SINGAPORE STOCK MARKET NEWS
China stocks mostly in correction mode

28Aug06
Many readers asked what happen to me la past 2 weeks.
Sorry, have been busy at work recently and have not provided market update for sometime. But I don’t think I have missed much since my last update on 3aug. I mentioned that I expected market to see some correction after rallying for 2 to 3 weeks from mid-July, where the rally was supposed to end in the first week of Aug06.

If we look back, although the STI index recently peaked on 18aug, many hot china stocks have actually peaked much earlier as I expected.

To name just a few, for example,
Celestial recent peaked 3aug 1.65
ChinaSun peaked 3aug 0.89
ChinaSky peaked 2aug 1.10

Of course some stocks continued to reach new highs after first week of aug but these are selective stocks with company specific newsflow or events (eg. results or conferences). On the broad market sense, I hope I have provided some useful insights (and also warning) to my readers for this on-going correction, especially for broad china stocks.

If we look at the STI, despite hitting recent higher high on 18 aug, STI actually showed slight negative divergence because STI hit higher high BUT the stochastics showed lower high. This MAY BE a sign of peaking and possible correction soon.

And if we look at most second liners and china stocks, many of their volume is now only a fraction of what they were few weeks ago. And many of them HAVE NOT reached oversold levels yet.

So I decided to be patient and wait lor ! Wait until we see MANY hitting oversold levels then I will feel more confident of re-building positions.

By the way, I have added one new feature (shout box) in the blog. Feel free to ask questions or post comments directly inside the box. So that readers can interact with each other.

Happy Trading.

SINGAPORE STOCK MARKET NEWS
Overbought signals in place but not distribution signals ……

3august06

Slight profit taking today is expected since many stocks have moved from oversold into overbought levels (stochastics). When we see a Group of stocks moved into a particular position eg many now in overbought levels, the odds of a correction is high. As long as the correction is shallow and on thin volume, the market may still have a bit more upside since many stocks have yet to release results.

I have mentioned earlier that we are in the 3rd week of upward move which started mid july. Again, based on historical data, the mid july rally usually loses steam after 2 to 3 weeks.

Also, I have not seen the negative broad base distribution signal yet (ie volume expansion, day range expansion and close near day low). If we see that, beware !!

Until that happens, specific stocks may still have upside potential. As more and more stocks report their results, we should see the market beginning to lose its momentum. I believe expectations on many stocks are high, so even if they report good numbers, there will not be many upgrade reports.