20th December: The index and all sectors, with the exception of communications, need more volume in order to build a persuasive rally. With luck, this will come in the new year.
Current Prediction
Long term: double bottom still points to around 700, but will be cancelled if the index falls much below 360.
Currency: none
29th November: Today the communications sector broke out of a reverse head and shoulders. This is a cascading pattern: meaning it is built on the short term double bottom that broke out a few weeks ago. This is the sort of development, (from short term to medium term pattern), that we need to see in order to be confident that the rally will continue. With luck, banking and finance will soon follow suit.
Current Prediction
Short term: none
Medium term: none
Long term: double bottom still points to around 700, but will be cancelled if the index falls much below 360.
Currency: none
22nd November: With luck, the index will rebound from its current support. Finance and Property still have bearish targets that will not be cancelled unless those sectors rally a bit more. Communications gives hope: it has rebounded nicely after pulling back to a double bottom neckline. With luck, the other sectors will soon follow suit.
Current Prediction
Short term: double bottom points to 450
Medium term: none
Long term: double bottom still points to around 700, but will be cancelled if the index falls much below 360.
Currency: none
15th November: The index has moved out of our double bottom according to expectations. Target at 440 could soon be met. Resistance is at around 460. However, for the next phase of the recovery to take root, we need to see volume picking up to around 20 or more billion baht per day.
Some nice breakouts last week from reversal patterns. But finance and banking, with one or two exceptions, need more volume to make a convincing long term recovery.
Current Prediction
Short term: double bottom points to 441
Medium term: none
Long term: double bottom still points to around 700, but will be cancelled if the index falls much below 360.
Currency: none
8th November: The index has made a very nice double bottom, suggesting that the index has reverse its medium term bearish trend. Major resistance is now at 540. But there will be resistance at 440 and 490.
The finance and property sectors have yet to shake off their bearish top patterns, but banking and communication have rebound sufficiently to cancel their bearish top patterns. Communications looks the strongest sector at the moment.
Current Prediction
Short term: double bottom points to 441
Medium term: none
Long term: double bottom still points to around 700, but will be cancelled if the index falls much below 360.
Currency: none
25th October: The index has reached our double top targets at around 368. But that fact alone does not indicate a reversal. There is the possibility of a small double bottom and possibly a little island reversal next week. But many individual stocks still have bearish targets and do not yet show signs of bottoming. With luck, a clearer indication will become available during the week.
Current Prediction
Short term: triangle points to 350
Medium term: double top points to 370 - done
Long term: double bottom still points to around 700, but will be cancelled if the index falls much below 360.
Currency: none
11th October: The index could soon bottom. The finance and communications sectors are on good long term supports.
But many individual stocks do not give any indication of bottoming and have lower targets. BBL, BAY and SCB are examples in the banking sector. TA is a clear example in the communications sector. Property stocks also appear to have a long way to fall. Unless these stocks show signs of bottoming - such as a small double bottom - we should expect them to reach log targets. That could see the index fall to 350 or even 330.
Prospects for the region look good. But we should await a clear double bottom or other reversal pattern before jubilantly presuming that the market is about to make a sustained rally.
Current Prediction
Short term: triangle points to 350
Medium term: double top points to 370
Long term: double bottom still points to around 700, but will be cancelled if the index falls much below 360.
Currency: none
4th October: After the failure of our previous falling wedge, we should be cautious of further wedge breakouts. But we should not dismiss them altogether. It is often the case that a small patterns fails, only to reveal a larger pattern. That could be happening now. A larger falling wedge is forming.
However, the breakout from the wedge alone should not be taken as a reversal. We should take it as a possible first bottom of a double bottom. The double bottom has been the most reliable reversal pattern in recent SET history. On this scenario, we could see a rally to 420, failure to 370 or even lower, and the development of a little double bottom.
Sector charts this week give a mixed picture. On the one hand, short term charts for banking, finance and communications, show mere pullbacks to the neckline of nasty top patterns. Those patterns will be cancelled if the index rallies further this week.
I have removed the head and shoulders scenario pointing to 270 as its neckline is too steep to be considered valid. We therefore have no target below 350. But that does not mean that the index will not fall below 350. Our targets are minimum targets. We should not presume a reversal until we see one.
Current Prediction
Short term: triangle points to 350
Medium term: double top points to 370
Long term: double bottom still points to around 700, but will be cancelled if the index falls much below 360.
Currency trend: target of 47.5
27th September: Last week saw my worst case scenario take effect. Our wedge and double bottom were defeated by a triangle. We could now see the index fall to somewhere between 350 - 370. There is a good support at that level. But we should now consider a new worst case: a fall to 270. Banking, finance, and property sector indices already give bearish predictions that would correspond to a fall to around 270 on the SET index. The currency has fallen through support and could fall to 51.
On the brighter side, our rounding bottoms and long term channel supports offer good support at 360. Reverse head and should symmetry and higher lows on the 50 day average volume, suggest that the market is still in bull mode. Let's see if 360 holds this week.
Current Prediction
Short term: triangle points to 350
Medium term: double top points to 370
Long term: double bottom still points to around 700, but will be cancelled if the index falls much below 360.
Currency trend: target of 47.5
20th September: Our double bottom scenario is taking a bit of time. But there's a chance that the market could be waiting for the baht to bottom. At present the currency is on good support. So too is the SET. Let's see if they turn. KTB could be a rally leader.
Current Prediction
Short term: wedge and double bottom that should, with good volume, give a swift rebound to 550 or thereabouts
Medium term: double bottom points to 650 - still valid
Long term: none
Currency trend: target of 41 is valid, provided the currency doesn't strengthen above 38.1.
13th September: Last week it was wedges. Now it's double bottoms. The medium term chart shows a nice series of double tops, wedges and double bottoms, make a three phase cycle. This cycle has occurred twice over the past year. With luck, we are entering the final stage of a bottoming process that could see the index return rapidly to 550. The alternative is a miserable fall below 400.
Current Prediction
Short term: wedge and double bottom that should, with good volume, give a swift rebound to 550 or thereabouts
Medium term: double bottom points to 650 - still valid
Long term: none
Currency trend: target of 41 is valid, provided the currency doesn't strengthen above 38.1.
30th August: The index continued its rally from our falling wedge and rebounded above the neckline of the double top pointing to 345, cancelling that pattern. Many individual stocks in the banking, finance, communication, building and property sectors have also given a good indication that the index has reversed after making a short to medium term bottom. The question now is how far up - and when? Read on.....
Current Prediction
Short term: double top points to 345; this is a valid target until the index rebounds above the neckline at 450. However, a breakout on decent volume from a falling wedge last Friday gives a good chance that the top will be cancelled and that the index will return to 550.
Medium term: double bottom points to 650 - still valid
Long term: none
Currency trend: target of 41 is valid, provided the currency doesn't strengthen above 38.1.
23rd August: The wedge that we have been monitoring for several weeks finally broke out last Friday. The wedge breakout coincided with a good medium term support in the index, and in the banking, finance and communication sectors. Most individual stocks in those sectors demonstrate the same characteristics.
Thus it is highly probable that the index has reached a short term bottom
and will recover to the previous high of 550.
If volume on the recovery is good, there is a good chance that the
index will break out of a larger pattern pointing to 900. However, the
breakout might not come until October.
Note that I have not yet cancelled the double top prediction of 360. It is technically valid until the index breaks above the neckline at 450.
Current Prediction
Short term: double top points to 345; this is a valid target until the index rebounds above the neckline at 450. However, a breakout on decent volume from a falling wedge last Friday gives a good chance that the top will be cancelled and that the index will return to 550.
Medium term: double bottom points to 650 - still valid
16th August: The index is sitting on many good supports. But the fund chart has no support at the current level. A rebound promises to be swift, thanks the steep falling wedges. Good chance of rebound this week, otherwise, support is at 400 then 360.
Current Prediction
Short term: double top points to 345; this is a valid target. But given the recent history of failure of such a pattern, I would not confirm the target unless the index fell below 420.
Medium term: double bottom points to 650 - still valid
Long term: reverse head and shoulders points to 740 - cancelled
9th August: The index is approaching good support at a point somewhere between 420 and 430. This level coincides with supports for many of the bank stocks and a blue chip finance stock. With luck, we will see a rebound this week, ending the current bear phase. But if 420 fails, we should be prepared for 345.
Current Prediction
Short term: double top points to 345; this is a valid target. But given the recent history of failure of such a pattern, I would not confirm the target unless the index fell below 420.
Medium term: double bottom points to 650 - still valid
Long term: reverse head and shoulders points to 740
Currency trend: strengthening in the short to medium term.
2nd August: The index has good support at the current level and then at 430. Banking and Finance sectors could still fall a little before reaching good support. But other sectors, including Communications and Property, are on good support at present. We should hope for a rebound soon. If the index falls below 430, there is a danger of a fall to 375.
Current Prediction
Short term: reverse head and shoulders points to 595 - doubtful
Medium term: double bottom points to 650 - still valid
Long term: reverse head and shoulders points to 740
Currency trend: strengthening in the short to medium term.
19th July: Banking and finance could drag the index down a little more. But the long term prospects look all the better for the correction. A rally on strong volume should signal the end of this current phase of weakness. It could come this week.
Current Prediction
Short term: reverse head and shoulders points to 595
Medium term: double bottom points to 650
Long term: reverse head and shoulders points to 850, target could be reached as early as September.
Currency trend: strengthening in the short to medium term.
12th July: The banking sector was sold off heavily last week, dragging down the index. However, the sector rebounded last Friday. We still have further downside according to valid targets. But in this bull market, good supports often intervene in preference to short term targets. Thus it is possible that the sell-off concluded last week. If not, the downside for the SET would be around 470.
Other sectors were quite strong. Communications finished last week at a new long term high. Finance is also looking relatively healthy.
Our target of 850 is sitting right on the cusp of validity. If the index falls further we will have to put it on hold. But I feel reasonably confident.
Current Prediction
Short term: reverse head and shoulders points to 595
Medium term: double bottom points to 650
Long term: reverse head and shoulders points to 850, target could be reached as early as September.
Currency trend: strengthening in the short to medium term.
28th June: The market started the week on a weak note. But provided that the market stays above 525, the neckline of our long term daily pattern, there should be no cause for concern.
Banking and Finance Sectors are each facing strong long term resistance. But Communications and Property are looking good.
Current Prediction
Short term: reverse head and shoulders points to 595
Medium term: double bottom points to 650
Long term: reverse head and shoulders points to 850, target could be reached as early as September.
Currency trend: strengthening in the short to medium term.
21st June: Today's breakout confirmed a long term target of 850.
Current Prediction
Short term: reverse head and shoulders points to 595
Medium term: double bottom points to 650
Long term: reverse head and shoulders points to 850, target could be reached as early as September.
Currency trend: strengthening in the short to medium term.
