Nikkei 225 Phase Analysis

Date	Close	Phase	50 DMA	200 DMA
1/4/2008	14691.41016	-3	15708.10254	16883.99414
1/7/2008	14500.5498	-3	15661.8252	16870.60156
1/8/2008	14528.66992	-3	15623.62891	16859.85938
1/9/2008	14599.16016	-3	15586.59961	16848.55469
1/10/2008	14388.11035	-3	15547.19531	16836.77344
1/11/2008	14110.79004	-3	15503.72656	16822.2793
1/15/2008	13972.62988	-3	15453.06641	16806.32617
1/16/2008	13504.50977	-3	15389.19629	16786.75195
1/17/2008	13783.4502	-3	15331.84473	16768.26758
1/18/2008	13861.29004	-3	15274.31738	16749.96289
1/21/2008	13325.94043	-3	15203.42871	16729.76953
1/22/2008	12573.0498	-3	15124.54004	16706.36133
1/23/2008	12829.05957	-3	15055.74121	16684.18555
1/24/2008	13092.78027	-3	14992.60547	16663.21094
1/25/2008	13629.16016	-3	14943.25391	16646.21484
1/28/2008	13087.91016	-3	14889.58105	16625.43359
1/29/2008	13478.86035	-3	14847.49023	16605.10938
1/30/2008	13345.03027	-3	14810.4502	16584.37695
1/31/2008	13592.46973	-3	14779.7666	16564.91406
2/1/2008	13497.16016	-3	14739.71875	16543.68164
2/4/2008	13859.7002	-3	14708.98633	16524.6543
2/5/2008	13745.5	-3	14680.80273	16505.0332
2/6/2008	13099.24023	-3	14641.9375	16482.82813
2/7/2008	13207.15039	-3	14601.84961	16462.04297
2/8/2008	13017.24023	-3	14565.44238	16438.99023
2/12/2008	13021.95996	-3	14528.10645	16416.46094
2/13/2008	13068.2998	-3	14486.76758	16393.4668
2/14/2008	13626.4502	-3	14454.83887	16374.73828
2/15/2008	13622.55957	-3	14424.21484	16355.58887
2/19/2008	13757.91016	-3	14389.09766	16337.10254
2/20/2008	13310.37012	-3	14341.69238	16316.39648
2/21/2008	13688.28027	-3	14302.87793	16298.65625
2/22/2008	13500.45996	-3	14263.28223	16279.01172
2/25/2008	13914.57031	-3	14229.39746	16261.58203

Nikkei 225 is also in Bearish phase. However, it is now about 300 points away from the 50 day moving average. Once the close goes above the 50 day moving average, we will move into "Recovery" mode. So those that are short in Nikkei need to be careful.

Shanghai Market Analysis

Date	Close	Phase	50 DMA	200 DMA
1/2/2008	5272.810059	3	5257.520508	4546.415527
1/3/2008	5319.859863	3	5248.450684	4558.19043
1/4/2008	5361.569824	3	5238.819336	4570.467285
1/7/2008	5393.339844	3	5235.438965	4582.675293
1/8/2008	5386.529785	3	5231.376465	4594.955566
1/9/2008	5435.810059	3	5225.133301	4607.062988
1/10/2008	5456.540039	3	5216.319824	4619.18457
1/11/2008	5484.680176	3	5206.918457	4631.320801
1/14/2008	5497.899902	3	5198.590332	4643.45459
1/15/2008	5443.790039	3	5191.909668	4655.301758
1/16/2008	5290.609863	3	5185.032715	4666.140137
1/17/2008	5151.629883	-1	5177.334473	4676.20459
1/18/2008	5180.509766	3	5168.90918	4686.241699
1/21/2008	4914.439941	-1	5160.597656	4694.82666
1/22/2008	4559.75	-2	5145.481934	4701.705078
1/23/2008	4703.049805	-2	5135.788086	4708.958008
1/24/2008	4717.72998	-1	5126.97998	4716.089844
1/25/2008	4761.689941	-1	5113.960449	4723.44043
1/28/2008	4419.290039	-2	5095.041016	4728.941406
1/29/2008	4457.939941	-2	5077.874512	4734.613281
1/30/2008	4417.850098	-2	5060.835449	4739.708008
1/31/2008	4383.390137	-2	5042.629395	4744.403809
2/1/2008	4320.77002	-2	5024.759766	4748.53125
2/4/2008	4672.169922	-2	5018.520508	4754.236816
2/5/2008	4599.700195	-2	5009.871582	4759.644531
2/13/2008	4490.720215	-2	5000.509277	4764.115723
2/14/2008	4552.319824	-2	4994.333496	4768.818359
2/15/2008	4497.129883	-2	4988.208496	4773.241699
2/19/2008	4664.290039	-2	4981.427734	4779.318359
2/20/2008	4567.029785	-2	4975.33252	4784.232422
2/21/2008	4527.180176	-2	4968.503906	4788.313965
2/22/2008	4370.290039	-2	4957.591797	4791.562988

