The Bull is Charging ...

Summary: VIX did not make a higher high value (HH) on 4 Oct 2011. Thereafter the value of VIX was lowering with each passing day. The decreasing VIX value is a sign that investors' confidence is returning to the market. In this study of market bullishness, 7 technical indicators were chosen :

1. price bars formed the higher high higher low (HHHL), zigzag upward trend
2. price bars surged above the downward trend line and resistance level
3. price bars showed gap-up day(s) pattern with higher transacted volume
4. price bars showed the upward ADX trend line
5. price bars showed the upward MACD trend line
6. price bars showed the positive CCI values
7. price bars surged above the 200MA line

Based on the above criteria, each index is given a 7-digits code, e.g. "1234567" means the captioned index has met all 7 bullish criteria, "_23456_" means criteria 1 and 7 were not met. All selected indices listed below except SSEC are displaying bullish trend. In order for the market to remain bullish until the year end, SSEC must follow the rest and turn bullish soon:

DJI : 12_4567, it surged above 200MA @11970. Watch this new support level for market reversal. Next resistance level to look out for is @12800.

GSPC: 12_4567, it surged above 200MA @1274. Watch this new support level for market reversal. Next resistance level to look out for is @1356.

BKX: 123456_, it surged above resistance level @40. Watch this new support level for market reversal. Next resistance level to look out for is @46

GLD: 1234567, it surged above resistance @165. Watch this new support level for market reversal. Next resistance level to look out for is @189.

XOI: 12_4567, it surged above 200MA @1255. Watch this new support level for market reversal. Next resistance level to look out for is @1350.

N225: 123456_, broke free from side way upper channel @8900. Watch this new support level for market reversal. Next resistance level to look out for is @9500.

HSI: 123456_, it surged above resistance level @19000. Watch this new support level for market reversal. Next resistance level to look out for is @21500.

SSEC: _23456_, it surged above resistance level @2460. Watch this new support level for market reversal. Next resistance level to look out for is @2622.

STI: 123456_, it surged above resistance level @2823. Watch this new support level for market reversal. Next resistance level to look out for is @3000

Caveat Emptor

Reading VIX Trading STI - Japan Tsunami

VIX has gaped up again last night and was at the highest level since Aug 2010. As a result, all major US indices were down big intra day following other regional market indices.

Would anyone know that the Tsunami at Japan would trigger such a market sell down? I do not think so. Was there any sign for such sell down? I believe so if the warning from VIX chart is read in the same way I do.

When the market rises to a level with more big players thinking to sell instead of buy the market, the buy orders dwindle and the sell orders start. As a result, VIX will rise and volatility will increase.

Be it technical, non-technical, political and etc, the traders (as suggested by VIX reading) were all waiting to exit the current market in a bigger way for different reasons. They just need an excuse, the catalyst, to justify their action (so as to answer to their "bosses" and shareholders). Japan Tsunami has just provided a major group of big players to lead the exodus from the market.

Will the market go lower? Yes for shorter term (at least for a week or two). The market can only stop falling when the sellers change their perception of the market. That can only be changed when the market has fallen enough to make it look cheap. Before that, the market will zigzag down. In a much longer term (in months to a year), there is a very good chance for the market to exceed the current level.

Given the above scenario, one should be able to decide to hold or to reduce his positions. The reasons for taking up the earlier positions will be the key to that decision. If in doubt, close the position and wait for the next entry signal.

Caveat Emptor, 16 Mar 2011

Watching VIX, Trading STI

The VIX  has retreated in last two sessions of FEB 2011. There may not be a drastic correction to the market for the time being. Do look out for any unusual increase in VIX level ...

