apf trading technical analysis market commentary 25 jan 2011

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25 January 2011 TECHNICAL ANALYSIS

Market Commentary

GENTING SINGAPORE

Genting Singapore is one of the most heavily traded counters on the Singapore Stock Exchange.

TD Sequential indicated a count 13 at the close of Sep 2010, indicating a potential market

exhaustion. The corresponding Risk Level (magenta dotted line) at 2.37 serves as the current

resistance which had held strong for the last quarter of 2010.

With the Tenkan Sen crossing Kijun Sen in Jul 2010, indicating the price momentum is skewed to

the upside, the rally has been nothing short of spectacular. However this hasalso brought prices far

above the Kijun Sen. Prices have been consolidating for the past few months, respecting the risk

level seen in TD Sequential. In general, prices tend to gravitate towards the Kijun Sen like a rubber

band effect. The Kijun Sen, if you recall is the mid point of the highest point and lowest point for

the past 26 weeks (in the chart above). It is common to see prices retrace towards this mid level in

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a mean reverting manner. If the current sell setup fails and a buy setup is initiated upon price flip, prices may start to gravitate towards Kijun Sen which is currently around the 2.00 level.

On a longer term basis, the bull trend is intact with the price well above the Kumo Cloud. The

Chikou is also currently also above price. Chikou is the current closing price time shifted backwards

26 weeks. Having Chikou above price means in the simplest sense, current price is above the price

26 weeks ago. This serves as a confirmation of the long term bull trend. Another very important

and interesting observation is the widening of the Kumo depth (thickness of the cloud). In general,

a thick cloud signifies a strong support/resistance. The widening depth of the cloud tells us the

strength of the support region (1.5925 - 1.945) is strong. Looking back to TD Sequential, a

qualified break above risk level would suggest the likelihood that the bull would continue to complete yet another TD Countdown.

<Update>

Since 2 weeks ago, Genting recorded count 7. However note that the setup is being done in a very

tight range. There seem to be a lack of buyers at this point to push the counter further north. Also,

take a look at the monthly chart right at the bottom.

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A TD Combo completion countdown 13 is a rare occurence on long time frames like the monthly

charts in this case. Although there is another existing sell setup ongoing, suggesting market exhaustion may be here yet, this would be something that we would be watching closely!

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CNOOC

This chart is shouting for attention due to the bullish picture shown by the Ichimoku system and

the completion of TD Combo Countdown. Around the same time, the TS Sequential Countdown is

also showing market exhaustion (see chart below). TD Combo typically appears in trending markets

while TD Sequential would show up more in ranges. Here the Sequential showed market exhaustion

followed by the Combo agreeing. However note that the TD Sequential risk level had been broken

out with qualification. We remain cautious and would watch the price's action with the TD Combo

risk level at 19.80.

Prices are likely to converge to the Kijun Sen. If prices starts to initiate a buy setup in the coming

weeks, perhaps its a good time to take profits and look for a re entry point when prices correct back to the Kijun Sen or the Kumo.

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HINDALCO INDUSTRIES

Following the TD Combo Countdown completion count 13 3 weeks ago, prices initiated a buy setup count 1 with risk level at 260.25.

What this means is that here could be a decent short/sell entry point with stop loss around the risk level, 260.25.

Please note that the overall trend being an up trend, this sell off has higher chance to be a

correction. With the Kumo providing good support and the chikou above prices, the support region could possibly be a short take profit region or a chance to go long.

Watch for this week's close to be below 247 for count 2 or the setup would be invalidated.

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USDJPY

Bear trend intact with Ichimoku Indicators.

However both TD Combo and Sequential showing market exhaustion on Monthly Charts. Watch for a price flip and initiation of sell setup to go long USDJPY with a stop around the risk level 76.70

Will revisit in coming months.

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USDSGD

Strong Singapore Dollar has been taking out every risk level on a qualified basis (solid magenta line).

Market exhaustion is once again indicated by the TD Combo completion 3 weeks ago with the next risk level stands at 1.2561.

The cloud is however still providing good resistance for the USDSGD pair and the chikou also

suggests bearishness. Watch for any signs of trend reversal around the next risk level at 1.2561

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CRUDE OIL GENERIC FUTURES

Crude oil showed a Perfected Sell Setup (Red Arrow) and a TD Combo count 13 completion in the

same week (Apr 2010). Perfected sell setup has a high probability of a 1-4 bars correction while TD

Combo 13 countdown completion suggests market exhaustion. Markets then proceeded with a sell

off to reach the Kumo cloud which provided support for crude prices.

Kumo cloud support region was respected. TD Combo Risk Level due to the Apr 2010 TD Combo

countdown completion stands at 90.06. Crude price is hovering around the risk line early this year.

At Friday's close, a buy setup was initiated. Watch for qualified breakouts of the risk line in coming

months. A qualified breakout (represented as a solid line vs a dotted line here) early in the setup

would suggest a good chance of the completion of the setup and countdown.

The reason why we are cautious of a breakout higher is due to the bullish picture painted by the

Ichimoku Kinko Hyo. Since the Tenkan Sen crossed above the Kijun Sen in July 2010, prices

advanced about 20%. Chikou is well above prices at the moment and the future Kumo is bullish as

well

Watch for a pullback to the Kijun Sen for the next possible entry point.

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The appearance of the TD Sequential countdown completion followed by the confirmation of the TD

Combo countdown completion was a good sell entry back in April 2010 with a possible stop slightly above the risk line at 90.06.

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On the smaller timeframe (daily), The current TD Sequential Risk Level is at 93.25 while prices are

on count 3 of buy setup. Formation of the Kumo is giving good support, similar to the longer time frame.

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We then turn to the daily TD Combo. Risk Level is at 92.93. These are key levels to be keep a lookout for price actions.

CBOE SPX VOLATILITY INDEX

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While the equity bulls are in vogue, please do remember to keep a lookout at the VIX INDEX. This

is a good measure of the "risk trades". A sell setup was initiated at Friday's close. Lets watch to see

how this would develop in the coming weeks. A continuing sell setup would mean VIX is generally increasing, and risk aversion is more evident in the markets. We will come back and re visit.

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APF Trading is a trading advisory firm offering clients advice on multi-asset trading strategies,

signals, trading systems, execution services and trading platforms. The firm also conducts research and technical analysis with a focus on Ichimoku Kinko Hyo and DeMark Indicators.

apf trading technical analysis market commentary 25 jan 2011

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