In the beginning of 2008, the Shanghai Composite Index was still showing bullish signs. However warning signs started to appear and Jan 28 2008, the index entered into "Distribution Phase". Now the index is clearly below the 50 and 200 DMA. Once the 50 DMA cuts below 200 DMA, we will be entering the "Bearish Phase".

Maybe the coming Olympics will give a boost to the China Stock Market but once the Olympic effect is over, we may be in for a rude awakening.

Therefore better play safe.

DOW Phase Analysis

Lets take a look at Dow Jones Industrial Average.

Date	Close	Phase	50 DMA	200 DMA
1/2/2008	13043.95996	-2	13367.72852	13360.86133
1/3/2008	13056.71973	-3	13357.52246	13364.70508
1/4/2008	12800.17969	-3	13340	13366.46875
1/7/2008	12827.49023	-3	13323.04492	13368.2998
1/8/2008	12589.07031	-3	13301.38867	13368.83984
1/9/2008	12735.30957	-3	13279.96094	13370.1709
1/10/2008	12853.08984	-3	13259.61719	13372.4502
1/11/2008	12606.2998	-3	13235.89355	13373.98047
1/14/2008	12778.15039	-3	13212.85645	13376.12598
1/15/2008	12501.11035	-3	13191.52246	13376.86133
1/16/2008	12466.16016	-3	13168.94336	13377.28027
1/17/2008	12159.20996	-3	13141.25977	13375.52246
1/18/2008	12099.2998	-3	13110.02734	13373.36914
1/22/2008	11971.19043	-3	13083.45117	13370.4209
1/23/2008	12270.16992	-3	13063.52832	13368.92578
1/24/2008	12378.61035	-3	13050.24512	13367.9502
1/25/2008	12207.16992	-3	13034.6377	13366.5625
1/28/2008	12383.88965	-3	13016.1748	13365.71582
1/29/2008	12480.2998	-3	13001.16016	13365.05664
1/30/2008	12442.83008	-3	12987.81641	13363.66895
1/31/2008	12650.36035	-3	12977.28711	13363.05664
2/1/2008	12743.19043	-3	12972.98242	13362.75391
2/4/2008	12635.16016	-3	12965.4834	13361.88672
2/5/2008	12265.12988	-3	12954.80469	13358.40137
2/6/2008	12200.09961	-3	12939.18848	13354.80469
2/7/2008	12247	-3	12929.25977	13351.26953
2/8/2008	12182.12988	-3	12913.73242	13346.73047
2/11/2008	12240.00977	-3	12892.74414	13342.40234
2/12/2008	12373.41016	-3	12873.97754	13338.66504
2/13/2008	12552.24023	-3	12857.58594	13336.11133
2/14/2008	12376.98047	-3	12838.83496	13332.31543
2/15/2008	12348.20996	-3	12820.8252	13327.99609
2/19/2008	12337.21973	-3	12798.6709	13323.47461
2/20/2008	12427.25977	-3	12774.81836	13319.28906

Similar observation. The Dow went into "Bearish Phase" on 3 Jan 08. Few days earlier than STI. It was in "Distribution Phase" before that. We are now 33 days in Bearish mode.

