Dear Readers,

“The market is too high…. time for correction/it cannot go any higher…” – says an inexperienced trader.

What is high and what is cheap? It is just that you anchored yourself to high and cheap. It is nothing but your opinion.

There is a saying on Wall Street

Bear markets have no support and bull markets have no resistance.

Markets do go CRAZY but it not our job argue with them. Would you stand on the SMRT train track and shout at approaching train “I have your schedule, you’re not supposed to be here”?

Travel broadens the mind. This is why each weekend I will review monthly and weekly charts of 13 keys markets around the world. Let’ take a quick look at the weekly chart of four keys markets.

DAX (Germany): +3.4%

HKSE (Hong Kong): +7.9%

S&P 500 (US): +1.7%

SSE (China): +5.22%

In Summary: I can’t find a single bearish market.

Let’s turn to our Singapore market…….

STI Open: 3,451.73

Week High: 3,480.84

Week Low: 3,450.26

STI Closed: 3,472.38

Price Change: +18.63

Percentage Change: +0.53%

Total Volume: 1.204 billion

I always remind myself that I don’t have to trade the stock market – I trade the market of stocks.

Weekly Chart of ST MACD histogram is still ticking up but on daily chart MACD histogram is ticking down. But we could see bull continue if HKSE and SSE are on the roll. This will definitely pulling up the whole region.

However STI only represents the 30 largest companies in market value out of a total 1296 listed companies on the Singapore Exchange which is why I am using CADI to measure the market breadth.

The daily Chart of STI MACD histogram is ticking down but CADI is pointing up. This is showing more companies are moving higher than are moving lower, and it is suggesting than other sectors are moving up strongly.

FTSE ST Catalist Index – which tracks penny counters listed on the Singapore Exchange – is up 10.77% since hitting the 2009 low.

For the past 2 weeks, penny counters are moving higher and higher but are they over brought?

Read my first paragraph again and you decide for yourself.

But no need to feel excited or panic, enjoy the party, but keep in mind that trees do not grow to the sky. Having caught some good trade, my next task will be protect my profit.

In the meantime, enjoy but protect your profits if you have.

Best wishes,

Divergence Trader

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