14th June: The index ended the week after turning at the double top resistance. Could this be the start of my feared return to 400?
Unlikely. The Communications sector, a market leader, has broken out of a reversal pattern, as have the property and food sectors (not market leaders). Many individual stocks have broken out of reversal patterns last week. One such stock National Finance and Securities, has broken a neckline similar to that which the Finance Sector is currently facing. With luck, this sector will soon follow, and the index too.
Volume is good. The target of 600 is valid in the short term (one or
two months). The only suggestion that the market should make a double top
and fall to 400 (380 actually) is the scenario I have painted below. But
a scenario is not a prediction. We should presume the prediction unless
something breaks.
Current Prediction
Short term: none
Medium term: double bottom points to 600
Long term: reverse head and shoulders points to 640, but a pullback to 400 would not be inconsistent.
Currency trend: strengthening in the short to medium term.
7th June: On balance, chances of a short term rally look good. The index has broken out of a falling wedge. Volume was good. The finance sector has turned on the neckline of a long term reversal pattern and many stocks look positive. Furthermore, the turn on the medium term double bottom (see the first chart below), confirms the target of 600 and gives good cause to expect that, in the event of a correction, the index will not slip below 450.
However, there is still the danger of failure and correction to 390. The market could rally to 500 or slightly higher and then enter a short term bearish phase. If so, the banking sector looks like the sector that could bring the index down.
Keep an eye on the Communications Sector. This sector is close to a key resistance which marks the neckline of a long term reversal pattern. If this neckline breaks, we will have evidence of a the short term rally to 640.
Finally, this week, look more to volume than gain in points. If we see the market turnover at around 15 billion baht, chances of the rally are good, even if there are a few days of small point gains in the index.
Current Prediction
Short term: none
Medium term: double bottom points to 600
Long term: reverse head and shoulders points to 640, but a pullback to 400 would not be inconsistent.
Currency trend: strengthening in the short to medium term.
31st May: The index is facing a crucial support at the current level. But given that the likely trend for the region is down in the short term, (and given the dependence of the SET on the regional trend), the greater probability is that the support will fail. Alas.
On the other hand, there is a chance of a rebound to 500 again, with danger of a fall to 400 after such rally. See my long term scenario below. Finance, Energy and Communications are all on good supports and might precipitate a rebound from the current level. But beware a rally on low volume.
There are supports at 430 and then around 400.
24th May: Short term indicators are not clear. On one hand the index is struggling at the 500 level. Last week we saw the index approach 500 only to fail. The pennant scenario has past its use-by probability date. We are more likely to see a correction to as low as 420. The banking sector support this scenario. It looks weak. Symmetry suggests a couple of months of consolidation, possibly until September or October.
On the other hand, the long term fund chart gives a scenario whereby the market will rally until July.
In the absence of good short term indicators, and with nearly all stocks and sectors still clinging to support, it's anyone's guess.
Current Prediction
Short term: none
Medium term: none
Long term: reverse head and shoulders points to 640, but the index might consolidate at around 530.
Currency trend: strengthening in the short to medium term.
10th May: A long term scenario on the weekly chart suggests that the market could still be in bear mode. However, positive signs in the in fund chart and huge volume confirming a higher target for the index suggest that the index should not correct below 420.
The target of 640 is valid and the probability of the target being reached within a couple of months is increased by the huge volume last week. Many bank stocks still have higher targets, suggesting that further correction, if any, will be mild. Many stocks have scenarios suggesting higher targets.
Current Prediction
Short term: none
Medium term: none
Long term: reverse head and shoulders points to 640, but the index might consolidate at around 530.
Currency trend: strengthening in the short to medium term.
3rd May: The return of the bull was confirmed last Friday by the record volume of Baht 22 billion and the breakouts from long term resistances in the Banking and Finances sectors. KTB, SCB and BAY also made long term reversal pattern breakouts. A rapid rise to 530 would now be unsurprising.
26th April: The index is still held down by long term resistances, particularly in the banking sector. However, there are some positive signals. BBL, for one, has made a pullback to the neckline of a nice reversal pattern. A rally in this stock could herald the much needed boost that the market needs to see 540.
Current Prediction
Short term: reverse head and shoulders points to 430: possible pennant could take the market to 450.
Medium term: none
Long term: reverse head and shoulders points to 640, but the index might consolidate at around 530
Currency: 38.6 unless the currency strengthens above 37.1
19th April: The index has broken out of a short term pattern pointing to 430. But there is a good chance, if volume is sustained at last Friday's level, that the index will jump to 530. Thereafter, we could see consolidation until the fourth quarter of the year.
Current Prediction
Short term: reverse head and shoulders points to 430: good chance
Medium term: none
Long term: reverse head and shoulders points to 640, but the index might consolidate at around 530
Currency: 38.6 unless the currency strengthens above 37.1
14th April: The SET has not done anything inspiring over the past two weeks. However, the fund chart has risen above the neckline of our top scenario, cancelling that spectre. Our little double bottom pointing to 390 is still valid. But beyond that, there is no clear direction.
26th March: Signals are still mixed. First, there is a long term resistance operating at the current level. But average volume has clearly risen since September's low last year. And the long term weekly support is still holding. The Energy Sector looks promising. A couple of stocks, including Siam Commercial Bank, look as though they could form very nice double bottoms, replete with nice volume patterns.
But we must wait and see. If the long term resistance breaks, whether volume builds, and whether the index sends out any nice patterns indicating sustained, durable, long term gains. At the moment we have a mere short term pattern. That could develop into a medium term pattern. Or it could fizzle out.
Current Prediction
Short term: double bottom points to 393.
Medium term: none
Long term: none
Currency: 38.6 if current resistance breaks.
22nd March: The triple top pointing to 270 is cancelled and a double bottom points validly to 395. But long term resistance is currently strong and volume, while building, is not equal to that of the previous rally of October to January and thus the chances of the index rallying much above 400 are limited.
Current Prediction
Short term: double bottom points to 393.
Medium term: the reverse head and shoulders still points to 470 - hopes fading.
Long term: none
Currency: 38.6 if current resistance breaks.
15th March: A nice burst of euphoria today broke a small double bottom with target of 393. The chances that this target will be reached are good. But 393 would not break the long term resistance. Only good volume of around 12 billion baht per day would give confidence that the prediction of 470 would be reached. If this does not occur in the next two weeks, the prediction of 470 would be cancelled by reason of time limit. We would then be faced with a double top prospect and a fall to somewhere between 270 and 200.
Current Prediction
Short term: double bottom points to 393. The triple top pointing to 270 is on hold.
Medium term: the reverse head and shoulders still points to 470 - hopes fading.
Long term: none
Currency: 38.6 if current resistance breaks.
8th March: The top pattern pointing to 270 is still valid. The long awaited surge in volume that would be necessary to sweep the market to 470 hasn't materialized.
Current Prediction
Short term: triple top points to 270
Medium term: the reverse head and shoulders still points to 470 - hopes fading.
Long term: none
Currency: 38.6 if current resistance breaks.
1st March: Conflicting signals: on one hand a short term pattern points down to 270, but our reverse head and shoulders with target of 470 is still valid. A break above 360 will cancel the top pattern, but only a surge above 400 on strong volume will escape the long term resistance in the daily chart, while only a fall below 310 will confirm the fall to 270.
Current Prediction
Short term: triple top points to 270
Medium term: the reverse head and shoulders still points to 470
Long term: none
Currency: none
15th February: A big question mark hangs over the Thai market. The rebound last Friday was sufficient enough to cancel all bearish index and sector targets. But one day of activity, alone, is not persuasive. Volume still appears to be trending down. Unless we see solid build-up in volume over the next couple of weeks, the rally last Friday could serve to provide a lower target; namely, the previous low of 200.
I consider that it is unlikely that the market would return to its previous low, given that the trend for volume is increasing. But low probability does not mean no probability. We will have to endure some uncertainty.
Keep an eye on the long term weekly chart, which is still encouraging.
Current Prediction
Short term: double top points to 270 - cancelled
Medium term: the reverse head and shoulders that points to 470 is now possible, as the index rebounded sharply upon hitting the neckline of this pattern. But strong volume would be required to fulfil the target.
Long term: none
Currency: none
8th February: The index looks like it is about to take a big fall, as do the finance and banking sectors. Communication is likely to be sucked down in the wake.
However, the long term weekly chart shows good support and the medium term fund chart show some support. So there is a chance that the index might not fall as I expect. No doubt this week will give further clues.
Current Prediction
Short term: double top points to 270
1st February: There are good points and bad points again. First the bad news:
But the good news:a small double top suggests a return to the neckline of a our medium term double top at 330. The fund chart, which has made a similar pattern, points below the neckline of its double top, suggesting that the index could follow. banking, finance and communication sectors have turned on long term resistance; none of the individual stocks looks strong volume is falling off for the index and all major stocks.
Our target of 470 is still valid, but if the support at 350 fails, I think we can kiss it goodbye.Long term supports are still holding on the weekly chart, the long term fund chart and the long term finance sector rounding bottom. 350 is a strong support for the index.
Current Prediction
Short term: reverse head and shoulders pointing to 470 - pattern has defects, but good volume.
Medium term: none
Long term: none
Currency: none
25th January: Most recent target of 600 is cancelled. The lower target of 470 is valid, but running out of time. Some nasty tops are appearing in the sectors. If the index falls below the support at 330, we could expect a return to 240.
Current Prediction
Short term: reverse head and shoulders pointing to 470 - pattern has defects, but good volume.
Medium term: none
Long term: none
Currency: none
18th January: Last week the index pulled back to the neckline of our latest reversal pattern. No major supports broke last week, except for that of BBL.
BBL and KTB, two major bank stocks, look particularly weak. Volume is falling off dramatically. Unless there is a sharp increase in interest in these stocks, it is difficult to see the banking sector, and the index, faring well in the short term.
Current Prediction
Short term: reverse head and shoulders pointing to 470 - pattern has defects, but good volume.
Medium term: reverse head and shoulders pointing to 600. Good chance
Long term: none
Currency: none
11th January: The index has broken out of a medium term pattern pointing to 600 in the medium term - perhaps as early as the second quarter of this year. All depends on volume. Breakout volume was good. But there are still some danger signals: notably, resistance in the banking and finance sector and in the long term fund chart. But communications and the long term weekly SET chart are encouraging.
Current Prediction
Short term: reverse head and shoulders pointing to 470 - pattern has defects, but good volume.
Medium term: reverse head and shoulders pointing to 600. Good chance
Long term: none
Currency: 37, maybe 33.5
1998
21st December: Uncertainty reigns again. The index could be pulling back to the neckline of a pattern pointing to 470. Or it could be making a top pattern. A fall to around 320 will confirm the latter scenario. But only a break above 380 on strong volume would erase doubts that the market will fall to previous lows or lower. Thus there is a wide range of uncertainty.
