Daily Market Opinion for 14-Aug-2012

Daily Market Opinion for 14-Aug-2012
Daily Market Opinion for 14-Aug-2012

Yesterday, STI started the week with a positive note by closing 10.61pts higher. The bullish movement for the day started off with slight gap down. But the selling pressure was weak as it was quickly overcome by bargain hunters lurking in the market. Despite weak market sentiment in HSI, STI was able to ignore the bearishness and continued to trade higher. This bullish momentum during the day did not meet any strong selling pressure and this resulted STI to close at 3064 level with 10.61pts higher. Last night, DJI failed to maintain its bullishness and close with 38.52pts lower. Will STI be affected by the bearish sentiment in DJI last night? Or will STI ignore all the bearishness and trade towards its recent high again?


A white candle was formed by STI yesterday. This white candle implies that the intraday sentiment is a bullish one and it also shows that STI refuses to trade lower despite a gap down opening. It’s closing which was above the previous day’s high also indicated that more bullish strength is yet to be seen. However, the short-term indicators did not react accordingly and remain bearish. However, RSI reacted positively and entered the overbought region, which triggered a bullish signal for STI. Hence, the indicators were giving mixed signals currently but with a good possibility that STI continue to head higher today.


The banks closed positively yesterday with most of them testing the 20ma support line yesterday. Dbs was seen to be the strongest performer in the sector yesterday as it closed $0.18 higher. Dbs formed a bullish engulfing formation as it tested the 20ma support line. This candle formation confirmed that 20ma is holding strongly and a new higher low is being formed. Hence, Dbs is likely to head higher to test its recent high of 14.99 level to continue its uptrend movement again. Ocbc struggled to stay above the 20ma for the past few tradings sessions and it attempted to rebound above 20ma yesterday. With its bullish harami pattern being confirmed, Ocbc is likely to head higher today to face 9.56 resistance level. Overall, the banks are likely to continue its bullish momentum again as their support levels held well.


Most of the properties were either trading flat or ended slightly higher yesterday. Citydev continues to test its recent high yesterday but was unable to break its. F&N’s limelight started to tone down as it is still unable to trade higher than its historical high of 8.66 level. Capitaland was the only one that failed to close higher yesterday as its selling pressure continues for the 4th day. Capitaland is now testing its major support level at 2.99 but yesterday, it closed slightly lower than this support level at 2.97 level. If Capitaland fails to recover above this 2.99 major support level, it will likely to trade much lower and possibly reverse its current uptrend. Overall, the properties are either struggling to break its resistance or its support level.


The offshores were the sector that helped STI to close bullishly yesterday. Sembcorp lead this sector yesterday by closing 2.4% higher. After its successful breakout at 5.50 level, Sembcorp is now continuing its uptrend momentum and will be head and test its immediate resistance level at 5.76 level. Sembmar also tried to follow Sembcorp’s footstep as it managed to break its recent high at 5.10 level. This will imply that the upside movement can reach as high as 5.21 level. Kepcorp also continued it uptrend movement after formation of a higher low and will now be heading towards 11.60 resistance level. Overall, the bullish momentum of the offshores will likely to sustain today.


The commodities were trading mixed again with majority on the positive side. Wilmar and Golden agri were seen rebound from their low yesterday. Wilmar is likely to rebound towards its 20ma at 3.41 level before it might decide to continue its downtrend again. Golden agri is likely to test its breakdown level at 0.71 before it continues its downtrend. Olam, Sakari and Noble which has been enjoying upside rally started to show bearishness yesterday. Sakari & Noble formed strong bearish formation and will likely to show further downside today. However, strong earnings report from Noble yesterday might prevent Noble from going lower by reversing its losses yesterday. Overall, the commodities will likely to show mixed movement with bullish tendency today.


In conclusion, STI’s bullish sentiment yesterday will likely to continue today. Expectations of further downside retracement seem to have vanished after yesterday’s bullish movement. STI immediate resistance stands at 3080 level and it could be tested soon. Key sector that will likely to lift STI to this resistance level will be the banks and offshores. If the banks and offshores are unable to break their resistance levels, 3080 resistance level will likely to hold. The properties will continue to be the main draggers for STI’s upside. Therefore, do expect STI to show bullishness today but strong upside movement should not be expected.


Long traders can watch for uptrending counters that test their support levels to long. Shortist should have closed their short positions to wait for shorting opportunities.


*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)