Philip Chua Business Blog

Posts Tagged ‘volume’

THERE was very little to distinguish yesterday’s session from Tuesday’s – the Straits Times Index (STI) rose, the broad market was mixed, volume was low and dealers who decided not to go on vacation spent the whole day wondering if perhaps they had made the wrong decision.
Other features reminiscent not just of Tuesday but also of previous days included a relatively heavier concentration of effort… more

Rallying, with record volume on EBS, a lot more than we had allowed for after touching a multi-year low at 84.82, so that this now looks like an ‘extension’ and ’spike low’. This suggests that the ‘channel’ will hold for many months to come, though keeping the downside bias thanks…

A PUSH on the three banks in relatively thin volume initially helped send the Straits Times Index up 40 points to 2,785 yesterday but afternoon concerns triggered by a firming US dollar and the associated worry over how Wall Street might react brought the index down to 2,758.79 for a closing gain of just 13.75 points.
Excluding the STI components and derivatives, there were 215 falls versus 144 ri… more

A 70-POINT rise in the December futures contract on the Dow Jones Industrial Average, a 1.7 per cent rise in Hong Kong’s Hang Seng index and a firm opening Europe-wide yesterday led traders here to bet heavily on Wall Street opening the week with a bang. The subsequent buying targeted mainly banks and propelled the Straits Times Index up 56.62 points to 2,783.85 in moderate volume of 1.85 billion … more

HELPED by a push on SingTel and property stocks, the Straits Times Index yesterday gained for a fourth consecutive session, up 13.8 points to 2,642.23 despite weakness in Hong Kong that cut 1.04 per cent off the Hang Seng Index. Penny stocks were very much in focus once again – volume traded excluding foreign currency issues was 3.3 billion units worth $1.8 billion or about 55 cents per share.
The… more

(SINGAPORE) The value of tangible assets may change in a recession but the intangibles are what matter more in such times.
This is likely the underlying cause of the phenomenon that has taken the jewellery industry by surprise.
In spite of the downturn, the sales volume of jewellery for special occasions such as engagements, weddings and anniversaries has kept up and, in some cases, even increase… more

Since the past few weeks, a lot of “experts” has been calling the recent rally a “Bear Rally” that don’t have volume and won’t last long…

The question is: “Are they Correct?” Perhaps they are right but the main reason that they are making this statement may not hold water after all. The main reason that most “experts” are citing is : The rally over the last six weeks simply lacks the buying volume we need to see for the effort to be a new bull market.
Let’s look at some comments below from Pacific Shores Investments, LLC
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Reality Check

Charts don’t lie – the bullish volume since early March hasn’t been nearly as weak as these forecasters have said it’s been (even if Monday’s selling volume was really strong).

In all fairness, it’s not been ‘through-the-roof’ volume. But, it’s been persistent – the market has rallied on worse.

The nearby charts of the NASDAQ and the Dow (with volume data) tell the story. Green volume bars are bullish, while red volume bars are bearish. Though neither index gets points for consistency, it’s not like there’s been no bullish volume. In fact, the green bars started to get quite tall last week.

You can also see the volume over the last six weeks – during the rally – was no greater or worse than the selling volume we witnessed in February.

Oh, and if you’re eyeing the middle to latter part of two weeks ago as a potential lull in bullish volume, remember, the market was closed on Good Friday. Plus, the Thursday before that holiday was effectively a half-day since many traders started the long weekend a little early. That wasn’t a decline in buying volume… it was a decline in any activity.

So, the question we ask is simple – what do these pundits mean when they say the buying volume has been too light for the market to be at the beginning of a new bull market? It’s been far stronger than they act as if it’s been.

Our posed question in this forum is rhetorical, but if we get a chance to ask the same question (and to demand specifics) we will. We encourage you to do the same. Until then, keep these charts in mind the next time you hear these guys make their case…. have they actually looked at the data?

Just for the sake of argument though, let’s compare the last six weeks to the beginning of prior bull markets.

Why? Basically, the same folks are telling us this big move off of March’s lows isn’t like the beginning of other recoveries. This time, we’re lacking the volume (surprise, surprise) that we’ve seen with previous rebounds. Therefore, they feel, this can only be a bear market bounce.

Our question – again – is as simple one…. what prior rebounds are they talking about?

Yes, there’s got to be some volume to kick-start a new bull market, but if you think we saw some miraculous volume with the bull markets that began in early 2003, or in early 91, or in late 87, or in 1985, think again. The last time we saw significantly measurable ‘accumulation’ at the onset of a bull market was in 1987, and even that instance wasn’t terribly decisive. If anything, the last six weeks look very much like the beginning of prior bull markets.

Bottom line?

We’re not saying these gurus are wrong; we’re just saying their arguments and opinions are without foundation even though they may believe they are. Respectfully, we ask them to get specific. Otherwise, we can only assume the trend in place is the one that will persist.

Just some food for thought regarding media commentators. It doesn’t take substance or reason to put on a good show.
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And let’s look at some technical analysis from DMG & Partners Charts & Comments…
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Our contrarian call that most market indices would encounter a pullback during the previous week did not materialise. On the local front, the Straits Times Index (FSSTI Index) extended its charge on high volume to eventually chalk up a 3.7% weekly gain. Given these developments, we now believe that the index is still riding on a Wave 1 which is expected to translate into further upside.

Retracements to be regarded as healthy pullbacks. While the 14-day RSI is approaching overbought territory, we believe that any profit-taking seen in the index should be seen as healthy pullbacks. As with the previous three instances (once in Mar 09, twice in Apr 09) when the RSI was close to or at the overbought mark, the STI did give back some ground although the ensuing rally had more than made up for it – the STI had appreciated more than 300 points since the end of
Feb 09.