Bad factors:
Good factors:Rally last week was on low volume. If 320 breaks we would probably see 260 very soon thereafter; Strong long term resistance not yet overcome; possible head and shoulders top forming; Short term channel support has failed; SET reversal pattern pointing to 470 is defective in that it has small shoulders (otherwise volume is good); BBL failed a good reversal pattern the fund has broken out of a short term top pattern, anticipating the index; Finance sector index has made a head and shoulders top pattern
Thus we have two scenarios:Volume for the market and the current reversal pattern are still sufficient for rally to get to 470 - but the picture is weakening week by week. SET is holding above neckline of a reversal pattern - thus we could merely be seeing a pullback to the neckline of our pattern that points to 470.
Current Predictiona failure of the neckline at 325 ending the current rally with a head and shoulders top - now more likely than last week due to the rally on low volume; or a surge up to 410 on high volume, 16 to 20 billion baht turnover per day, giving a high probability that the index will reach 470 in the short term - still possible, but looking less probable as volume dwindles.
Short term: reverse head and shoulders pointing to 470 - pattern has defects, but good volume.
Medium term: none
Long term: log target of 100 - cancelled, tentatively.
Currency: 37, maybe 33.5
14th December: The slight rebound last week on low volume shows weakness in the market. It could merely be an extended period of consolidation before the market advances. Or it could be the right shoulder of a head and shoulders top (see chart below).
We will not get a clear indication that the rally has failed unless the index falls below 330. Thus there is a risk of substantial loss until we get a clear confirmation and there is a risk of getting out of the market prematurely, for some cutting loss on stock bought recently and then seeing the market surge. Time for risk management therapy.
Bad factors:
Good factors:Rally last week was on low volume. If 330 breaks we would probably see 260 very soon thereafter; Strong long term resistance not yet overcome; possible head and shoulders top forming - last week's rally on low volume supports this scenario; SET reversal pattern pointing to 470 has small shoulders (otherwise volume is good); BBL failed reversal pattern
Thus we have two scenarios:Volume for the market and the current reversal pattern are still sufficient for rally to get to 470 - but the picture is weaker than last week.; short term channel support for the SET can still be found; SET is holding above neckline of a reversal pattern - thus we could merely be seeing a pullback to the neckline of our pattern that points to 470.
Current Predictiona failure of the neckline at 325 ending the current rally with a head and shoulders top - now more likely than last week due to the rally on low volume; or a surge up to 410 on high volume, 16 to 20 billion baht turnover per day, giving a high probability that the index will reach 470 in the short term - still possible, but looking less probable as the index rallies on low volume.
Short term: reverse head and shoulders pointing to 470 - pattern has defects, but good volume.
Medium term: none
Long term: log target of 100 - cancelled, tentatively.
Currency: 37, maybe 33.5
7th December: A bunch of contradictory factors makes the market very confusing. They are summarized:
Bad factors:
Good factors:Strong resistance; possible head and shoulders top forming; reversal pattern has small shoulders (otherwise volume is good); BBL failed reversal pattern
Thus we have three scenarios:Volume for the market and the current reversal pattern are still sufficient for rally to get to 470; short term channel support for the SET can still be found; SET is holding above neckline of a reversal pattern - thus we could merely be seeing a pullback to the neckline of our pattern that points to 470.
Current Predictiona failure of the neckline at 325 ending the current rally with a double top - unlikely due to high volume on second top a rally on low volume making a head and shoulders top and the end of the current rally; or a surge up to 410 on high volume, 16 to 20 billion baht turnover per day, giving a high probability that the index will reach 470 in the short term - possible if Korea is to be taken as a lead.
Short term: reverse head and shoulders pointing to 470 - pattern has defects, but good volume.
Medium term: none
Long term: log target of 100 - cancelled, tentatively.
Currency: 37, maybe 33.5
18th November: The rally now faces its biggest challenge: it has to overcome long term daily and weekly resistance before it can reach our target at 400. Chances are still good. But volume is falling off. The question is now whether the recent diminution in volume is a mere breathing space, or whether the rally is running out of steam. There is no reason to suppose that the rally will stall at the current level. All short term supports are good. But we will have to wait at least till the end of this week for more evidence.
Current Prediction
Short term: reverse head and shoulders pointing to 400
Medium term: none
Long term: log target of 100 - cancelled, tentatively.
Currency: 37, maybe 33.5
4th November: 400 looks like a good possibility. All indicators point higher. Volume is good.
Current Prediction
Short term: reverse head and shoulders pointing to 400
Medium term: none
Long term: log target of 100 - cancelled, tentatively.
Currency: 37, maybe 33.5
23rd October: The chances that the index will reach at least 400 in the current rally are good. There are no real clouds on the horizon or strong resistance points. Volume is building up nicely. The only obstacle is some strong resistance in the banking sector. But this could easily be overcome.
Current Prediction
Short term: reverse head and shoulders pointing to 400
Medium term: none
Long term: log target of 100 - cancelled, tentatively.
Currency: 37, maybe 33.5
19th October: According to local gurus reported in the Bangkok Post, the current rally in Thailand lacks "quality". I see differently. We have not had a rally with good, sustained volume since January this year. I am not saying that the market has reached the bottom. All depends on continued good volume. It could disappear. But the long term charts of individual stocks are showing signs that the market could have turned the corner. KTB looks especially encouraging, as do many others.
Another positive factor to note is that the long term target of 100 has been cancelled, due to the closure of the index above the neckline of the pattern.
Further, last Friday the SET broke out of a new reversal pattern, with good volume, pointing to around 400. There is stiff resistance at 330 to 340. But there is good reason to hope that the market will at least make the new target. With a bit of luck, this is just the beginning.
Current Prediction
Short term: reverse head and shoulders pointing to 311, good chance of getting higher.
Medium term: none
Long term: log target of 100 - cancelled, tentatively.
Currency: 37, maybe 33.5
12th October: The rally in Thailand is progressing nicely. The necessary volume is present. There is stiff resistance at 300. We should see consolidation at this level. But chances are increasing that the index can overcome this level. KTB and other stocks have broken out of good reversal patterns today (not shown on the charts), suggesting that the rally has more life.
Current Prediction
Short term: reverse head and shoulders pointing to 311, good chance of getting higher.
Medium term: none
Long term: log target of 100
Currency: a triangle points 38.7
5th October: As the rest of the region looks bleak, the chances for further rallying in Thailand are slim. The market has already rallied 25% this month; a paltry amount given the falls this year. But there are strong resistances facing the index. These resistances are reflected in the fund charts and the sector charts and in individual stocks.
Current Prediction
Short term: reverse head and shoulders pointing to 295 - low chance
Medium term: none
Long term: log target of 100
Currency: a triangle points 38.7
28th September: The SET is doing well. Today, the index broke out of a new reversal pattern pointing to 295. Volume is good. Many individual stocks look good (see the next page).
But there are strong resistances to be overcome before the index can get above 270. I am also doubtful about the prospects of a rally in Thailand that is not accompanied by the rest of the region. But who knows, maybe the region will take it's cue from Thailand.
Current Prediction
Short term: reverse head and shoulders pointing to 295
Medium term: none
Long term: log target of 100
Currency: a triangle points 38.7
21st September: As I write the index has broken out of small double bottom and the banking sector has broken out of a little triangle pointing up. Some short term relief perhaps.
I have included time limitations for the SET prediction of 188 and the banking sector prediction of 57. Both of these bearish predictions will likely be cancelled. However, the long term predcition for the SET is still 100. This would not be cancelled unless the index broke 300.
Current Prediction
Short term: none
Medium term: target of 188 by way of a head and shoulders is likely to be cancelled due to time limitation; ie, it did not reach target on time.
Long term: none
Currency: a triangle points above 40
14th September: Nothing persuasive happened last week. The brief rally last Monday came to nothing. The index is going to fall under 200 if nothing comes along to buoy it up.
7th September: The index appears to be trickling to target. Volume is very thin.
21st August: Getting close to good long term support at 210 on the daily chart. But we still have a target of 188. Bangkok Bank still has another 20% to fall and some communications stocks still have a good 30% to fall. So it would be surprising if the good support holds. Anyway, there's another "good support" at around 140. Tiny market volumes. Expect a real surge when the market takes off. Be prepared for getting left behind, rushing into the market near the top and getting caught.
Current Prediction
Short term: triangle 215
Medium term: 188 head and shoulders should be considered likely. 215 is now passed
Long term: none
Currency: none. A possible rising wedge that points to 42.50.
24th August: The index is heading at least to 215.
Current Prediction
Short term: 188 head and shoulders should be considered likely. 215 is now confirmed.
Long term: none
Currency: none. A possible rising wedge that points to 42.50.
12th August: The target of 188 in the short term chart looks likely. I resisted taking the pattern seriously due to the tiny shoulders. But it must now be considered a possibility. The end of the month could be the time when the target is hit.
Current Prediction
Short term: 188 head and shoulders should be considered likely.
Long term: none
Currency: none. A possible rising wedge that points to 42.50.
3rd August: The short term chart now shows a rectangle; ie, a horizontal channel. Volume build-up is fair. If it continues to build up and, if the index breaks 300 on strong volume, we would have a double bottom reversal. Otherwise, the trend is down.
Current Prediction
Short term: none
Long term: none
Currency: none. A possible rising wedge that points to 42.50.
27th July: The index is sitting on good supports and the short term pattern is potentially bullish. But Bangkok Bank is making a bearish pattern. So there is some confusion in the market.
22nd July: The index has a chance of getting to 355 if the support at 280 holds. Woops. That support failed today, Thursday 23rd as I am checking the page. Could still be an ascending triangle. Come back next week.
Current Prediction
Short term: double bottom pointing to 355. But low probability of success given the current weakness in the region.
14th July: Some evidence that the index will drift down further, perhaps to 210. But the long term support is good. Volume has dried up to the levels of late December 1997. Maybe a surprise rally. But I would not expect it before the end of the month.
Current Prediction
Short term: log target of 248 for a head and shoulders top, 188 is the arithmetic target. Short term, invalid triangle points to 210.
Long term: none
6th July: The index should reveal a little bit of direction this week. The short term pattern in the chart below could indicate that the index is going to 210. This would be likely if the support at 265 fails. On the other hand, if the index breaks 280 on strong volume, we could see a rally to 340. I would give that lower chance.
Current Prediction
Short term: log target of 248 for a head and shoulders top, 188 is the arithmetic target.
29th June: The SET index and the banking and finance indices look like they are on or close to good supports. Stocks are close to target, with the exception of Bangkok Bank and Thai Farmers Bank, which could fall to around 24 and 19 baht respectively. If the other ASEAN markets do not reach bottom before the end of July,it is quite likely that the index will fall to as low as 188.
Current Prediction
Short term: log target of 248 for a head and shoulders top, 188 is the arithmetic target.
