Let me begin by saying that most people have very short memories. Oh yes, we remember our wife/husbands/kids mobile numbers, birthday or anniversary date, but what I mean is that in the financial market the average memory span seems to be about 2 ½ weeks. Most people think that what has been happening in the recent past will not continue to happen in the future. Back in early Apr, when the stock market first started coming off its 7 years highs, nobody anticipated a large downtrend. Some predicted STI will move even higher after some corrections.

Now we've had a two-month decline, and the websites are full of forecasts of market crashing, where were these forecasters two months ago? I think many of them are operating on the basis of a 2 ½ week memory...

I aim to make my decisions on the basis of what I see and not what I hear. Let's us look at the charts.......

STI Open: 3,370

STI High: 3,383.56

STI Low: 3,346.86

STI Close: 3,352.65

Price Change: – 0.8

Percentage Change: – 0.024%

Total Volume: 1.206 Billion

For the past 2 weeks, STI is at the resistance level of 3,350 levels. The really fascinating message, though, is on the daily chart. On Tuesday 21^st Jul, STI moved to 3,370 but failed to hold at this level and closed at 3,352.

Daily MACD histogram is ticking down. The fact that the STI opened up and closed down shows that powers that be were on the bearish side.

As for my choice for the week ahead, I will to be extra cautious. We are now begin to move into earnings season and the markets are looking to see if reports will be better than expected. If earnings come in worse than expected, this would be a negative catalyst. Monday, we will have DBS and on Friday we will have OCBC and UOB.

Divergence Trader,
The man without a magic crystal ball

PS If some readers notice that I have been missing in action for 2 weeks, it is because my wife has given birth to our second child. Our son has been born in a very special year - the 50^th Anniversary of Singapore. Thank you friends for their well wishes and messages on the Facebook. We are very blessed.

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