Daily Market Opinion for 8-Aug-2012

Daily Market Opinion for 8-Aug-2012
Daily Market Opinion for 8-Aug-2012

STI attempted to break 3080 level again yesterday. STI opened with a slight gap up and surge above 3080 level during the early trading session. However, sellers were waiting for their chance to exit at this resistance level. STI went tumbling down after reaching as high as 3086 level. Strong selling pressure was seen after lunch hours causing STI to hit as low as 3066 before buyers started to stream in. However, before market closes, another wave of selling pressure caused STI to close at 3067 level. STI ended flat with merely 4.08pts lower. Last night, DJI ended higher with 51.09pts up. Will STI continue to test 3080 resistance today or will STI start to retrace to close its gap support level between 3056 – 3069 level?


STI ended with another black candle yesterday. This time round, a longer upper shadow was formed; which indicates that the 3080 resistance level is indeed a strong resistance level. Black candle formation also indicated that there is a likelihood of STI entering the gap support level between 3056 – 3069 levels. However, the short-term indicators remain bullish and refuse to show any bearish signs. Stochastic continue to be in overbought region and is yet to head downwards. Therefore, STI is likely to stay at current levels with 3080 level as the upside cap and the gap support of 3056 – 3069 as the downside floor.


The banks ended lower yesterday as it have failed to trade higher. Dbs and Uob turned back to test their breakout level and it will be crucial for them to maintain their breakout level. Uob announced a growth in their earnings after market close and it was announced that the current chairman will be stepping down. The growth in earnings will likely to bring some buying support for Uob while the stepping down of the current chairman will bring some volatility. Ocbc was seen attempting to trade towards its recent high but it failed to maintain its bullish strength. Ocbc could be attempting to close its gap support before heading higher. Overall, the banks’ upside momentum seems to be compromised. But if they are able to stay supported, further upside can be anticipated.


The properties suffered profit taking pressure yesterday as traders were quick to take profit of the market. Capitaland retraced the most yesterday after attempting a new high. Currently, it could be heading back to test 3.00 support level. Citydev also retraced strongly and it is currently in its gap support zone. If it fails to hold at this support level, it will mean further downside for Citydev. Bearish signal is also been seen in Citydev, hence, do expect selling pressure to set into Citydev. Last evening, ThaiBev has announced its offer to buy part of APB’s stake at $55 from F&N. This will greatly boost the numbers of F&N today, which will likely to encourage F&N to test 8.50 level again. Overall, the properties, with exception of F&N, will likely to suffer further selling pressure today.


The offshores also experienced profit-taking pressure yesterday. Kepcorp attempted to head higher by having a gap up opening but profit takers slow down it’s ascend. Kepcorp closed at its gap support level between 11.30 – 11.34 levels. Sembcorp and Sembmar continued to face resistance from their 20ma line. Sembmar announced new rig order after market closes yesterday. This will likely to bring positive sentiment to Sembmar which will likely to aid its attempt to break the 20ma resistance line. Sembcorp will likely to gain bullish advantage as its counterpart receives good news. Overall, the offshore will likely to attempt to head higher as there are no clear signs of bearishness.


The commodities were trading mixed yesterday as they are waiting for clearer directions. Olam managed to break its resistance level and could be attempting to head higher. If Olam continues its bullishness today, it will be heading towards next resistance level at 1.98 level which confluences with the 100ma line. Sakari continues to test its resistance level at 1.50 and was unable to break its. With its Stochastic at overbought and possible bearish crossover, it is unlikely that Sakari will be able to break this resistance level. Overall, the momentum of the commodities was sluggish as they are still in a downtrend motion. Hence, sharp movements for the commodities are unlikely for the moment.


In conclusion, STI is likely to continue to be capped by 3080 resistance level today. There is a tendency for downside movement currently as various sectors were not showing bullishness yesterday. Hence, it will be more likely for STI to retrace and test its gap support level between 3056 – 3069 levels. Furthermore, with national day holiday tomorrow, it will encourage traders to close their positions today. Selling pressure will unlikely push STI below the gap support of 3056 – 3069 levels today. Flat intraday movement will be expected for the day with more volatility to happen before market closes.


Long traders should stay aside if long positions have been reduced or closed. Shortist can initiate some cautious short positions if the risk and reward is right.


*Disclaimer: This material is provided to you for general information only and does not constitute a recommendation, an offer or solicitation to purchase or sell the product mentioned. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of you acting based on this information. Investments are subject to investment risks. If there are any questions, please contact me (Jay)