Passive Income for Life

In my last post, i mentioned about expecting the unexpected and that i was expecting a pullback. It does seem that I was right on both counts. (But to put a caution to the previous statement, almost everything can be right on hindsight, just depending on the timeframe).

1) STI did pullback right after i made the posting.

2) Today, STI retook and blasted past the high established on the 27th March. Unexpectedly.

As what Decipher have mentioned in his own blog, I think i might feel a little “cake sim” knowing that I switched my SG/Msia fund for a China fund. Of course in such a short time frame, it’s always easy to beat oneself. I console myself by saying that SSE is on an uptrend more sustainable than STI. At least a little more predictable in a way.

The recent rally has made me do a little study on my own for STI technical charts. I’m not a Elliot Wave fanatic or a good wave chartist but at least 2 traders I know have advocated the passing of the final wave 5 before an uptrend rally.

Looking back, 9th March was the time I mentioned that the support has been broken at the mid 1400 level. It was a wrong call. More aptly put, it is too early a call to make on that single day’s candlestick bar. Again, hindsight reveals it is a whipsaw, forming a close but strong support at that level.

I had some comments and personal queries on whether this is a bear rally or not. Actually, I was hoping that it would be and that the index would sink lower for me to buy in at a lower price. But the charts tell nearly everything (on a shorter time frame).

Looking at a similar sharp rally last year Oct/Nov, it rose at a nearly 60-70 degree level. To me, that’s scary but everyone seems to have forgotten about it. Now is all the talk about how STI has risen over 20% in the past 3 week though the degree of rise is about 45. To me, it seems more sustainable and less likely as a bear rally. “Likely” the keyword, not “bear rally”.

Is window dressing a contributing factor to the recent rally? I’m not too sure but my personal opinion is that there was not much to dress up anyway. Everyone knows companies will do badly somehow. Just how bad. Today, it was announced that the Singapore manufacturing sector has shrink for the 7th consecutive time in a row. Yet, STI surged. Well, some substantiate by saying that the fall is “slowing down” so it’s a “good thing”. How confusing it can get.

I’m still struggling to understand the best time frame to apply TA and which to apply FA. Short term definitely TA but how short is short? We obviously know that Singapore will most likely do well in the long run due to its governance and forward-looking leadership. But in the short run, we know it is the hardest hit as an export-driven economy.

I can write a thesis on this, it’ll wait for another time.

For now, almost certainly, I am going to watch closing the trendlines, support and resistance levels. For me, very short term (1 week?), a pullback testing uptrend line due to overbought levels. A short term (within 4 weeks?), a probable test of 1900 strong-resistance level.

Only time will tell but as we come closer to the future days above, it would be clearer then.

Time to sleep!