STI Phase Analysis

Based on my post yesterday, there are 6 phases for price trend. As of 15 Feb 2008, STI is still in Bearish phase.

Date	Close	Phase	50 DMA	200 DMA
1/2/2008	3461.219971	-2	3536.371582	3505.101807
1/3/2008	3397.060059	-2	3529.352783	3506.520264
1/4/2008	3437.790039	-2	3525.255859	3508.125
1/7/2008	3353.060059	-2	3518.411133	3509.111816
1/8/2008	3338.27002	-2	3512.194336	3509.706055
1/9/2008	3344.530029	-3	3504.942139	3510.399414
1/10/2008	3311.070068	-3	3495.732422	3510.931641
1/11/2008	3287.340088	-3	3485.08374	3511.197754
1/14/2008	3218.139893	-3	3473.477539	3511.280029
1/15/2008	3154.580078	-3	3460.455078	3510.908447
1/16/2008	3058.48999	-3	3445.553467	3510.044678
1/17/2008	3139.879883	-3	3434.044678	3509.512695
1/18/2008	3104.25	-3	3422.72583	3508.592285
1/21/2008	2917.149902	-3	3407.406982	3506.513184
1/22/2008	2866.550049	-3	3391.277832	3504.116455
1/23/2008	2983.620117	-3	3378.956543	3502.034668
1/24/2008	3050.090088	-3	3369.73584	3500.172119
1/25/2008	3159.47998	-3	3363.416504	3498.866455
1/28/2008	3041.060059	-3	3353.739258	3497.208496
1/29/2008	3049.899902	-3	3345.185547	3495.590088
1/30/2008	3000.030029	-3	3336.366943	3493.519287
1/31/2008	2981.75	-3	3327.767578	3491.351807
2/1/2008	3007.800049	-3	3319.158447	3489.388672
2/4/2008	3077.080078	-3	3313.756348	3488.317871
2/5/2008	3038.419922	-3	3308.266846	3486.706543
2/6/2008	2931.969971	-3	3300.388428	3484.423828
2/11/2008	2868.290039	-3	3289.382813	3481.892822
2/12/2008	2926.22998	-3	3280.454346	3479.710693
2/13/2008	2949.540039	-3	3272.051025	3477.423828
2/14/2008	3045.590088	-3	3263.398438	3475.658447
2/15/2008	3088.679932	-3	3254.746826	3474.295654

Looking at the phase column, you can see that the market was already in "Distribution Phase" beginning of this year. I have used numbers to represent the different phases. Please refer to Legend below.

And on the 9 Jan 2008, it moves to the Bearish Phase. Strategy now is to move to the short side, reduce or eliminate long position.

Remember, the trend is your friend. Don't fight the trend.

6 Phase Trend Analysis

In the Technical Analysis Of Stocks & Commodities (Bonus issue 2007), Chuck Dukas analyze trends by breaking up prices into 6 phases,
1. Recovery phase
2. Accumulation phase
3. Bullish phase
4. Warning phase
5. Distribution phase
6. Bearish phase

The author uses the following rules to define phases:
1. Recovery Phase
Close > 50 DMA
Close < 200 DMA
50 DMA < 200 DMA

2. Accumulation Phase
Close > 50 DMA
Close > 200 DMA
50 DMA < 200 DMA

3. Bullish Phase
Close > 50 DMA
Close > 200 DMA
50 DMA > 200 DMA

4. Warning Phase
Close < 50 DMA
Close > 200 DMA
50 DMA > 200 DMA

5. Distribution Phase
Close < 50 DMA
Close < 200 DMA
50 DMA > 200 DMA

6. Bearish Phase
Close < 50 DMA
Close < 200 DMA
50 DMA < 200 DMA

Introduction

This is a trend analysis page. I will be putting up analysis of major stock market indices, forex pairs and commodities prices.

Do visit this blog often to get the latest updates.