The Thailand SET closed at 1615.89, up 0.14% for the week as the Greek debt drama continues to unfold. At least the new, leftist Greek Prime Minister, Alexis Tsipras, is willing to talk to their creditors and stopped asking for a debt write-off or World War II reparations, which is a “good” thing. 

A headline risk for the market still exists as the talks could drag on without a conclusion. The Greek government and Greek banks could run out of money as early as next month if no agreement between Greece and the ECB can be reached. 

ECB President Mario Draghi probably wants to wrap up the Greece debt talk as soon as possible because the EBC needs to get ready for the launch of massive quantitative easing (QE) next month. 

Mr. Dragi’s QE is still facing some legal and political hurdles, largely from Germany. In theory, it is still possible that the German Federal Constitutional Court in Karlruhe could instruct the German Bundesbank not to cooperate with the ECB bond-purchasing program. 

One should be aware that there is a fundamental difference between the ECB’s QE and the QE run by the U.S. Federal Reserve, with respect to capital flows. During the U.S. Federal Reserve’s QE, the primary broker-dealers, not the banks, were the main recipients of the Fed’s newly printed money. 

As far as we understand, during the ECB’s QE, the European banks will put up acceptable collateral with the ECB and central banks of the Eurozone countries and, in return, receive a cash loan. 

Since the European banks are tightly regulated, the effect of the ECB’s QE on capital flows into the emerging markets will not be the same as that during the U.S. Federal Reserve’s QE. So, don’t make any big bets on massive hot money during the ECB’s QE.

The Thailand SET got some support on Friday after the leaders of Russia, Ukraine, France and Germany reached a ceasefire deal for the year-long Ukrainian conflict. Many people, including those in the Obama administration, expressed skepticism that Moscow will live up to the terms of the agreement, meaning the ceasefire might not last.

One should be aware that the put-call option ratio for the SET50 index, consisting mostly of large-cap companies, printed at over 1.4 on Friday. In the derivative markets, a put-call ratio over 1.0 means investor sentiment is bearish.

According to Reuters this week, the National Statistical Office of Thailand labor force survey showed that the January unemployment rate jumped to 1.06%, up from 0.56% in December and 0.94% in January last year. The job losses were mainly in agriculture and retail businesses. The report seemed not to upset the Thailand SET.

In the SET chart pattern, a doji star just re-emerged at the 1619 trendline resistance. Technically, a doji star is formed when a stock opens with a gap-up and closes at almost the same price. The reason is because the bulls are unable to take the price higher all the way to the close as they lost momentum. 

A doji at a support or resistance line is critical as it signals that the current trend could be over and a potential trend reversal is coming. Since a doji star is not a signal, but a warning of a potential reversal downward, one should pay close attention to a bearish trend reversal pattern during the next trading session. 

A bearish reversal pattern, such as the Evening Star pattern, is confirmed if the SET opens with a gap-down on Monday and closes down with a large bearish candlestick. It will be interesting to see what happens as the U.S. markets will be closed on Monday for President’s Day.

We would like to point out that the Moving Average Convergence/Divergence (MACD) is turning downward and is ready to cross below the signal line. The bearish crossover is a sell signal for active traders. 

If one decides to chase after the SET performance, there are two major technical resistances at 1625 and 1650. In the case of a pull back, there are supports at the 1602 and 1595 levels.