Long Term Market Analysis: Continuation? (14 May 2011) | Investment Moats Skip to Content

Long Term Market Analysis: Continuation? (14 May 2011)

long term market analysis attempts to identify the general trend  the market, whether bullish or bearish. stay vested when trend is bullish and trigger downside controls when trend is bearish

S&P 500

Every one is watching the 1340 level on the S&P500. Violation of it will invalidate the reverse heads and shoulders breakout. Breaking out will continue the upward trend but invalidate it will not be a death sentence.

We are still well above the 200 EMA. A death cross at 200,50 and 20 EMA at 1180 will be about a 10% drawdown from current levels.

A 10% drawdown on the index looks tolerable, but most investors owns individual stocks and likely the drawdown will be larger.

By the time the death cross happens it is likely the draw down is 22%. 

STI

I like the look of the STI much better than that of S&P500. We are in a consolidation stage and a breach of 3200 could see a resumption of further upside. Holding dividend stocks in this current environment seems to be a plan of not doing any stupid selling  and knowing when to get out.

However, the consolidation have brought the 20  and 50 EMA close. Further downside to below 3000 will trigger a sell of most growth stocks I have and some profit taking.

The drawdown then is 5% which would likely mean a 10% correction on most individual stocks.

The 2750 level is a point where we can observe and selectively add more stocks should this level holds. If not, we can lighten up most of our holdings to collect at cheaper prices.

I run a free Singapore Dividend Stock Tracker . It  contains Singapore’s top dividend stocks both blue chip and high yield stock that are great for high yield investing. Do follow my Dividend Stock Tracker which is updated nightly  here.

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