Is the market correction over? Don’t guess, let the indicators tell you

STI rebounding off first support zone at 3300 points

I mentioned earlier that a typical sharp correction for the straits times index (STI), based on historical patterns is between 10-15% from recent high, with 10% being first support level followed by 15% correction as the second stronger support level….see blog comments below on 1st august

http://www.mojostock.com/blog/recent-two-sharp-market-corrections/

STI is now staging a technical rebound, almost spot on from the 10% correction level of 3300 I mentioned last week. This rebound is not surprising since it coincides with the 10% correction and stochastics for STI is in oversold zone, further increasing the odds of a technical rebound.

For STI to "recover" from this round of sell down, STI needs to form a new base around 3300 points.  So in the next 1-2 weeks, will have to monitor and see if the 3300 level can hold on after this round of technical rebound is over.  If it breaks, then next psychological support level will be at 15% correction from recent high of 3688, which is around 3100 points.

The next question on everyone’s mind is that how long it will take for the market to stabilize.  Well if you believe in technical indicators, then you don’t need to guess, just wait for the indicators to TELL YOU when the market is going to stabilize.

At the moment, most daily trending indicators for STI remained in NEGATIVE zone.  

1. Parabolic SAR negative

2. MACD negative

3. Multiple moving averages - short term all cut below long term

I would prefer to wait for at least ONE of the trending indicators to turn positive before feeling more comfortable that this round of correction may be over.
 

Article by Rooney