Our resident expert chartist has decided to contribute her thoughts on the recent market drop, she seems to think things may continue to decline…enjoy!


I am digging for the possible downside of the SET index in this current decline.

While this chart may look confusing to many, it is actually very simple.

First, look at the black trend lines. The SET index has retreated from this monthly resistance line, of which its parallel lines previously signal significant declines. One of the largest decline occurred at the parallel line of this black resistance line but not draw in this chart though, includes the pre-Subprime Crisis period.

So, yes, we are at the significant juncture.

Keep in mind that, the decline at this resistance line doesn’t have to be GFC-sized large; it can be much smaller, 100 points decline, perhaps?

All the red trend lines show the pattern of the SET index I am watching now. Note that these are not based on Fibonacci.

I am watching the support level at 1,380-1,370. That’s the first downside I see.

Am I pessimistic? No, that’s my optimistic downside.

I have another scenario in mind: the SET index may swing within this red-blue channel, ranging within 400-550 points, for a year or two, before something triggers a deep, deep plunge —– the pattern we saw pre-Subprime.

That’d be one of the nightmares. But for now, let that scenario be just that – a really bad dream.

  1. Before certain readers laugh (we know where you live), consider: the SET runs seminars on technical analysis. Bloomberg recently ran an article by a Tom Keene stating unequivocally this was how “the pros” beat the market. Not only was I unaware how these pros did so, I didn’t even know they beat the market. However: it can cost nothing (or, caveat emptor, empty your account) to be aware of how the chartist mind is working, it does impact the market short-term, and there is a traditional local orientation in this direction–although the original market voodoo that they do came from The West (see Dow Theory). The last truly juicy panic down to 800 here was preceded by one of the most beautiful head-and-shoulders I ever saw. That was the last time P/E’s were lower than yields. Panic is the vulture’s best friend.

    Plus, what the hell, we all sneak a peek from time to time anyway, right?

  2. So what is everyone’s thinking after the first raft of earnings for the banks (proxy for the wider economy)?

    Personally I think the banks have held up incredibly well to be basically flat year on year so far. Could we be at the bottom? Won’t know til after the fact.

  3. Thanks. Appreciate your insights….. Now, perhaps add some rationale… What is your estimated earnings for 2015 for the SET?

  4. The SET Index, now at 1445, trades at roughly13.8 times estimated earnings (104.25) for the next 12 months, compared with the five-year average of 12.3, according to data compiled by Bloomberg.

    Assuming any mild market shock, the SET might easily moderate to its 5-year average multiple. In that scenario, the SET would dip to 1282 – i.e. 12.3 times 104.25. Of course, short term trading ranges swing widely, driven by the emotional psychology of the moment.

    • I wouldn’t be surprised to see the index decrease below 1,400, or to where J.N. just mentioned.

      1) I think there’s more pain coming for financials
      2) Energy’s 2Q bump from inventory gains won’t exist from what we see today
      3) Telco’s, ok 4G, perhaps the only decent sector, but TRUE (as I’ve said before) is already rather expensively priced, DTAC is becoming a perfect example of a leveraged dividend player for the main shareholder thus only ADVANC
      4) Consumer names (the last big sector) i.e CPN, BIGC, etc, there aren’t going to be any magical numbers coming out of this sector
      5) The announced delay of infrastructure projects (which isn’t completely unexpected given that we are already in the 3q) was just the catalyst local institutions needed to sell.

      So, not surprised to see this pullback, nothing overly attractive on the large names @ the moment

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