THE Straits Times Index has now fallen for five days in a row, resulting in a loss of about 135 points or 5.7 per cent.

So is it a healthy correction or the start of another big downward swing?

My colleague,  Gabriel Chen, remarked that the prices of several blue-chips have fallen below their 10-day and 20-day moving averages. To those who follow charts, this is a bearish indicator.
This morning, I took a look at the chart of United Overseas Land – one of the many beneficiaries in the liquidity-induced stock market run-up.

It tells a fascinating story. In late October, when hedge funds were under severe stress, UOL fell to a low of $1.58 on October 29 – the day when STI hit a 10-year intraday low of 1451.

The stock then recovered to a high of $2.39 on January 5, only to fall victim to another vicious sell-down as jitters rocked the markets following US President Barack Obama’s inauguration.

Then on March 9, when markets succumbed universally to despair, UOL hit $1.59, or about the same low level reached on Oct 29, as STI bottomed out at 1456.

Equally fascinating is how the gyrations of the stock market coincide with the use of the term “green shoots” in the media.

In late December, “green shoots” were all the rage, as markets recovered from their sell-down two months earlier. Then in March, “green shoots” made a dramatic comeback in the vocabulary of market pundits as stock prices bottomed out.

The recent fall in stock prices again coincides with a decline in the use of the term “green shoots”.

For those who do not have the means to track the charts using esoteric formulae such as 10-day moving averages to check for forward looking trends, this may be an easier way to take a check on market sentiment.

Happy investing!

SOURCE: SHAREINVESTOR

SOURCE: GOOGLE TRENDS