22nd June: Rock bottom bargain basement. Most targets have now been hit. Even the arithmetic targets for most stocks have been hit. Even the finance sector hit 500, well before the July date I was expecting. The sector is now out of its short term falling channel and could be ripe for a rally, if it doesn't disappear altogether. Even Bangkok Bank has hit its logarithmic targets, making the lower target of 24 avoidable.
The rally last Thursday saw heavier volume than we have seen since March, suggesting many vultures sitting on their rocky perches waiting for the last signs of life in the SET index before plunging in to feed.
A rally this week would not surprise.
1st June: All targets have been hit. The SET thus looks ripe for reversal. There is good long term support at the 290 - 310 region. But I doubt the SET will reverse before the other ASEAN markets, such as the Philippines, which has only just broken out of a head and shoulders top. Thus, if there is no rally soon, it is possible that the index keep falling till 250 in mid July.
Current Prediction
Short term: No prediction of the index. However, if there is no rebound, we should see the index touch its previous bottom of 330. The finance sector is moving to the target of 1,300.
Long term: could be heading back to 330 to 340 for a double bottom, or lower, to the long term support at 310.
25th May: Finance and Banking sectors have both made double bottoms
and many stocks with lower targets are sitting nicely on good supports.
The index is an inch away from a double bottom. So there is a chance for
a reversal soon. But more likely, the index will fall further. Here is
the evidence for further falls:
So in balance, it looks like the index hasn't touched bottom.The long term weekly chart begs for 310 or 320 The fund chart calls for further falls - but this could be explained by currency falls. Many individual stocks have further to fall: Thai Farmers Bank is only half way to target; Dhana Siam looks like it should close one day at 3 - not just hit 3 intra-day, as it did last week. The index itself has given no signs of reversal. There is no volume build up. Nor is there any pattern forming.
Current Prediction
Short term: No prediction of the index. However, if there is no rebound, we should see the index touch its previous bottom of 330. The finance sector is moving to the target of 1,300.
Long term: could be heading back to 330 to 340 for a double bottom, or lower, to the long term support at 310.
18th May: The index, and many other indicators are near their targets. The Finance Sector has at last hit 1,300. The Banking Sector is approaching double bottom level, as is the SET index.
The indicators that are still holding out are:
But for these indicators, one might be tempted to say that the market is ripe for reversal. With many indicators having reached or approached target, it is time to keep alert for the next rally. I have shown a little clue from the last rally in January. See below.Thai Farmers Bank, which is still 20% above target, the fund chart, which suggests another 10% fall, at least. But this might reflect currency rather than stock market. Krung Thai Bank could be making a possible rounding bottom, suggesting that a bottom will not come for the market until mid July. (This could give support to an ominous possibility that BBL falls to 40.)
Current Prediction
Short term: No prediction of the index. However, if there is no rebound, we should see the index touch its previous bottom of 330. The finance sector is moving to the target of 1,300.
Long term: could be heading back to 330 to 340 for a double bottom,
or lower, to the long term support at 310.
11th May: The index could soon make a double bottom, having reached the vicinity of its previous bottom. But this scenario could still see the index falling by 15%. There is support for a double bottom scenario: many of the stocks that had further to fall over the previous few weeks are now close to target. The finance sector points to 1,300, but it is on good long term support. The target for Shinawatra Computer (Shin) is the neckline of a nice symmetrical triangle (see Thai Stocks next page). This could be the point of a turnaround.
Countries such as Indonesia, Singapore and Malaysia have further to fall. I would expect these countries to touch bottom before another regional rally. Accordingly, we might see some drifting in Thailand over the next six weeks till these other countries shed more ground. On the other hand, Thailand was the first to fall and might lead a rebound.
Current Prediction
Short term: No prediction of the index. However, if there is no rebound, we should see the index touch its previous bottom of 330. The finance sector is moving to the target of 1,300.
Long term: could be heading back to 330 to 340 for a double bottom,
or lower, to the long term support at 310.
4th May: The finance sector and many stocks have further to fall. But long term supports are good and, in conjunction with low volume, might turn the index around. Otherwise, we should face the prospect of a double bottom at 340.
Current Prediction
Short term: triangle pointing to 410 and a double top pointing lower to around 400. The finance sector looks particularly weak and could fall to 1,300, provided the long term supports to do not prevail.
Long term: could be heading back to 340 for a double bottom, or lower
27th April: Same picture as last week. More short term weakness on the charts, but long term supports could intervene and prevent the situation deteriorating too much further.
The fund looks strangely resilient. A falling wedge might be containing further falls.
Finance sector fell through the neckline of a double top pointing to 1,300. But the long term support is in tact.
Current Prediction
Short term: triangle pointing to 410 and a double top pointing lower to around 400. The finance sector looks particularly weak and could fall to 1,300, provided the long term supports to do not prevail.
Long term: could be heading back to 340 for a double bottom, or lower
20th April: The index looks set to fall to 400. But many key stocks, the banking sector and the long term fund price look well supported, leaving open the possibility that further falls will be limited. The downside is still the previous low at 340. But volume has dried up significantly over the past two weeks, suggesting a possible rebound.
Current Prediction
Short term: triangle pointing to 410 and a double top pointing lower to around 400. The finance sector looks particularly weak and could fall to 1,300.
Long term: could be heading back to 340 for a double bottom, or lower
11th April: The index looks set to fall back to 400 and possibly lower. Most of the stocks on the next page have quite a bit further to fall. Bangkok Bank is among them. The pretty reverse head and shoulders that portended 118 has failed. But two head and shoulders tops, pointing to 66, appear to be working. The hope for containment of the current decline lies in long term supports. Pay attention to these charts.
Current Prediction
Short term: triangle pointing to 410 and a double top pointing lower to around 400. The finance sector looks particularly weak and could fall to 1,300.
Long term: could be heading back to 340 for a double bottom, or lower
20th March: Short term patterns are not reliable. Breakouts fail one week, repair the next, then promptly fail again. A lot of noise makes prediction difficult for the stock market. But the currency situation looks clear. The baht is on course for 36.
Our darling Bangkok Bank, with its cute little reverse head and shoulders, has made a head and shoulders top, pointing to 75. Nasty! High volume today supports the pattern. News that the bank is increasing capital sent the stock down. But, strangely enough, even the target of 75 would not cancel the pattern pointing to 118. So it's a dangerous trade to cut loss and buy back. It could hit target and bounce back in a flash, given the current volatility.
The index is still making a triangle. It will soon break out and, provided it is not too close to the apex, will give some clue as to the next trend for the index. The finance index is making the most encouraging sounds this week. The long term resistance for the finance sector index broke slightly today, but not decisively.
Current Prediction
Short term: none yet, but a symmetrical triangle will soon give an indication. If 525 breaks, we can expect 630, then 780, provided volume is strong.
Long term: none
16th March: Two bullish signals suggest that Thailand is leading the region in recovery. First, the fund has broken out of a reverse head and shoulders on the short term and long term charts. Secondly, two bearish head and shoulders patterns in the finance and banking sectors failed last week. The short term rising trend support intervened to send the indices above the neckline of the patterns, cancelling them. Currency is also strengthening, but this is a regional phenomenon.
There are still long term resistances to overcome before the index can
be said to be in a primary bull phase. The index must also break 535 on
good volume before we can be confident of further rises. But the signs
are encouraging.
Current Prediction
Short term: none yet, but a symmetrical triangle will soon give an indication. If 535 breaks, we can expect 630, then 780, provided volume is strong.
Long term: none
9th March: Despite the short term weakness, there is still a good chance that the index will rally to 800 in the next month or so. The big disappointment is Bangkok Bank, which broke out of a reverse head and shoulders pattern and promptly failed, (along with so many other reversal patterns in ASEAN countries). But the bank is holding on by a thread. We could see a recovery mid-week. Finance is weak. Communication is stable.
The fund also failed its breakouts. The currency is weakening in the short term. Beware the turns on the long term finance, banking and index charts. They look ominously like the turns of last August that took the indices to new lows.
Current Prediction
Short term: triangle points to 670
Long term: none, but keep an eye on the long term pattern pointing to 150. This is not valid due to volume patterns. See below.
2nd March: The index is on the verge of breaking out of a reverse head and shoulders pattern that points to 800. The currency appreciated today. The fund chart also looks good.
Current Prediction
Short term: triangle points to 670
Long term: none, but keep an eye on the long term pattern pointing to 150. This is not valid due to volume patterns. See below.
23 February: The index, fund, currency, and stocks shown in this page are all facing stiff resistance this week. But they are all sitting pretty for good reversal patterns. If the resistances are broken, we can expect a good rally lasting, perhaps, into the next month. Keep an eye on Bangkok Bank. If it breaks 100 on strong volume that could signal the start of something big.
Resistance this week is pretty strong at around 540. If this level breaks it will be a good sign. Check out the meidium term chart below.
Current prediction
Short term: reverse head and shoulders with no right shoulder pointing to 630. But I wouldn't rely on it. Better to wait for the neckline at 560 to break.
Medium term: none
Long term: none
16th February: The index and many stocks have turned on medium and long term resistances, casting doubt over reversals and cancelling our prediction of 670. We'll have to wait and see this week how far the index will fall. Next support is 440.
Current prediction
Short term: reverse head and shoulders and pennant with target of 670
Medium term: none
Long term: The symmetrical triangle pointing to 200 was cancelled
after the index broke 540.
10th February: The rally looks good. It will probably continue. But there are strong resistances to overcome on the two year chart (at 570), finance at 2,500 and some individual stocks, such as BBL.
Current prediction
Short term: reverse head and shoulders and pennant with target of 670
Medium term: none
Long term: The symmetrical triangle pointing to 200 was cancelled after the index broke 540.
31st January: The rally hit 500 on Friday, and looks set to hit 540, and possibly 580, in the short term. The banking and finance sectors have both broken out of reverse head and shoulders patterns. These sectors should fuel more gains in the index. Communication looks like it has topped out for a while.
Current prediction
Short term: reverse head and shoulders target of 540
Medium term: (which in this market could mean Wednesday) resistance at 580
Long term: A symmetrical triangle pointing to 200: The pattern can be cancelled if the index breaks 540, as I expect it will.
26th January: Last week the long term, weekly, resistance broke. This is the first time in two years that the descending channel has been penetrated. Although it is an encouraging sign, it is not the sign of a long term reversal. And the short and medium term resistances look steep this week. The two year chart (see below) looks especially resistant this week.
Current prediction
Short term: resistance at 440
Long term: A symmetrical triangle pointing to 200: valid except for the fact that the breakout occurred at the apex. Such breakouts usually invalidate predictions. But in the current climate triangles with the apex defect have worked more often than not. This pattern would only be cancelled if the index breaks 500.
26th January: Last week the long term, weekly, resistance broke. This is the first time in two years that the descending channel has been penetrated. Although it is an encouraging sign, it is not the sign of a long term reversal. And the short and medium term resistances look steep this week. The two year chart (see below) looks especially resistant this week.
