from its 200 day EMA. But after crossing above its 20 day and 50 day EMAs on a volume spurt, the upward momentum dissipated. The index has been moving sideways in a narrow range between 1552 and 1582.

Only a convincing move above the 1610 level, backed by good volume support, can restore the earlier bullishness. The technical indicators are beginning to weaken, though they remain bullish. Slow stochastic has slipped down from its overbought zone. MACD is above its signal line and barely positive. ROC is dropping towards the ‘0’ line. RSI is sliding towards its 50% level.

Some more consolidation is expected before the KLCI can climb above 1610.

Bottomline? Asian index charts have reacted differently to the recent bear attacks. Jakarta Composite seems ready to fall deeper into a bear market. Stay away for now. Singapore’s Straits Times is technically in a bear market, but forming a bullish reversal pattern. A small entry can be made. Malaysia’s KLCI index is in a bull market, but stuck in a broad range between 1520 and 1610 for the past 5 months. Hold.

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