Turning point reached in market rally

I was planning to write a blog post last Friday to point out that both the DOW and S&P 500 have almost reached the 61.8% Fibonacci retracement level as shown the chart of the S&P500 above. Technical analysts believe that the Fibonacci retracement levels are potential turning points in markets as mentioned in my earlier [...]

Is China a leading indicator? Part 4

I have been tracking the Shanghai Composite Index on this blog since August 2009, when it made a sharp 20% correction. When I last looked at the Shanghai Composite Index on December 22, 2009, it looked like it was on the verge of breaking the long-term up trend line that started from November 2008. It [...]

Year of the Tiger: expect loud roaring

Last Sunday, 14 February 2010 was the start of the Chinese Year of the Tiger. I received lots of emails and text messages from my Malaysian friends with wishes like “May you have a roaring start for the Year of the Tiger” or “May your year ahead roar with success”. I am not superstitious but [...]

Do investors need trading tools today?

I must admit I was a little skeptical when I was invited by ino.com to trying out their suite of tools for traders, which they felt would be useful for readers of this blog. My initial thoughts were that their tools are probably not going to be applicable because SMSF trustees are long term investors, [...]

Should Australian investors worry about the European debt crisis?

Apparently not, if you read the local financial news. While the problems with Greece continue to dominate the headlines on international news portals, our headlines are focused on Australian company earnings. Yesterday the stock market celebrated our low unemployment rate and Rio Tinto’s great earnings report. After the Australian market had a 9% correction which [...]

Is the DOW in trouble?

Watching the stock market action in the past week for me has been more exciting than watching the Australian Open. The most “entertaining” market is none other than the venerable DOW (see chart above) which comprises of the 30 largest companies in the US. Just one day after making a new high, the index fell [...]

2010 Bear Market Strategies

I was surprised when I found out that the top keyword search phrase for my blog this month was “2010 Bear Market Strategies”. Due to the lack of bearish articles on Australian sites, my little old blog appeared in the top 2 listings on the Google search results! For the few bears out there (according [...]

Is China a leading indicator? Part 3

Today as I looked at my list of world stock market indices, every major market index in US, Europe and Asia was up, except one – the Shanghai Composite. At the time of writing of this blog post, it was in the red by 0.59%. I guess China did not get memo about the Santa [...]

Where is the AUD headed in 2010?

Yesterday, the Aussie dollar index broke below a key technical support level of 89.89 which was the most recent low on 28 Oct 2009. From the chart below, you can see a “head and shoulder” chart pattern (not a classic textbook one as there appears to be three right shoulders). The “head” is marked by [...]

Using volume to validate price

In my earlier blog posts in the technical analysis series, I focused more on prices which obviously dominate what we see on price charts. Chart patterns like the head and shoulders, Fibonacci levels and trend lines are all very important in helping us forecast where prices are likely to go. Another important indicator that I [...]