A Trader's Journal
After a beautiful recovery starting from 4 Feb 14, the STI is currently at resistance of 3,100 – 3,120. I would expect the Index to take a breath and consolidate for a while before testing 3,120 again. Looking at Dow Jones peaking and HSI also begins its consolidation, it will be sometime before the Indexes gain their strength to climb higher grounds.
Traders may take some profit now.
STI has broken its 1st support on 4 Feb 14 with a low of 2,953. As the index did not continue to head towards its 2nd support of 2,900 – 2,920 for the time being, we can assume that the Index is taking a rest. Currently, we can see that it is trying its best to go above 2,990 (support turn resistance). Once 2,990 is broken and the Index stays above it for a few trading days, we can say that the Index is supported. It will be good if this coincides with MACD reaching its bottom or crossing its signal line. Once this is established and if possible, wait for a retracement back near to the support of 2,990, Traders may go in for bottom fishing with a tight stop loss.
However, if 2,990 is not broken or the Index does not hold above for a reasonable period of trading days, then we can expect market consolidation to continue with no direction. The index will hover between 2,920 to 2,990.
photo credit: citron_smurf via photopin cc
Stocks were crushed Monday, with the Dow closing down 326 points to 15,732.80 and with the S&P 500 down 40 points to 1,741.89. A very weak Institute for Supply Management report on manufacturing was blamed, as was Asia.
Market technicians, or chart readers for the rest of us, are paying close attention to the current levels of the market. More specifically, the key 200-day moving average has come into play on Monday.
The indexes were at their lowest levels since late October. The NASDAQ Composite Index had tumbled 107 points to 3,997. The Nasdaq hasn’t closed under 4,000 since Nov. 25.
The Dow has been the most volatile of the three major averages this year.
The Dow was trading under its 200-day simple moving average Monday for the first time since Dec. 2012. Its 14-day relative strength index, a measure of momentum, was at 28. A reading below 30 suggests the index has fallen too…
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