Current prediction
Short term: resistance at 440
Long term: A symmetrical triangle pointing to 200: valid except for the fact that the breakout occurred at the apex. Such breakouts usually invalidate predictions. But in the current climate triangles with the apex defect have worked more often than not. This pattern would only be cancelled if the index breaks 500.
19th January: The index broke out of the 2 - year daily chart resistance today. Volume was good. Many individual stocks have made reversal patterns. Chances for a bit of a rally are good. But there is no indication of a long term reversal.
The long term chart might break out of its channel and the fund chart will today have broken out of a falling wedge. These are positive signs. But not sufficient to show the bottom of the market has been reached.
Current prediction
Short term: resistance at 490 - 500.
Long term: A symmetrical triangle pointing to 200: valid except for the fact that the breakout occurred at the apex. Such breakouts usually invalidate predictions. But in the current climate triangles with the apex defect have worked more often than not. This pattern would only be cancelled if the index breaks 500.
12th January: Surprising! The SET only fell ten percent last week. More resilient than the other ASEAN markets. Volume is also falling off. Could that portend a bottoming out? I doubt it: major banks BBL and TFB are still nose-diving - but the banking index is near target. Meanwhile, exporters, such as Tropical Canning are going through the roof. A mixed and confusing picture. (Hence Felix pacing.)
Check out BBL on the individual Thai stocks page. It probably gives the best short term indicator for the market.
Current prediction
Short term: support at 340
Long term: A symmetrical triangle pointing to 200: valid except for the fact that the breakout occurred at the apex. Such breakouts usually invalidate predictions. But in the current climate triangles with the apex defect have worked more often than not.
5th January: The baht has shown its colours. 53 is on the cards. BBL, the largest capitalized stock in the market (I believe) is making another descending triangle, pointing to 53. So, if the targets coincide in time, you'll be able to buy Bangkok Bank for one dollar per share. Two years ago, it was ten. But I'm not rushing in to buy at that stage.
Check out BBL on the individual Thai stocks page. It probably gives the best short term indicator for the market.
Current prediction
Short term: support at 350
Medium term: A symmetrical triangle pointing to 200: valid except
for the fact that the breakout occurred at the apex. Such breakouts usually
invalidate predictions. But in the current climate triangles with the apex
defect have worked more often than not.
1997
29th December: Check out BBL on the individual Thai stocks page. It probably gives the best short term indicator for the market.
Current prediction
Short term: support at 350
Medium term: A symmetrical triangle pointing to 200: valid except for the fact that the breakout occurred at the apex. Such breakouts usually invalidate predictions. But in the current climate triangles with the apex defect have worked more often than not.
22nd December: A sleepy week in Thailand. Volume is so thin that a mere sneeze could send the index rolling one way or the other. Hong Kong will probably sneeze in a southerly direction. Japan too.
Current prediction
Short term: support at 350
Medium term: A symmetrical triangle pointing to 200: valid except for the fact that the breakout occurred at the apex. Such breakouts usually invalidate predictions. But in the current climate triangles with the apex defect have worked more often than not.
13th December: The index is now on a good medium term support. If this fails, I see nothing to contain the index before 200. But this would be on very thin volume.
Volume on the last few days was around 4 billion baht. But much of this was taken up by a sale of shares in BBL by a finance company through Peregrine. Could have something to do with keeping afloat. The turnover not attributed to these transactions would amount to a mere billion baht per day. Bear this in mind when considering the chances of the index bottoming out.
The baht could fall to 46 or lower.
Current prediction
Short term: support at 350
Medium term: A symmetrical triangle pointing to 200: valid except for the fact that the breakout occurred at the apex. Such breakouts usually invalidate predictions. But in the current climate triangles with the apex defect have worked more often than not.
8th December: After much dumping and new lows, the SET turned around last week. There's no reversal pattern. But a good turn on support could give an upside of 520 or more. The good news is that Thai Farmers bank has broken back into the triangle pattern, making a shakeout, and cancelling the gloom prediction of 15 baht. BBL and DS have not yet recovered to the extent that their predictions are cancelled. But with the current mood, there is hope.
The baht could fall to 46 or lower.
Current prediction
Short term: none, but a turn on support gives hope.
Medium term: A symmetrical triangle pointing to 200: valid except for the fact that the breakout occurred at the apex. Such breakouts usually invalidate predictions. But in the current climate triangles with the apex defect have worked more often than not.
1st December: The medium term SET chart shows a triangle with a breakout from the apex, pointing to 200. BBL has broken out of a descending triangle. The target is 5. Thai Farmer's Bank, the second largest bank, has broken out of a symmetrical triangle and is pointing to 15. Dhana Siam has made a valid prediction to less than 50 satang (or half a baht), the finance sector: 200. KTB - 5. The Japan meltdown scenario would facilitate these targets.
This scenario has another side: Good supports for all of the above stocks and indices. Also, the minute daily turnover suggests that the market is merely drifting and could reverse at any moment.
Next week should give a clearer picture.
A silver lining: Tropical Canning, an export stock, has gone through the roof.
Current prediction
Short term: none
Medium term: A symmetrical triangle pointing to 200: valid except for the fact that the breakout occurred at the apex. Such breakouts usually invalidate predictions. But in the current climate triangles with the apex defect have worked more often than not.
17th November: No clear predictions. A new triangle could be taking the index to below 400 or above 600. That's as far as it goes this week. But that's a potential upside of 30% for the traders. Not to be sneezed at.
Take a look at the finance sector and KTB long term charts. They show rounded bottoms that portend six months of bottoming. But remember, there could be a lot of volatility in the low ranges of those charts. Good trading opportunities.
Current prediction
Short term: a triangle pointing to 440. Target met intra-day last Friday 31st October.
Long term: none
27th October: The path to 440 looks clear. But long term supports might intervene. Almost all stocks and sectors are sitting on very good long term supports. Some are facing stiff resistance (DS and the long term index). Something must break soon, giving a clear indication of the market direction.
The medium term chart points to 220. The prediction is not valid. But that of the fund chart, pointing down 65%, is valid.
The baht is heading towards its target of 40.5.
Current prediction
Short term: a triangle pointing to 440.
Long term: none
20th October: The market fell to 509 today, resting on the support of our medium term triangle. This is the last major support that will prevent a fall to the nether regions of 440 and beyond. Banking stocks have fallen out of triangles, portending further falls, finance stocks still have a way to fall before breaking supports, communication stocks look weak, but volume does not suggest a breakout. Check out the individual charts. None gives a clear picture. The medium term SET chart shows today's (Monday) close.
Current prediction
Short term: a triangle pointing to 440, which could possibly be a shakeout (false breakout on the downside). If the index falls below 500, we can be reasonably confident that it will fall to 440.
Long term: none
13th October: The index fell out of our small triangle last week, making a valid target of 440. A false breakout is possible. This occurred in July when the index hit 690, and it might be happening again. But we would need a break above 580. See BBL, TFB and the finance sector charts which give encouraging perspectives.
Current prediction
Short term: a triangle pointing to 440, which could possibly be a shakeout (false breakout on the downside). If the index falls below 500, we can be reasonably confident that it will fall to 440.
Long term: none
6th October: Rising wedges (bearish) continue to do battle with ascending triangles (bullish). See DS, BBL and TFB, in particular.
As of market close today, one or two of them has broken out of the wedges, a bearish sign. But we won't be pronouncing bearishness until the triangle breaks at 540. Gurus Carrell and Anant take lower targets of 525 and 530 respectively.
So there is nothing to report, beyond the short term danger of the wedges. KTB has broken out of a descending triangle. This could be a harbinger for the whole index. But the stock has made false breakouts on the downside before. So, I'm afraid, uncertainty prevails for another week.
Medium term scenarios: - double bottom is the most hopeful scenario for a durable reversal in the near future
1. Symmetrical triangle: this scenario doesn't guarantee a reversal. At the moment the index has made three nice turns (460, 680 and 490). Theory requires four turns to be sure. We might see this at 620, then 520 again, then another rise above 600. Could be many months of volatility.
2. An ascending triangle: If the index keeps rising to 690 (instead of 620), then reverses to the 500 level, turns up again and breaks through 700, we will have a durable reversal. This would also take a few months.
3. Double bottom: If the index breaks the 700 level, without turning at 630 or 690 back to 500, then we would have a double bottom reversal.
4. A descending triangle: This option seems to be ruled out by reason of the turn last week at 490. But it is still possible in the bank sector.
Current prediction
Short term: hope: a rise to 660 if the triangle shown below breaks out. Otherwise, a fall to 440, provided no false breakouts.
Long term: one of the scenarios outlined above
29th September: Our little "triangle within a triangle" happened last week and we saw the index rise to 566. The index then turned, making a valid triangle with four turns. It will soon provide a good indication of the medium term direction of the market.
Now we should see a return to 530 and with luck, another turn. If the index keeps rising, we can expect 620 in the short term. But if 530 fails, the index will probably fall to 450.
Otherwise, the charts are making conflicting patterns: you will notice ascending triangle formations (taking intra-day prices) which are bullish and rising wedges (taking closing prices) which are bearish omens.
Medium term scenarios: - double bottom is the most hopeful scenario for a durable reversal in the near future
1. Symmetrical triangle: this scenario doesn't guarantee a reversal. At the moment the index has made three nice turns (460, 680 and 490). Theory requires four turns to be sure. We might see this at 620, then 520 again, then another rise above 600. Could be many months of volatility.
2. An ascending triangle: If the index keeps rising to 690 (instead of 620), then reverses to the 500 level, turns up again and breaks through 700, we will have a durable reversal. This would also take a few months.
3. Double bottom: If the index breaks the 700 level, without turning at 630 or 690 back to 500, then we would have a double bottom reversal.
4. A descending triangle: This option seems to be ruled out by reason of the turn last week at 490. But it is still possible in the bank sector.
Current prediction
Short term: a rise to 620 .
Long term: one of the scenarios outlined above
22nd September: The index might be making a little triangle now without going down to 500. But what's another few percent? There's nothing much going on. Politics dominates this week with a censure debate (i.e., vote of confidence in the government) and vote on the new constitution. Carrel thinks the index will test 500 on Tuesday or Wednesday.
Medium term scenarios:
1. Symmetrical triangle: this scenario doesn't guarantee a reversal. We would have to await the fourth turn. Then a further fall to around the 500 level. This would be the decisive point. If the index fell through the 500 level, after having reached 650, it would spell a fall to 250. I doubt this would happen. The index seems to reverse when the 30 day average value approaches 2.5 billion baht. It suggests that supply dries up at this level. If, on the other hand, the index turns on 500 and then breaks through 620, we would have our reversal confirmed. This would take about two months.
2. An ascending triangle: If the index keeps rising to 690 (instead of 630), then reverses to the 500 level, turns up again and breaks through 700, we will have a durable reversal. This would also take a few months.
