STI Outlook: 15 Feb 2015

Recently I’ve been very focused on looking into companies, but I felt that it was time to take a step back and look at the bigger picture. As they say, “A rising tide lifts all boats.” Now, I ask myself, is the tide still rising? I personally don’t see a point trying to surf when there’s a tsunami out there. The probabilities simply work against you.

The Big Picture:

STI Weekly

Overall trend of the market remains bullish, although I do feel that market is a little on the higher side. To me, it means that many stocks have been experiencing good gains and retracement could be coming soon.

Starting off with the charts, I feel that the market is going to hit a few resistance levels in weeks to come and could possibly see a correction back into the 3300-3380 region. The move on the week of 23 Jan broke some new heights and we are seeing how far it can go with immediate resistance at May ’13 high of 3472.

Let’s Zoom In!

STI Daily

Taking A Closer Inspection:

Volume: Bearish divergence can be observed in the daily charts. Prices are somewhat consolidating with a bullish bias while waiting for a catalyst to make a firm move.

RSI: Appears well correlated with no divergence for now although upside is beginning to be more limited.

MACD: MACD is about to cut down the signal line, a bearish sign of retracement.

Stochastics: Has broken off the 80% mark, showing some signs of weakness.

Overall:

Combining the factors I have mentioned in this post, I feel that a correction is on it’s way, but trend would likely remain to be bullish. Seeing how prices are close to many resistance points(3 different time frames), I can’t help but feel that prices will have to come down and take a breather. This is supported by some signs of divergences and weakness by the technical indicators in the daily chart.

Read also: The Greatest Investment Of Your Lifetime – My latest article on MoneyDigest!

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