Initial but weak resistance at the 1,959 level would first serve to cap any additional upside, although we do expect this barrier to be broken. Following which, the momentum is expected to drive the STI up to around the 2,000 mark where stronger resistance at the 1,991 – 2,037 range is located. On the other hand, any retracements seen within the STI should be limited to the 1,836 – 1,848 range which a technical gap resides.

Continues to rally. Our earlier forecast that Wave 5 may have ended when the Shanghai Composite Index (SHCOMP Index) hit the 2,456 mark during early Apr 09 was on the wrong track as a runaway gap manifested last week to propel the index to another week of gains. Presently, we believe that Wave 5 may still be play and therefore we are expecting further upside to occur for the index.

Longer-term trend is also bullish. With the 14-day RSI remaining below the 70 level, the index does not appear to be overbought. Additionally, we also note that the index had produced a clear break above all its longer-term moving averages (50, 100 and 200) – this suggests a rather bullish trend as the last instance when a break above its 200-day moving average had taken place in Dec 05, the ensuing rally saw the index appreciate by more than 3,500 points before breaking back below the 200-day MA.

The 2,625 level may be viable. After having more than fulfilled the 100% extension move of Wave 1, we believe that the next price target for the current Wave 5 would be the 100% extension of Wave 3 at 2,625 [ derived from 1.0 * (2,402 – 1,814) + 2,037 ]. Coupled with the daily high seen on 11 Aug 08, we therefore indentify resistance at the 2,601 – 2,625 region. Meanwhile, support at the 2,444 – 2,464 range is expected to deter any potential pullbacks.

Switching our views. We had previously mentioned that we would be adopting a short-term bearish stance on the Dow Jones Industrial Average (INDU Index) until the 100-day moving average is broken above. Now that price action has produced such a phenomenon during 16 Apr 09, we believe that the index may be poised to extend its gains despite the spectacular rally it had experienced off its Mar 09 lows.

However, a short-term breather may be at hand. The MACD chart is showing some signs of flattening out. While this may indicate that the index may be entering a consolidation period which might see some of its gains being tapered off, note that its moving averages are still firmly above the centreline – this indicates that the underlying trend remains bullish. Furthermore, the lower bollinger band is also turning up sharply, reflecting support levels are being elevated up higher progressively.

Wave Count suggests a target around 9,000. The current Wave 1 should still be at play – we peg resistance at the 8,996 – 9,015 area, courtesy of the 38.2% fibonacci retracement of Wave C at 9,015 [ derived from 0.382 * (13,136 –,6,469) + 6,469 ] which roughly coincides with a certain daily high seen during early Jan 09. Should the index enter a consolidation period, however, any probable short-term downside would find initial support at the 7,750 – 7,798 range while further support is also available at the 7,540 level.

Similar to the DJIA, the S&P 500 (SPX Index) has also produced a clear break above the 100-day moving average –we therefore also believe that its gains could be extended. As with the chart of the DJIA, the bollinger bands within the S&P Index are also turning up while the MACD technical indicator is also emitting signs of flattening out, although it nevertheless remains above the centreline. In summary, we believe that the S&P Index could therefore similarly consolidate before making a substantial push further.

Currently also in a Wave 1 that has yet to run its full course, a probable price target for the S&P Index would be the 961 mark [ derived from 0.382 * (1,440 – 666) + 666 ]. As a series of daily highs also reside at the 951 level, we therefore identify resistance at the 951 – 961 area. Support levels, meanwhile, are seen at the 828 – 831 and 814 levelsrespectively.

Primary Wave Count was incorrect. Ironically, our alternate Wave Count for the Hang Seng Index (HSI Index) turned out to be the correct one. We had previously wrote that a break above the 15,147 – 15,258 area would see price action fully retrace Wace 5 of C at the 15,763 mark – this scenario would also indicate that Wave 1 was still up and running.During last week, the HSI had actually cleared both these levels to eke out a 700-point weekly gain.

Momentum remains positive. Wave 1 appears to be still up and running, implying that additional upside may be forthcoming. Furthermore, the 14-day ADX has also trended up, indicating that the current (bullish) trend is
strengthening. We therefore would be altering our previous bearish view and are now forecasting the HSI to ascend further.

Key levels to note. We see resistance at the 17,090 – 17,141 region as depicted by the confluence of the 38.2% fibonacci retracement of Wave C [ derived from 0.382 * (26,387 – 11,344) + 11,344 ] and the trend high recorded during 14 Oct 08. Support levels have been outlined by the two respective technical gaps, residing at the 14,987 – 15,140 and 13,788 – 13,953 areas.
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Dear Friends,

Well, it pays to be optimistic as what goes down may eventually comes up after all.

If you are a investor like Warren Buffet, the Ups and Downs of the market should not bother you too much as your investment horizon should be long enough to ride out all these noises in the market. Just ensure your portfolio is fundamentally sound with good companies in it.

But if you are a trader, be careful of what the “expert” says and comments; “experts” are also human and human mistake is rather common nowadays.

Ok, let’s be optimistic and start investing in the long run whenever there is opportunity with any downside correction. Like many have commented, this is a one in a century crisis; I reckon this is also one in a century opportunity to make huge gain in the market over the next few years.

Stay Cheerful and be optimistic, we may indeed see a recovery by end of 2009. Even if we did not, stay invested in the long run and do not be too worried about the Ups and downs. The Truth is : Market Will Recover…

Talk to you again,

Sincere Appreciation,

Philip Chua, ChFC CFP FChFP
IARFC AMC B.BUS (Hons)

Mobile: +65-9748-4828

http://www.philipchua.com/

Twitter Me @phichua