Key insights from 3 major indices – STI, Nikkei, Dow Jones

The Dow Jones has found support at the bottom of the channel, and this could mark the end of its decline and the resumption of its slow creeping journey upwards. The Dow heading upwards could improve global sentiment and give a boost to all indices worldwide.

After the steep drop from the earthquake disaster, the Nikkei has found support at the previous low. The fall has stabilised with a couple of harami inside bars, with one of the bars being a hammer. With Warren Buffett stepping out to encourage buying, it suggests that the situation in Japan is much under control now.

The STI is coming out of the oversold zone, but the question is whether one should buy on dips or short on rallies. Looking at the recent price channel, it is clearly sloping down, and price is under the 200-day moving average, a common gauge of bullishness/bearishness, and in this case bearishness. Based on my trend-following approach, I would avoid going long against the trend. However, neither would I go short now since the reward/risk is unfavourable. I am anticipating this week to close up, but would prefer to see at least a higher low form before considering going long.