Latest thoughts from Ploy !

As we are in the last week of the year 2011, there is no joy to the world of investment. The SET hit the cycle resistance during Christmas and fell back down, as the Baht is weakened against the Dollar. From the chart, the Baht/Dollar exchange rate may head up to re-test the barrier at 31.42-31.44 again, and a breakout above this barrier will be a negative to the SET.

The SET didn’t manage to stay firmly above the barrier at 1,043-1,045, and as it tumbles now, the support is at 1,025-1,020. Another critical support is at 1,006-1,000. If the SET falls below 1,006-1,000, it will signal a dangerous Double Top pattern, and the downside may be steep. I wouldn’t recommend buying anything now.

Across the globe, the Dow Jones faced its cycle resistance, which was around the 22^nd-23^rd of December. The index may head up to 12,750 and 12,870, but I would rather wait until trading resumes tonight before confirming the signal, because there is still the possibility that the index will fall down after it hits this cycle resistance.

The reason I said there is still the possibility that the Dow Jones will fall back is that, the US dollar index still stalls and there is no clear signal where it is heading yet. It may head up to test the interim barrier at 80.14, or down to test the support at 79.40-79.20. While the signal is not clear, I suggest waiting and seeing how the Dow Jones will turn out tonight. A continued rebound in the Dow Jones may signal that the US dollar index may head down to test 79.40-79.20. So, that is a wait-and-see.

One thing to keep in mind is that, the SET will not perform well as it used to do for the past few weeks. The charts below show that the SET is about to under-perform the Dow Jones, the Asia Pacific region (excluding Thailand), and the US dollar index. But, it is quite difficult to fully confirm this signal since most markets are closed during Christmas, and the volume in the SET is so low. If these charts continue heading down late this week, when most markets will trade on the last few days of the year, it will be easier to confirm that the SET is about to under-perform most markets.

Therefore, ease off buying for now and do not expect much for the January Effect. Wait for the clear signal in the Dow Jones tonight, and other markets in the Asia Pacific regions tomorrow. 

I, myself, am shutting down the computer and flying to Singapore. Happy Holidays and happy trading to you all!