Watching VIX, Trading STI

What shall I do with the current market? Should I pick up the recommended bargains or wait and see. Since the traders' fear and greed remain the same irrespective of time and market, the relevant historical VIX chart and the indexes were checked. There are four charts in the attached JPG file:

Chart 1 - US VIX 2011 Volatility Chart (top right)
Chart 2 - US VIX 2007 Volatility Chart (bottom right)
Chart 3 - SG STI 2007 Chart (top left)
Chart 4 - US DJI 2007 Chart (bottom left)

In Chart 2, the spike in VIX on 27 Feb 2007 (Monday) was the triggering day for substantial market correction for the week that followed. The results were :

a. DJI (chart 4) fell from around 12625 to around 11980 (-5% or -645)
b. STI (chart 3) fell from around 3300 to around 2930 (-11% or -370)

In Chart 1, the latest VIX 2011 ending 23 Feb 2011 shows two candlesticks for the latest 2 trading days, i.e. on 22/2 and 23/2. The 2 gaped up bullish candlesticks look suspicious and may be signalling the substantial correction is on its way. The current turmoil in Africa and Middle East provides good excuse for the big players to sell the market as part of the market play. The probability is high.

STI has corrected quite a bit (-307) since the beginning of 2011. Support is seen at around 2900. Should US market fall big as expected, would STI fall through the 2900 support? It is hard to tell but is likely. With uncertainties looming before us, it may be better to stay at side line and wait for clearer signals to pick up any bargain.

Caveat Emptor.

NB: VIX chart is used by some traders to get a feel of the fear in the traders. The higher the VIX value, the higher the fear in the traders. When the fear is high, traders will sell the market.

MARKET TREND & VIX - 2010 MAR

VIX

Since 5 Feb 2010, VIX has been falling from its pivotal peak (29.22 points). It gaped down further on 5 Mar 2010 to 17.23 points as market confidence regained ground considerably. Two possibilities may happen in the following week:

1. Based on the on-going momentum, market will continue to build confidence and lower VIX further to such a level testing the 12 months low of 16.86 set on 11 Jan 2010.
2. It is time that VIX may undergo some degree of technical correction after falling more than 40% from the last peak. If the 2004 pattern were to repeat, this technical correction (rising VIX) may last some time, possibly around 3 weeks.

S&P500 (GSPC) Projections

In first scenario, S&P500 will move up possibly making new high when VIX falls further. That will be good for all the bulls. Once 1150 is broken (unlikely but market will decide), the target could be 1180 and beyond.

In second scenario, On the contrary, S&P500 will dip and consolidate when VIX goes through a technical correction in the coming weeks. The target is around 1050.

Key Observations

Do note that the gap down of VIX on 5 Mar 2010 was similarly observed on 23 Apr 2004. The latter VIX gaped up on subsequent day and formed an imperfect "Island" (candlestick terminology). The "Island" is known to be a turning point for trend reversal.

STI

Will STI dip below its 200 days moving average (similar to 2004 pattern) ? If scenario 2 in above US market were to take place, STI is likely to fall towards its 200 days moving average and below similar to 2004 pattern. In that scenario, the STI target will be around 2300.


Possible Action

1. If one is unsure of the risk and return involved, do not take any position.
2. If one feels the market is bullish, take appropriate position, monitor the market closely and act decisively accordingly to trade plan.
3. If one feels that 2004 VIX pattern will repeat in 2010, wait for confirmation signal and take the appropriate position to benefit from it. Do not trade without a proper trade plan.

Market Trend 4Q 2009

V Shape or W Shape recovery? It does not matter!

If S&P500 and VIX were to repeat their chart patterns in Sep/Oct2003, VIX will rise to around 30 in next 5 to 10 days whilst S&P500 will briefly fall to below 1000 level and possibly find support at AROUND 975 level. Thereafter S&P500 will continue its longer term rising trend in zig-zag manner, i.e. peak around middle of the month and bottom at end of month or beginning of the subsequent month. That up-trend move will be accompanied by VIX which is likely to fall to its 50MA level or lower until the first two months of the following year.

The 2003 historical chart for China market may not be relevant as the China market conditions then were very different from the current one. As a reference, China's SSEC declined continuously from Jun03 to Nov03. Thereafter it rose none stop until Apr04. SSEC is currently in down-trend move heading towards 2500 support level.

Strait Times Index (STI) is likely to remain steady and consolidate its current level waiting for the right market mode to resume its uptrend move. It may be possible to surpass 2800 level in that move. The impending up trend will likely be lead by the Finance sector. Bargain hunting at around 2400 level for mid and longer term play is likely to see profit margin of around 15% .

Cautions: There is one certainty in market forecast, i.e. the market will not listen or follow any market forecast. Do have an exit plan on hand for any position entered just in case the market behaves differently from the expected move. Caveat emptor. 28.09.2009.

