Daily Market Opinion for 11-Jul-2012

Daily Market Opinion for 11-Jul-2012
Daily Market Opinion for 11-Jul-2012

Yesterday, STI bucked the regional bearish trend yesterday despite weak China economic data being announced. STI opened higher and recovered part of the losses on the previous day. However, for the morning trading session, STI was unable to go beyond 2950 level as the regional market went into red. After the lunch hours, STI progressively tested the 2950 resistance level and managed to break it when the European market opened with a positive note. Buyer flocked the market in the last trading hour which pushed STI to close at 2964 level, ending with 35.54pts higher. Last night, DJI started with a positive opening but it ended up 83.17pts lower. Will yesterday’s recovery be sustained? Or will STI continue to retrace after DJI’s weak closing last night?


STI formed a white candle yesterday which reversed most of the losses. This might seems like a bullish reversal pattern but there isn’t any significant retracement being seen. Furthermore, this pattern is not formed at a good support level and hence, it might not be a good bullish reversal pattern. The short-term indicators also did not show that bearish momentum has ended yet. The Histogram and Stochastic were both heading lower and this indicates that STI is still likely to go lower despite yesterday’s sharp rise. Therefore, STI will likely to continue its retracement movements towards 2910 support level before a proper rebound could occur.


The banks reversed part of their losses yesterday. Uob refused to slide towards its support at around 18.60 level. Its lower shadow formation yesterday showed its reluctance to retrace and this could mean that its drop could be a slow and gradual one. Ocbc tested its support at 8.85 slightly and bounced up after testing it. This could mean that its support is holding well but its bearish indicators might encourage it to test this 8.85 support level again. Dbs seems to be ready for a rebound as its indicators are starting to show signs that the bearish momentum is weakening. Its support at 13.94 level seems to be holding well and if Dbs manages to trade higher today, it would mean continuation of uptrend. Overall, the banks might still face some selling pressure but the selling pressure is unlikely to be a strong one currently.


The properties also rebounded yesterday despite its bearish readings. F&N was able to rebound back to its recent high level of 7.45 level. Its candle showed a white one with long lower shadow. This indicates that its bullish momentum is still intact is might have good chances of heading higher. Capitaland also showed similar long lower shadow candle yesterday. Its shadow tested the 100ma at 2.85 level which indicates that the support is holding well. However, its bearish indicators will likely to push Capitaland to test this 100ma support level again. Overall, the properties were still showing signs of bearishness and will likely to head towards their support levels.


The offshores were also reluctant to head lower yesterday as they managed to rebound slightly yesterday. Kepcorp tested its 100ma support line and close with a white candle. As the indicators were still showing bearishness, it is likely to continue to test its 100ma line at 10.65 level. Sembmar also held well at its 100ma support line. Similar to Kepcorp, it might continue to test its 100ma line at 4.93 level before it can head higher. Overall, the offshores are now close to their support levels but their indicators are yet to show clear signs of bearish weakness. Hence, they might continue to test their support level before a clear rebound can be sighted.


The commodities were mostly higher yesterday. Golden agri took the lead in rebound yesterday as managed to rebound back to its recent high of 0.72. It is likely to continue to trading in this tight range of 0.68 – 0.72 level before it can break for a higher high. Noble grp and Wilmar were showing signs of struggle to break into an uptrend formation. Both of them formed sideways movement and were threatening to break for a lower low. If their immediate support level were able to hold well, they will be able to rebound back to their recent high. Sakari has retraced closer and closer to its support level of 1.39. If this 1.39 support level is able to hold well, it will have a good chance of breaking its 50ma resistance line. Overall, the commodities were quite mixed yesterday but most of them are doing healthy retracement.


In conclusion, although STI had a strong rebound yesterday, it might not be a convincing one to confirm its uptrend continuation. Various are still showing bearish momentum in their indicators and they are still likely to retrace to test their immediate support level. With DJI’s bearish closing last night, it will likely to drag STI back to its previous bearish levels and head towards 2910 support level. Therefore, STI is expected to head lower today by returning the gains it had achieved yesterday.


Long traders are to continue to wait for market to reach its support levels. Various counters that are close to their support can be shortlisted for potential long entry setups. Shortists whom have counter-trend short positions should continue to take profit if possible.


*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)