3. Double bottom: If the index breaks the 700 level, without turning at 630 or 690 back to 500, then we would have a double bottom reversal.
4. A descending triangle: This option seems to be ruled out by reason of the turn last week at 490. But it is still possible in the bank sector.
Current prediction
Short term: a rise to 630, at least - with each passing week the prediction appears to be more of a hope than a prediction. But the 500 support is critical..
Long term: one of the three scenarios outlined above
15th September: A possible little triangle forming at the current level that will take the index back to 500. See the chart below.
Medium term scenarios:
1. Symmetrical triangle: this scenario doesn't guarantee a reversal. We would have to await the fourth turn. Then a further fall to around the 500 level. This would be the decisive point. If the index fell through the 500 level, after having reached 650, it would spell a fall to 250. I doubt this would happen. The index seems to reverse when the 30 day average value approaches 2.5 billion baht. It suggests that supply dries up at this level. If, on the other hand, the index turns on 500 and then breaks through 620, we would have our reversal confirmed. This would take about two months.
2. An ascending triangle: If the index keeps rising to 690 (instead of 630), then reverses to the 500 level, turns up again and breaks through 700, we will have a durable reversal. This would also take a few months.
3. Double bottom: If the index breaks the 700 level, without turning at 630 or 690 back to 500, then we would have a double bottom reversal.
4. A descending triangle: This option seems to be ruled out by reason of the turn last week at 490. But it is still possible in the bank sector.
Current prediction
Short term: a rise to 630, at least.
Long term: one of the three scenarios outlined above
8th September: Yes! It's a triangle. That means we can expect the index to keep rising until 650. Banking and finance, in particular, are driving the market higher. The low volumes that appear on the charts for these sectors are deceptive. It does not mean that there is low demand. On the contrary, it means that there is no supply. This is because the SET has a 10% ceiling rule. Dhana Siam, for example, hit its ceiling early in the morning. Only a few thousand shares were traded. Tomorrow, the same phenomenon may be expected. Thai Farmers Bank traded only a few thousand shares after it hit its ceiling at 101 at about 3 pm today. So the low volumes are deceptive. There is more demand in the market than the charts reveal.
Our 650 target is an approximation. A valid symmetrical triangle needs four turns. We are taking the top of the triangle to be the same as a corresponding resistance. This need not be the case, but it's a good conservative guide. The scenario list is now changed:
1. Symmetrical triangle: this scenario doesn't guarantee a reversal. We would have to await the fourth turn. Then a further fall to around the 500 level. This would be the decisive point. If the index fell through the 500 level, after having reached 650, it would spell a fall to 250. I doubt this would happen. The index seems to reverse when the 30 day average value approaches 2.5 billion baht. It suggests that supply dries up at this level. If, on the other hand, the index turns on 500 and then breaks through 620, we would have our reversal confirmed. This would take about two months.
2. An ascending triangle: If the index keeps rising to 690 (instead of 650), then reverses to the 500 level, turns up again and breaks through 700, we will have a durable reversal. This would also take a few months.
3. Double bottom: If the index breaks the 700 level, without turning at 650 or 690 back to 500, then we would have a double bottom reversal.
4. A descending triangle: This option seems to be ruled out by reason of the turn last week at 490. But it is still possible in the bank sector.
Current prediction
Short term: a rise to 650, at least.
Long term: one of the three scenarios outlined above
1st September: Yes, even thought the index has fallen further than we might have hoped, the triangle scenario is still possible. However, the weekly chart has met the previous low, making a possible double bottom. The bank sector also looks as though it is heading for a double bottom. But it is too early to tell.
Carrel sees 460 being tested, and even the danger of a fall to below 400. Anant points out that the market is currently over-sold but does not know where support is.
1. This is the triangle scenario: The index made its low in July and is now making a "higher low" that will form part of a symmetrical triangle. A turn at current level would assist. Both Bangkok Bank and Dhana Siam, which gave encouraging signs last week, failed to turn on their minimum targets. Bangkok Bank looks like it will make a double bottom at best.
2. A double bottom: The index could keep falling and make a double bottom at 460.
3. The bottomless pit: The index could keep falling below 460 and make a reversal pattern who knows where and when.
4. A descending triangle: If the index does make a double bottom and then turns at the 650 level, we are in danger of a descending triangle that could take the index to 220.
market close 25th August: The index closed today at 529, below our minimum target of 540, but on falling volume of 3.6 billion baht total value compared with 5.06 billion baht traded on Friday. BBL closed today at 131, a very good place for a turn. (See the chart)
Now all I'm offering is scenarios because I, along with everyone else, haven't really got a clear idea of how far down the market is going.
1. This is the triangle scenario: The index made its low in July and is now making a "higher low" that will form part of a symmetrical triangle. A turn at current level would assist. Bangkok Bank, which gave a clear sign of the current fall, has good support at its current level. Dhana Siam, which also gave an indication of last week's fall, could also reach its minimum target soon. Thus there could be a rebound this week giving us a triangle. Many of the charts below contain such triangles. Remember, the lower boundaries are just speculation at this point.
2. A double bottom: The index could keep falling and make a double bottom at 460.
3. The bottomless pit: The index could keep falling below 460 and make a reversal pattern who knows where and when.
I favour scenario 1. But it's just a hunch based on the fact that the index usually reverses on triangles and the fact that prices were so cheap at 460 that everyone went wild and sent the index rocketing. I doubt bad news will send the index down there again. But who knows?
Current prediction
Short term: 540, a triangle or a head and shoulders.
Medium term: no clear picture
Long term: Ask the IMF
market close 18th August: Still no clear idea where the market is going. Some signs point up: the reverse head and shoulders with pullback to neckline at 600. Some signs point down: the rising wedge (could point to the current 600), the fund chart, pointing down even lower.
Low volume has persisted over the past two weeks. Prices can slip a long way on low volume, perhaps to 540 or further. If the index fails to turn at 560, it could test 450 again.
I doubt it. Confidence is likely to recover now that the IMF thing is happening. But that might not be enough. Politics is getting into the market. The new Constitution will be put before Parliament soon and who knows what will happen. One thing is clear. At the moment noone has a clear idea which way the index is heading.
Mr. Carrel has a valiant opinion and must be praised for taking a plunge. He writes in the Nation that prices refused to fall during bad news last week and accordingly the market can be expected to rally in the middle of this week. He thinks that if the market were to fall below 500 it should have already done so. "A breakout upward this week is the most probable scenario", writes Guru Carrel.
I would be pleasantly surprised if there is such a breakout this week. Check out the charts and make up your own mind.
Current prediction
Short term: reverse head and shoulders shown in pink on the chart below with target of 750. According to this prediction, the fall to 600 today is a mere pullback. The defect of this pattern is the lack of a right shoulder. I have inferred the right shoulder from the gap. If the index remains above 600, this prediction will remain in tact. Below 600 and it is cancelled.
Medium term: Possible reverse head and shoulders forming. But note that this market does not usually reverse on head and shoulders patterns. Rather, this is a triangle market. That fact could spell a fall to 600 (which happened today) or anywhere above the previous low, in order to make the second turn.
Long term: The trend is still down until proven otherwise.11thAugust: All eyes are poised on events expected to occur after the Queen's birthday holiday tomorrow. Rumours abound regarding a change of government. But everyone is being circumspect (including me) for fear of being branded a shameless rumour monger.
Anyway, volumes have been minuscule over the past several days. Accordingly, there is nothing much to report. Only more ambiguity than we can comfortably handle. Our rising wedge may turn out to be a rising channel. Or it may be that the index has broken out of our rising wedge and is sitting, temporarily on the channel, before testing the 600 level. Nonetheless, the trend is up, in the short term, unless the channel breaks on Wednesday.
Carrel says that whichever way the market moves now will be "a durable move".
Current prediction: Possible reverse head and shoulders forming. But note that this market does not usually reverse on head and shoulders patterns. Rather, this is a triangle market. That could spell a fall to 600 or 580, before further gains could occur.
Short term: The trend is up
Long term: The trend is still down
4th August: Last week the market continued up in a rising wedge pattern. I have procrastinated in updating the site in order to see how the week begins. It is not encouraging. Although the market rose 11 points today, the volume was miserable. Only 3.3 billion baht. If this low volume continues this week, we can expect the market to hit 700 and then retreat to 600.
Anant, writing in the Bangkok Post, also sounds a word of caution. He notes that the breakout in Hongkong could deprive the ASEAN region, including Thailand, of liquidity that would otherwise have driven the market higher. This explanation sounds plausible.
Carrel is unusually equivocal this week. It could go up, but "the market is in danger of a sharp fall", he writes in today's Nation. The announcement of a deal with the IMF, says Carrel, should precipitate a move in either direction.
Pessimists may take encouragement from BBL which appears to have made a symmetrical triangle, broken out and pulled back. This pattern suggests a drop of at least 15% from today's price. Optimists, on the other hand, can take a look at Thai Farmers Bank, which has cleared the long term down channel, pulled back to the channel and is resting on the channel as a support.
Current prediction:
None at the moment. Note the nasty green rising wedge, resembling that which took the market down in January.
28th July: The recovery took a bit of a beating last week as the index dropped 28 points on Wednesday. That took us below the neckline of our little reverse head and shoulders, and has put the index in a symmetrical triangle. The triangle means that the index could go either way. That is, up or down. My feeling is that it will go up and that the triangle will be merely the shoulder of a larger reverse head and shoulders patterns.
But I stress a modicum of caution. Many of the stocks that we are following are still in their primary downtrends. They haven't broken out of their long term channels. Nor have they completed reversal patterns.
On the other hand, everything looks rosy. The individual stocks and sector indices are holding nicely in their respective ascending channels and the volume patterns look just like what you would expect for a reversal. More detail with charts below.
Current prediction:
None at the moment. I'm afraid we have to err on the side of caution and wait for the triangle, shown below, to break.
20th July: Last week the index broke out of a small reverse head and shoulders pattern on good volume. It's only a small pattern and no guarantee of a durable reversal. (We would have to wait for a nice long horizontal shoulder that probably won't happen until the index gets to 750.) But it's encouraging. All of the signs are still positive: good volume, many reversal patterns in individual stocks forming and some breakouts from long term resistance.
But many individual stocks are still trapped in their long term down channel resistances (although the SET is clearly out). Notably among these trapped stocks are major banks KTB, Bangkok Bank and Thai Farmers Bank. A breakout from these channels will be a most encouraging sign.
Current prediction
Tentative short term prediction of 860: The chart below shows the breakout from a down-sloping reverse head and shoulders (green neckline). Note that the index pulled back on Thursday and Friday, but managed to hold above the neckline. The green arrow shows the target.
The prediction depends on the green neckline holding
14th July: All signs are positive. But there is no clear reversal pattern in the index yet, and some of the bank stocks are still contained within their long term down-channels.
