STI Weekly Update!


During the week, STI retraced 11 points (0.3%) from the opening at 3,038 and closed at 3,027.. The retracement action is a continuation of the high volume technical breakdown of descending triangle pattern as drawn on the daily chart last week. The projected level of 3,040 has been reached. This was posted last week on 26/1/14 ,

STI is currently hovering on the 3,024 horizontal support with a bullish reversal candlestick pattern. Along with the Stochastic indicator exhibiting a bullish crossover, there is a possibility of a short term technical rebound for the coming trading week. The immediate resistance to watch for is the 20-Day Moving Average resistance.


On the weekly chart, STI has negated the formation of a bullish inverse head and shoulders pattern. This is caused by the breakdown of 3,040 support level, as the level is crucial for the validity of the inverse head and shoulder chart pattern. The next two classical support to watch is the 2,980 and 2,930 classical support. It has been almost 13 months since STI traded below the 3,000 level.

January Indicator ?

The year-to-date decline in stocks points to a rough year for equities, according to the so-called January indicator, which is based on the historical tendency for the market’s direction in January to set the tone for the next 11 months.

Given that January has been a solidly down month for the market (STI -5.1%), followers of the indicator may be considering whether to unload some of their stocks off their investment portfolio. But does the month of January have special forecasting ability? That is the question I was asked earlier this week in which I threw cold water on the related notions that the full year’s direction can be predicted by the market’s behavior on the first trading month of the year.

My answer: While the statistical foundation for the January Indicator is stronger than it is for the indicators based on those related indicators, it is much more important to focus your attention on the tried-and-true indicators you would be paying attention to any other time of year.

There’s no reason to downplay their significance just because of what happens in January.

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