Will stock markets fall further? My fear is yes.

Faber now thinks the stocks are oversold in the near term on extreme negative sentiment towards the euro and North Korea, but there’s strong support around 1,045/1,050.

From a seasonal perspective, a summer rally in June/July could be expected, with a lot of resistance around 1,200/1,220, followed by a downturn and bottoming out in October/November. By then, another round of stimulus could come in and prop up equities as a stronger U.S. dollar and bond market would give the Fed ammunition to ease the monetary policy.
(Note: In a separate interview with Tom Keene on the same day, Faber says S&P could fall another 15%.)

The situation now:

On major indices (Dow, S&P, Hang Seng, STI):

On monthly chart: Bearish engulfing, stochastic falling from overbought zone. This signals long-term bearishness ahead. The last time the STI made such a pattern in Nov 2007, it took 1.5 years, in Mar 2009 before bottoming. This suggests that instead of looking at longs, it is now time to look at shorting the market.

On weekly chart: Hammers are forming, with reversals of stockastics but still falling RSI. This could indicate in the short term, the stock market may or may not reverse.

On daily chart: Dow Jones just made a bullish engulfing, coupled with recovery from oversold RSI and stochastics, signalling short-term upside.

Therefore, the trends of the markets can be summarised as such:
Long-term: Down
Medium-term: Uncertain
Short-term: Up

Therefore, Faber could be right in predicting a stock rally into June/ July (even though this is World Cup year, and many people are expecting trading to be quiet). Nonetheless, I will not be putting too much capital into long positions. However, 2 stocks in the local market stand out as still being on an uptrend (prices remaining above 200-day MA): SembMar and NOL.

Compared to SembMar, NOL looked just a tad more attractive as it just exhibited bullish engulfing, and crossing up from oversold stochastics. SembMar looks "overbought" at its current price.


My Trading plan:
Buy when market opens on 31/5
SL: 1.75 (correction low)
TP1: 2.00
TP2: 2.20

After this rebound, it will be time to prepare my ammunition for shorting the market.