Singapore Stock Exchange (STI) Technical Analysis – 20 Dec 2012

In the previous technical analysis of Singapore Stock Exchange (STI), we gave two possible scenarios, one bullish and another one bearish. In this article, we follow up on this technical analysis with the updated stock charts. Going back to the last review published in April 2012, we ended that review with these words

Although I do anticipate S&P 500 to reach 1475, it may not be enough to push STI beyond 3200. Also remember that two long term resistance lines are converging around 3200 region.

Point to note that 3200 is a likely target for both the Primary and Alternate count and thus, it is a very likely near term target.

The Singapore Stock Exchange has now hit 3180. The question now is where is the stock market going to head to next. Let us start by reviewing the longer term stock charts again. The below chart is the Primary count and the count itself has not changed much from the last update in April 2012. The timing though was off as I had anticipated the 3200 level to be reached much sooner and I had thought that 3036 was the end of the correction for Major wave 2.

The Primary count calls for an end of Primary wave [B] in Oct 2010. This means that the stock market is in Primary wave [C] with the Major wave 1 completed in an Expanding Triangle and Major wave 2 in progress in a complex w-x-y-x-z. There is an important point to note. The Singapore Stock Exchange has broken the long term resistance line that had formed since 2007. In fact, it retested the resistance line which appears to have provided support. This is a bullish move. But, I’m still of the view that the top side is limited as the momentum is extremely weak and the waves are not strong impulsive waves that can be expected to bring the stock market to higher levels. Take a look at the amber line which follows the stock market move. The recent move pales in comparison to the strong move that was seen in April to Oct 2010.

The below count is the Alternate count of the Singapore Stock Exchange. This is the bullish count and it has not changed as well compared to the technical analysis made in April 2012. At the time, the analysis said that a likely target is 3200 and if that is taken with strength, the stock market could head on to 3450 or 3650 region. The 3200 is almost there. But is the market strong enough to go on higher? The MACD is saying otherwise as it is showing that the momentum is not really there.  It seems that it would need a huge boost to bring the markets further upwards.

There is one point that is lending a big supporting hand to the alternate count. As you can see in the below chart of the Singapore Stock Exchange. The Expanding Triangle was broken to the top side and based on the price projection for an Expanding Triangle, the likely range is between 3400 and 3700. Triangles are one of the most reliable patterns and their price projections should be respected.

If the Singapore Stock Exchange marches on beyond 3313 (the start of the Major wave 1 – Oct 2010), it could very well move on to 3400 to 3700 regions.