Market analysis, insights and trading ideas on various markets and products!

Spencer Li

Simple chart-reading can tell you all you need to know

Leonardo Da Vinci once said that simplicity is the ultimate sophistication. Let’s take a moment to ponder that. This applies to research analysis as well. When you hear people talking about some sophisticated trading system or some flashy indicators or some complex wave projections, think again. It is more likely to be smoke and mirrors. All these tell you nothing new if you know how to read the bare charts. It’s as simple as that. Simple, and yet sophisticated. Looking back at my last few stock picks, I found that it is possible to read and understand what is happening on the charts. This makes it possible to pinpoint the low risk entry points, as seen in some of my previous posts.

https://synapsetrading.com/dbs-are-the-banks-leading-the-decline/
https://synapsetrading.com/noble-group-evening-star-signals-turn-to-the-downside/

Compare that with indicators. If you see a green arrow, do you know why it is a buy? Maybe it worked the past 3 times, but will it work this time? Maybe. Or maybe not. You won’t know. In fact, you won’t have any idea why there is a green arrow. You won’t know what is happening in the market. You won’t know what the smart money is doing. That is why chart-reading is an important skill everyone should master. Banks, funds and proprietary trading firms use it as their main tool. Maybe you should consider it too.

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Spencer Li

Noble Group – evening star signals turn to the downside | Technical Analysis | Singapore Stocks

 evening star signals turn to the downside

After the rebound for Noble, it is now setting up an evening star pattern, which is a short-term psychological pattern signalling an exit by the smart money. This trade was triggered last Friday, and I am expecting the SG markets to open down tomorrow after the bad news (or rather lack of good news) on the US markets. Since the US markets are closed tomorrow, there will be much apprehension in the SG markets, as evinced by the extremely low volume last Friday. I will be watching for more short opportunities. Good luck trading!

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Spencer Li

DBS – are the banks leading the decline? | Technical Analysis | Singapore Stocks

In my previous post, I mentioned that Genting was going to continue its decline, and currently it is below 1.50. The STI Index has closed on a new low, below the previous low of 2720. What does this mean? It means that there is a good chance of seeing new lows, either with or without a consolidation phase first. One tell-tale sign is the weakness in major sectors like the financials and O&M. Let’s take a look at DBS, one of the 3 financial giants.

DBS - are the banks leading the decline

After a classic evening star reversal early this month, DBS has gone down to make a new 20-month low, providing several good shorting opportunities (can you spot them?) along the way. The worse part is, there seems to be no immediate support level. This means that the markdown has potentially a lot of room to go, since there will be no psychological level for the bulls to rally. I would be keeping an eye out for more opportunities to go short.

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Spencer Li

Market Seasonality and Patterns – When is the Best Month to Buy?

One aspect of market analysis is statistical analysis, which is using statistics to find correlations and patterns, where opportunities of skewed probabilities may lurk, giving you an edge over the market in the long run. For investors, this lets you know the best month to start building your portfolio, or to rebalance/adjust your portfolio allocation.

Market Seasonality and Patterns - When is the Best Month to Buy?

Market Seasonality and Patterns – When is the Best Month to Buy?

Seasonality is a characteristic of a time series in which the data experiences regular and predictable changes which recur every calendar year. Any predictable change or pattern in a time series that recurs or repeats over a one-year period can be said to be seasonal.

This is different from cyclical effects, as seasonal cycles are contained within one calendar year, while cyclical effects (such as boosted sales due to low unemployment rates) can span time periods shorter or longer than one calendar year.

For the Singapore stock market, I have done a seasonality study, showing which months are more bullish and bearish. Contrary to popular belief, October is actually a rather bullish month. Every month has its unique characteristics, which skews the probability. As a trader,anything that tilts the probability in our favour is considered an edge.

Here are the results of my research:

Singapore stock market

Some key points to note: the best months for being LONG are April, November and December, while the best months for being SHORT are June, August and September.

There are many other patterns (some less obvious) which could have a significant impact on the stock market. Although your trading decisions should not be based solely on these, they can act as a powerful confirming indicator, or help you adjust your position-aggressiveness.

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Spencer Li

Market Outlook: Properties and Oil & Gas | Technical Analysis | Singapore Stocks

Market Outlook

Looking at the STI, it has certainly started off April strongly (refer to the last post), without even pausing to take a breath from the long run-up. Unfortunately, contrary to what I thought, there was no good pullback for entry. In fact, last Friday closed on renewed strength. There are 2 possible resistance zones ahead which could pause the current move, namely around 3305 and 3220.

Please take some time to answer this poll: “Are you feeling bullish or bearish about the Singapore stock market?” (click here to answer and view poll results)

Market Outlook 2

Looking at the daily chart of CapitaLand, we can see that there is an inverse head-and-shoulders formation, which is a bullish reversal pattern. It has broken the neckline on a bullish gap up, and has now broke through the previous resistance at 3.46. It looks poised to head higher, with possible resistance near the top of the downwards sloping channel.

Market Outlook 3

Looking at the daily chart of Keppel Corp, we can see that it has recently broke out of a triangle pattern, and has now formed a bullish flag/pennant pattern. Volume is on the decline and bars are small. I would enter with a tight stop to wait for a strong breakout, with a potential target of 14.00.

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