Daily Market Opinion for 10-Aug-2012

Daily Market Opinion for 10-Aug-2012
Daily Market Opinion for 10-Aug-2012

On Wednesday, STI was seen retracing further as traders unload their position for the national day holiday. STI started flat during the opening and did attempt to climb higher but sellers were waiting there. Further selling started when HSI opened and participant of the market became concern of the weak economic data from China. Selling pressure was seen for the rest of the day while some short covering was seen before market closing. STI ended with 15.49pts down at 3052 level. For the past 2 nights, DJI was trading flat with 7.04pts up and 10.45pts down for the respective days. How will STI react after the national day holiday? Is STI going to retrace further?

 

STI closed with a long black candle on Wednesday. This black candle had broken STI’s gap support level between 3056 – 3069 levels. Hence, this indicates that the next support level for STI to test is at 3030 level. 3030 support level will likely be a firm support level as it confluences with the 20ma line. The short-term indicators had also turned bearish as Histogram triggered bearish signal while Stochastic is now heading lower. Therefore, the bearish short-term momentum will likely to continue to push STI lower towards its support at 3030 level.

 

The banks encountered profit taking pressure on Wednesday. Ocbc suffered the heaviest selling pressure within the sector. Ocbc opened with a gap down and failed to hold its support at 20ma line. This can be the first sign to indicate a possible change of trend to downtrend. If Ocbc fails to hold its support at 9.24 level, it will indicate a downside target towards its 50ma line which is around 9.01 level. Uob also opened with a gap down but because of its strong earnings report, it was able to recover its losses and end up positively. Overall, the banks might continue to suffer selling pressure which will force them to head back to their 20ma line. They are running a risk of trend reversal to downtrend.

 

Most of the properties were trading flat on Wednesday despite strong opening. They were unable to sustain their bullish opening and selling pressure caused them to close flat. F&N was seen trading strongly again after the APB bid war saga. ThaiBev’s higher bid brought positiveness back to F&N again; causing F&N to test its recent high of 8.52 level. With bullish momentum seen in the short-term indicators, F&N is likely to surge higher to create another historical high. For the rest of the properties, short-term bearish momentum had been confirmed and they will likely head lower towards their 20ma line. Overall, the properties will likely to face selling pressure while F&N continues to thrive.

 

The offshores were bullish with exception of Kepcorp. Kepcorp failed to sustain its high and is now starting to retrace to form a higher low formation. It nearly tested its support level at 11.05 and started to perform an intraday rebound to close with long lower shadow. This movement has also created obvious bearish divergence signal in both Histogram and RSI. Kepcorp’s uptrend has indeed weakened. Sembcorp was performing bullishly on Wednesday as it managed to break its short-term sideways movement. Sembcorp is likely to head towards its recent high of 5.50 to test this resistance. Overall, the offshores are showing mixed movement but they are likely to retain their bullishness today as there is no clear signs of bearishness.

 

The commodities were mostly stronger on Wednesday. Olam, Noble grp and Sakari were seen ending the day strongly. Olam is now very likely to test its resistance level at around 2.00 level. Noble grp had broken its immediate resistance and will likely to head towards 1.15 resistance level. Sakari had successfully test its weekly high of 1.50 and if manages to break this weekly resistance level, it will likely form an uptrend formation. Among this sector, Golden Agri suffered very strong selling pressure yesterday. The high volume selling action caused Golden agri to break its support at 0.725 and test its next support at 0.70. 0.70 support level was even threaten to break during the day. Golden agri’s trend is no longer uptrend and will likely to form a sideways movement current. Overall, the commodities will likely to give selective bullish movement. But given that the bullish commodities are trading at their resistance levels, profit taking action should be expected.

 

In conclusion, STI will likely to face further selling pressure today; pushing STI towards its support level at 3030. The main draggers will likely come from the banks and properties. Offshores and commodities will likely to cushion or prevent sharp drops in STI. The short-term indicators for STI have turned bearish and this will likely to sustain STI’s retracement towards 3030 level. Hence, STI is very likely to test 3030 support level. It is important to note that 3030 support level will be a very important support level to hold as it will determine if STI will be able to continue its uptrend movement. With bearish divergence signal being seen, there is a risk of trend reversal.

 

Long traders can watch for uptrending counters that test their support levels to long. Shortist whom had short positions should consider to take partial profits once the target is being met.

 

*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)