V型或W型股市复苏？我不在乎！

如果标普500指数(S&P500)和波动率(VIX)重复他们的2003年9月/10月图表形态，VIX将在未来5至10天上升至约30点的水平，而S&P500将简要跌破1000点的水平，并可能寻求975点左右的支持水平。此后，S&P500将在锯齿的方式继续其长期上升趋势，即将于月中达到峰值和于月终或随后月初达到底部。这种上升趋势将伴随着VIX下降到50天移动平均线的水平左右或以下。此趋势将持续到次年2月。

中国指数的历史图表可能不管用。这是因为当时的中国市场和目前的条件不同。以下数据是作为参考使用:中国的证综合指数(SSEC)2003年6月至2003年11月不断下降。随后指数不停攀升持续到2004年4月。SSEC目前正处于下降趋势并将走向2500点的支持水平。

海峡时报指数(STI)很可能保持稳定和巩固其目前的水平并等待合适的市场时机冲刺。在这一冲刺中它可能会超过2800点水平。迫在眉睫的上升趋势将可能由金融股带动。若在大约2400点逢低买盘，其中期和长期利润可高达约15％。

注意事项：市场将不会听从或遵循任何市场预测。为防市场趋势和预期的不同, 进场时必须备有减损策略。买者自负。 2009年9月28日稿

美国牛市分析

以下只是我个人的意见。买者自负...

在过去3个月，波动率指数(VIX)保持在低于35的水平似乎已达到稳态状况。这是一个好消息，因为投资者信心已得以恢复，市场相当的份额将逐步增长。在这进程中股价将不时会有技术调正。

虽然美国金融机构指数价最近上升了不少，它还是有上涨的空间。这可以从GSPC（S＆P500指数），^XII（美国证券交易所体制指数）和^ BKK（KBW银行指数）上周五收盘时都创下新高。以下3只股提供了在这一领域股票部分观点：

花旗集团（C，最后闭市价于4.70）当上一次其价格在2007年7月滑低于200天移动平均线（或200D MA）后，在过去2年一直被视为长期看跌股。于今年8月20日，C的股价跨越200D MA，显示了长期趋势的变化。于8月21又取得新的6个月的跳空高峰日。虽然价格摆动指标（Price Osc）和股价显示反差，而前一交易日又是一个看跌墓碑十字星，可是在短期内，它的看涨迹象强于看跌。看涨迹象包括CCI上升，交易量的增长和过去连续两个交易日是积累日。眼前的目标 是5.50，如果股票以周五的收盘价买入，这将是17％的利润。如果用期权交易，可得较高的利润率。这些较高的利润取决于所选的期权执行价格，执行期限和选择的期权策略。 C的价格有可能上升到7.50这将是下一个价标。为了保护贸易的资本和利润，如果价格跌破低于上周四的高点4.50，这一新交易应该平仓。当盈利开始增长时，“斩仓“出售价也应逐步调高。这宗交易只可在股价高于4.51后才进行。

万事达卡（MA，最后闭市价于207.25）是另一个有吸引力的股票。上周，MA从近期高峰价209.27回跌6.5％后又回升。它于8月 21日开市时跳空。其闭市收盘价是过去12个月最高的闭市收盘价。其他看涨的迹象包括：在过去两个交易日连续积累日和艾略特5波的PTI@57。眼前的目标是220。如果股票以周五的收盘价买入，这将是6％的利润。建议这里用期权交易可得益于其有限的风险和更高的杠杆收益。我比较喜欢用近期期权，选择delta 值约 0.2或以上。为了保护贸易的资本和利润，如果价格跌破低于上周四的闭市收盘价203，这一新交易应该平仓。这宗交易只可在股价高于上周五的闭市价后才可进行。

VISA卡（V，最后闭市价于69.0）被视为是MA股票的姐妹。同样的交易法可以使用。眼前的目标是75.0。如果股票以上周五的的收盘价买入，这将是8％的利润。建议这里用期权交易可得益于其有限的风险和更高的杠杆收益。

美国市场的牛市无疑将增加已经看好亚洲市场更多的信心。我喜欢的新加坡股票也是在金融部门，尤其是新加坡发展银行和新加坡交易所。