Last week we had a bit of consolidation in the 600 - 650 range. All of this took place within the ascending red channel shown in the chart immediately below. The support at 600 adds fuel to my "gap" right shoulder argument. See the chart for explanation.
Rising volume also suggests that this is a durable reversal in the making.
Current prediction: none: just a scenario:
Pullback to 600 or 580, then, fingers crossed, a renewed surge to 750, breaking through a down-sloping reverse head and shoulders with target at 850. Then a reverse head and shoulders pointing to 1,280.
8th July: What happened last week and what does it portend?
Last week the index took off with unexpected power. On Wednesday and Thursday every bank, finance, communication and energy stock hit its ceiling (10% above the previous day's close). Lower volume on Thursday was explained by the fact that the ceiling for stocks was hit in the morning and there were no sellers. (The offer column on the trading screen was completely empty.)
Why such a huge rise? The answer might be given by asking why did the index fall to such ridiculous levels?
The answer to the latter question is simply the uncertainty over the fate of the currency. That unresolved issue kept foreign buyers away for months. And with no foreign buying interest, the index obeyed Newton's first law: namely, a body keeps moving in a straight line until acted upon by a contrary force. Stock markets follow the law: the SET kept falling and falling until it hit ridiculous levels.
Once the uncertainty was lifted, as the baht was floated, buyers got an opportunity to see that they were not alone in waiting to buy cheap Thai stock. Indeed, there are likely to be many more once the current wave of profit taking ceases. Some stocks are still rising to their limit in the first hours of trade. Dhana Siam, for example, has no high and low prices on the chart. It is simply rising to the ceiling every day. It may continue to do so.
The big question now is, "Do we have a durable reversal ?"
The answer is that we do not yet have a clear reversal on the index. (Although many individual stocks have made clear patterns). That might be simply because the force of the rise removed the opportunity to make a right shoulder for a reverse head and shoulders. (See the short term chart.) We must therefore await a pullback and then a renewed up turn at a point at which we might have otherwise expected a shoulder. We can then infer a right shoulder. Alternatively, we will have a reverse head and shoulders with a target of 850.
Today the index turned at the resistance point shown in the chart of 659. The chart shows support at 600. A turn at this point would indicate that a pullback to a reverse head and shoulders has occurred, albeit with a gap instead of a right shoulder.
This would indicate a long term durable reversal which would be the conservative time to re-enter the market for the long term. It would equate with the current opportunity in Korea, and the nice reversal we saw in Hong Kong in the second quarter of 1995.
Will it happen? Probably yes. Many stocks have made reversal patterns. Others have rebounded beyond the neckline of their descending patterns, removing all lower targets. Furthermore, the index has broken out of the long term descending channel that has contained the fall since May last year.
If this scenario is correct, we may see the index recover rapidly further towards its level at the beginning of the year, at about 750. This was the point where all the uncertainty about the baht began to dog the index.
Current prediction: none: just a scenario:
Pullback to 600 or 580, then, fingers crossed, a renewed surge to 750, breaking through a down-sloping reverse head and shoulders with target at 850. Then a reverse head and shoulders pointing to 1,280.
29th June: No clear sign of a reversal yet, although some communication stocks have made reversal patterns. Advance Info and Shinawatra are two such stock. The reversal patterns, double bottoms, are short term. But they could be the making of long term patterns.
Again, I note that no sharp reversal is likely. It could be months, perhaps a year or two, before we see the 1,000 mark again.
Current prediction: Short term gains. 540 is possible.
23rd June: The index moved rapidly below our target, but finished the week politely on the dot of 480. The SET index, the finance and banking indices as well as many major stocks and the fund chart, all touched and turned on very good supports. However, one or two blue chips, such as Thai Farmers Bank and Bank of Ayuthaya, still have another five percent to fall before hitting their targets. This suggests that there may be a little more rough weather on the horizon. But the quality of the supports that these stocks are resting on suggests that these targets may not be reached for a couple of weeks.
Stop press: 
Monday's
close of 504, with a gap of a few points, has made an island reversal,
which is a minor trend reversal phenomenon. That means that the index will
rise for a while. A logical danger point would be 540, at which point resistance
should kick in. Islands are unlikely to portend a long term reversal.
Current prediction: Short term gains. 540 is possible. But a few bank stocks could take a tumble in a week or two, dragging the index down (from who knows where to who knows where).
16th June: The index fell gently down a descending channel last week. The eight year support is broken, showing 470, or thereabouts as the next support. The 18 month chart shows good support at current levels, however, the banking index looks set to fall further, dragging the index down, at least to 500, and possibly to 480.
9th June: So much for that. The nice ascending triangle that we were plotting last week failed to materialize. More disappointments challenging the patience of the avid bottom-fisher.
Indeed, last week, the index even had the audacity to present a small descending triangle with a target of 480. TheBanking Sector index could be approaching the same target. Many individual bank stocks have possible lower targets. See them below.
However, prices in most of the charts have dribbled out of the apex of a triangle pattern, reducing the probability of them attaining their target. The exception is the blue chip stock Thai Farmers Bank, which has made a head and shoulders pointing rather unambiguously to a 30% drop.
Some assistance in determining the direction of the market may be had from the fund chart. It appears to be making the same nasty rising wedge that it made a month or two ago. That wedge portended further falls. Will the current one offer the same prediction? See below.
The good news is that the index touched a strong support on the weekly chart last week. But merely touching a good support does not imply a reversal.
When will the reversal come? Soon. How soon? Can't say. The cardinal rule in the prediction game is that one can never say where the bottom is; or, in other words, one cannot say, "it can't fall any further". Prices can always fall further. On the other hand, you can say "It's fallen pretty far and must be a pretty good bet for a long term investment at current levels".
The bad news is that the finance sector is caught in a rounded bottom. It has been rounding out for about six months. It hasn't reached the bottom of the pattern. It could touch a bottom of 1600. But even if it doesn't reach the bottom, the pattern is likely to continue in a symmetrical fashion, saucering along for several months. On this scenario, the finance sector should hold the index back till at least the end of the year. 2,600 is probably the highest point that the finance sector will see in the next several months.
The banking sector is also ominous.
2nd June: The Thai market may be making an ascending triangle, one of the more reliable reversal patterns. The pattern is shown in green. Falling volume supports the pattern.
26th May: I have nothing to add this week. Our final target was hit last week. There are no further signs either of reversal or further falls.
I therefore defer to Guru Philippe Carrel, who writes this week in the Nation, that the most probable scenario this week is first, a panic sell off, in response to the failed merger negotiations between Finance One PCL and Thai Danu Bank. He then predicts that once investors realize that the financial sector "cannot fall significantly lower, as most lines trade below or near par value, the market should rapidly recover".
This sentiment echos my gut feeling (which is nothing to rely on). Although one can never say the market "cannot fall further", it is fair to say that the market is cheap at current levels and a point will soon come when traders will stop cutting loss and only those prepared to hold will remain. When supply dries up at low price levels, the market will reverse.
This is probably the same idea that M. Carrel is alluding to. If the index fails to continue falling this week, notwithstanding the panic bad news, people are going to get a surprise and the market may reverse.
He says that a safe entry to the market would be above 603. This point would correspond to the neckline of our small reverse head and shoulders, provided volume increases.
20th May: Blood flowed last week as our final target was met. We now have a market at a six year low point. Some fine fish for those who dare to chase them.
12th May: Our long term target of around 580 is approaching. For those with a long term perspective, it might be time to consider accumulating some of the cheap pickings. Of course there is no guarantee that the index will reverse at this point. Anant Tantuvanich thinks that the index will fall to 520. We have no further indication of falls below 580.
Note also that the index is making a rounded bottom. It suggests that the reversal will be slow, saucering out of its current malaise, rather than shooting up dramatically. However, when one looks at possible price increases for individual stocks, a small movement up on a long term chart could correspond to a rise of 100% or more.
5th May: The index could be making a rounding bottom formation. If so, it could be many months before it hits our target. We'll wake you up when something happens. A few individual stock picks will come on line then too.
28th April: The prediction of 580 seems difficult to avoid as our short term and long term objectives coincide with at the same point. The chart shows a symmetrical triangle that has broken downside.
8th April: How disappointing. Our little symmetrical triangle, shown in green, fizzled out to the apex. Thus, although it broke out upside on relatively strong volume, it can't be a breakout and the pattern has no predictive value. A few moving averages are looking positive. But I wouldn't rely on them. No clear picture yet.
28th March: Volume still low. This conforms with triangle theory. But we're getting close to the apex of our triangle. That's not a good sign. It means that the triangle might not work. A break this week would be most helpful. For now we are still in the doldrums.
17th March: We now have a very nice symmetrical triangle forming. A fall below 660 would confirm the prediction to 580. The predictions of our respected guru, M. Carrel, coincide with our targets using Gann analysis. However he says we would require a further period of consolidation at the 720 level for a durable reversal. Carrel, this week, also makes the bold prediction that 580 would be the bottom. Tempting to think it couldn't get any lower.
10th March: Only a break above 760 on strong volume will confirm a reversal. Even a rise to 780, without strongly increasing volume, will only be an extension of the pattern of rising wedges. The pink lines show these pernicious formations. The index may rise to 780 and then plunge again. Volume patterns will hold the key. A rising wedge requires falling volume. A double bottom or a reverse head and shoulders would require increasing volume.
Note that the wedge pattern that occurred during December and January may be seen as a reverse head and shoulders. Average volume rose slightly. We should insist on strongly rising volume to take us out of the gloom. 580 is still a possibility.
3rd March: This market is enough to try the most patient. What next? The index touched 700 again today (not shown on the chart). But the finance and banking sectors were suspended because of merger rumors between Finance One and Thai Danu Bank.
A double bottom at 700 would be nice. But the cloud on our horizon is the long term possibility of 580, as shown by the nasty big symmetrical triangle on the weekly chart below.
Carrel also sees the possibility of 580 (or 920) by the end of ex month.
Let's not despair. This market is ripe for a primary reversal. Those of us who bear the blizzard now will have clear skies and sunny slopes with lovely fresh powdery snow in the months and years to come.
14th February: The index plummeted these last few days to hit all of our targets, including our long term target on the seven year chart. (Don't ask me how this stuff works.)
There could be further falls. BBL (Bangkok Bank) may be going lower, to 150, or possibly 140. KTB may sink a bit lower. But these prices now are pretty cheap. The long term investor would not be disappointed in a year or two to buy this market at current levels.
Note, however, that we don't have a reversal pattern. The best case scenario now would be a reverse head and shoulders with a neckline at around 880. But it's too early to speculate.
10th February: The index closed at 746 last week. This level approaches our target of 720. Both of the gurus that I follow agree with this target. Anant gives a range of 700-720. Carrel sees the possibility of the index dipping below 700 and a worse case scenario of a new objective at 580. This miserable scenario may be supported by the charts of our blue chips, KTB and BBL, two banks, presented above.
The fund chart has not yet done its minimum, portending further falls.
At these levels, the index is cheap. Long term investors should consider accumulating. A reversal could come at any time.
3rd February: Well, after a brief flirtation with the possibility of a reversal above 800, we must now adjust our sights back to the 720 mark. I say this with some trepidation because the pattern on which I base this prediction, a descending triangle, is not entirely satisfactory. Strictly speaking it has only two turns. However, the volume falls off as one would expect for a descending triangle.
The long term chart has been "doctored" to fit the 700 mark scenario. In these uncertain times, the principle of "near enough is good enough" should be considered
27th January: Nothing exciting occurred last week. The index merely pulled back to its neckline at around 845. A small reverse head and shoulders is still valid. Increasing volume supports the picture. However, these small reversal patterns have disappointed before. (Some lay blame on the support fund, which supposedly distorts the picture. Who knows?)
Guru Carrel has two scenarios: the most likely is a fall to 823 this week, followed by a test of 805 or 790. Secondly, and improbably, the market may retrace to 920.
Anant notes that the average P/E ratio of the SET has turned on a support of about 11, which is equal to the low made in 1991- a possible market supporting factor. He does not consider the market ripe for investing.
But you never know.
20th January: Nothing to get excited about. The index pulled back to the neckline again. Volume is picking up, as one might expect as a downward move gets moving. Lets wait and see. Our downward scenario of 720 is still on the cards, but a break above 845 might change that.
Carrel says a descending triangle is forming. But I don't see it. There is something like a descending triangle in our fund chart below. But that broke a long time ago.
13th January: Last week the index rose nearly 10% to touch the neckline of our head and shoulders, stalling at the magic resistance point of 845.
This movement can be explained as a second pullback to the neckline of our reverse head and shoulders. This is quite normal according to our theory. The same phenomenon can be seen in the Banking Index.
We expect the market to reverse here, before falling below the 800 level. Our target is 720. However, it might be appropriate to apply the rule "near enough is good enough" and pick up some bargains, should the index get down around the 750 level.
Carrel: I didn't quote Carrel last week, sparing him the embarrassment of his bold prediction that the index would reach 720 within four trading days. That didn't happen. It is a good example of what can happen when one is too bold with timing.
Our favourite guru nonetheless deserves quoting this week: He sees a possible retracement of the index to as high as 900, before it falls again. He sees strong support between 780 and 720, but nothing below. Therefore he is allowing three possible turning points: 780, (corresponding to the most recent low) 750 or 720. Below 720, there is nothing to support the market until 580.
Carrel's best case scenario is another fall to 780.
4th January: This index moves quickly. The index fell nearly five percent last week. A nice little trade was had by those who jumped out at the pullback at 820.
Our target of 720 may well be soon upon us. So keep alert.
Note that Krung Thai Bank, which has been our clearest indication of
the direction of the market, is nearing its objective of 43. If the index
gets to 720, KTB might get a little lower. But I wouldn't count on it.
Thailand is getting pretty cheap. Some bargains abound for those considering
the long term. KTB, in particular, has fallen more than 60% since October
1996.
1996
30th December: The index pulled back to the neckline of our head and shoulders. It now looks set to fall to at least 720 (black arrow - reliable), maybe 700.
23rd December: How much more of this can we endure? Last week's nasty falls of 5% portend a short term correction at the 800 level, where there is good long term support. Our analysis still sees 720 looming. Carrel still holds to his double bottom at 720, the first bottom in January, the second in April. Could be right. Who knows? I felt pretty hopeless last Friday and accordingly bought. (Thanks God, I sold the next week.)
16th December: After one technical pullback, the index appears to be heading down to our target of 720.
Will it happen? It seems too drastic to be true! After such a heavy fall, starting May this year, and while the other markets are doing just fine, could the SET keep dropping?
The Gurus are mixed. Anant identifies a major support for the finance index at its current level of 6,000 (see the chart for Dhana Siam, a major finance stock, below). He nonetheless acknowledges 845 as a major support.
Carrel says that no durable uptrend is in sight. The support at 845 is important, but he sees the market falling through this level, touching 820 and then hitting the 845 point as a resistance. Carrel also sees 720 as a target, albeit using Gann analysis.
Carrel allows almost negligible chance to a reversal at current levels, "but no hypothesis should be ignored with financial markets". (Indeed, I recall Carrel, only a few months ago, discounting the then possible fall to 880 as "against all reason".)
With the Dow, the Hang Seng and the Nikkei in short term decline, it would be unlikely for the SET to buck the trend. But this market will probably reverse when least expected. I see Thailand at current levels as a rare opportunity.
10th December: The SET has disappointed. It failed to rise according to our prediction. Many of the blue chip stocks have also failed to perform according to their targets. The index now seems doomed to fall further. Our next target is 845. Guru Carrel paints a gloomier picture:
Carrel, 9th December: The next support, according to Carrel, is 845. However, this is only an intermediate goal. The SET usually moves in steps of 215 points, says Carrel. The next possible bottom would therefore be around 720. He maintains that the SET will fall, at least, to 750. He sees the end of the downtrend occurring in April, 1997.
A little soul searching at the bottom of his column "Dawn finally appears in the darkest of the night". The end of the downtrend will occur "when noone expects it anymore, including ourselves".
Anant, 9th December: Asserts that the global bull trend will overcome local factors. He says that long term indicators point to a recovery with a peak in late January or early February. If this is correct, the SET will rise quickly, very soon.
The index chart: shows an invalid descending triangle. It is "invalid" because it has only two turns. But these "two turn triangles" have worked in the past, leading us to believe that they will work again. The minimum target is around 720, corresponding with M. Carrel's predictions. Note the slight pullback to the neckline on Monday 9th December.
25th November: After a 6% plunge last Monday the turbulent SET spent the rest of the week consolidating. Notice that the index and most of the blue chip stocks (some of which are show below) held firm at the neckline of their reversal patterns. This means that a reversal scenario was not invalidated by last week's plunge.
Guru Carrel, writing in The Nation, 25th November, does not see any cause for euphoria. He doesn't believe that the current price patterns are creating a durable reversal and warns of a fall to 845 next month or January 1997 and even further falls during the first quarter of next year. He bases his analysis, in part, on a prediction that the banking index will fall to around 800 (a fall of about 20% - see our KTB chart which may support this hypothesis, below).
Carrel sees a reversal at 1020 this week as the most likely scenario.
Anant Tantuvanich sees 1020 as a key resistance. He expects the market to continue rising until January if the 1020 point (the 10 week moving average) is passed.
We are not satisfied with a 10 week moving average. It disappointed early October. We would therefore prefer to see the 13 week moving average penetrated.
18th November: After several wild days last week the SET has plummeted nearly 7% in morning trade. Is this the beginning of a move down to 845? Or is it a pullback to the neckline of a symmetrical triangle? The small chart below the main index chart would suggest the latter. Tuesday's trade will tell.
Note that we have revised our interpretation of the symmetrical triangle at the 990 to 1090 levels. The significance of this revision is that the minimum (pink arrow) has been satisfied. The only cloud on the horizon is the chart of Krung Thai Bank (below) which shows a head and shoulders target of 55. The current price is around 76.
Guru Anant: Support for the pullback scenario is in Anant's column (Bangkok Post 18th November). Anant sees the start of a bullish cycle that should carry through to January. He argues that the current rally is a result of the regional trend and is not dependent on politics. This scenario would suggest that today's plummet is a knee jerk reaction by those disappointed investors who thought that a change of government was imminent. Let's see. He sees "danger" on the 20th and 27th. But he doesn't tell us what kind. Could it be false starts?
Guru Carrel: Nothing clear from this Guru, this week.
9th November: The SET finally made a reversal pattern, albeit a little one. The index shows that the neckline of a double bottom was broken on Friday. The fund chart, below the index, broke out topside from a symmetrical triangle. These are the first reversal signs that the index has made since it began its plummet in July.The market could go as high as 1060 by next week and 1230 in the medium term. But it is more likely to return toward 900 and a new low is possible [current low is 875]. The banking index has made a head and shoulders that could take the index to around 800. (It is currently around 1020)
The rally last week was purely speculative, based on a possible election result, not based on solid institutional buying, and is therefore ephemeral. (SeeThe Nation, 18th November)
These reversals offer a glimmer of hope that the index may finally turn around. On the other hand, we may be seeing the build up of a little head and shoulders consolidation that would take the index down to 845 or thereabouts.
Guru Carrel: (The Nation, 11th November) offers the following sage words:
October 25th: Again, I defer to the gurus (references are in last week's comment, located below the chart):We are still in a downtrend with a risk of a further 20% fall (760); The market may be reversing at its current level if the index falls immediately on Monday 11th November. In such a case it would revert to around 930 and would have "a better chance of a durable reversal". (This happened) The SET will reverse when interest rates are lowered. Carrel also points out that the possibility of a reversal would present a rare opportunity. This must be the case. It is rare to find a market that falls 35% in a year, as has the Thai market since January/February this year.
Anant: is pessimistic about the global cycles and warns that a downtrend in the US and Japan would mitigate against a strong recovery in Thailand. He advocates patience.
Carrel: sees the market falling to test 920 as this was the "main price accumulation during the previous fall"... and ..."markets always test such zones at least twice during the consolidation that follows a dramatic move". He then expects an improvement mid week to a maximum of 980 on small volume and small day-price range. He then expects the market to retreat to around 960, where it should be ripe for "a violent move, probably downward". See the comments from last week for expatiation on the downward move scenario.
M. Carrel has a nice comment on investors' time horizons. He says that he has been asked by readers whether they should cut losses now, after having invested for several years. He writes that an investor's strategy all depends on his time frame. He says for long term investors, who are betting on the future performance of a company or economy, there is no reason to "give up...just because short term investors are panicking". He says that the long term investors weren't watching the market every day for the past three years, "why should they start doing so now". Sage advice.
18th October: The SET has been in free fall since its miserable retreat from the 1100 mark, two weeks ago. It now looks as though a 50% retracement from the record high is in order. The record high occurred in January 1994 when the index reached around 1753. A 50% retracement would take us to around 875.
Last week the index touched 895. This is a 49% retracement and may be good enough.
The chart shows a triangle. However, to be valid, a symmetrical triangle should have three turns. This one has only two turns.
Guru Anant Tantuvanich of Thai Securities warns that there is still no reversal sign and that it's better to follow the trend than fish for the bottom.
Guru Philippe Carrel who writes in the Nation says that
we may expect a reversal of the index if the index can remain in its current
range for several weeks. If it keeps rising to 975 - 980 this week, we
may expect a sharp drop that will take us to 845. (This figure corresponds
to the target of our invalid triangle.) Below 845, Carrel sees the risk
of a fall of a further 15%.