Daily Market Opinion for 17-Jul-2012

Daily Market Opinion for 17-Jul-2012
Daily Market Opinion for 17-Jul-2012

STI tested 3000 level with a gap up opening yesterday. However, sellers were seen waiting at 3000 level to take profit which prevents STI from going higher than 3004 level. Multiple attempts to break this resistance level was seen during the early trading session but the buyers lost their steam before lunch time and sellers started to take control of the market. Sellers were also behaving indecisively as they were unwilling to push the price down further. Eventually, STI close flat with merely 3.19pts higher at 2998.75 level. Will STI start to retrace at this 3000 resistance level? Or will STI reach for the next resistance of 3030 level?

 

STI formed a small black candle with longer lower shadow yesterday. This candle implies that STI is facing resistance level currently and is unable to break it. In order to confirm its reversal, STI must trade below yesterday’s low of 2990 level before it will start a retracement. Short-term indicator wise, Stochastic is still showing bullish momentum but it is starting to show a bit of weakness. But the Histogram is still showing bearishness. The conflicting signal made it hard to have a definite answer on the current momentum. However, it is definite that STI is now overbought with Stochastic and RSI in the overbought region.

 

The banks were bullish yesterday as they were able to head for a higher level yesterday. Ocbc was seen to be the strongest among the banks as it gapped up strongly. Ocbc will be heading towards its horizontal and gap resistance between 9.24 – 9.35 levels. This means that Ocbc will have further upside room to surge. Dbs, too, attempted to go higher but in a slower pace. It will also be facing its gap resistance between 14.19 – 14.45. Overall, the banks will likely to continue to move higher as they still have upside room to test their resistance levels.

 

The properties were trading mixed yesterday as there is no strong catalyst for upside. Capitaland failed to break its recent high of 2.99 level and closed with a long black candle. If it trades lower than 2.92 today, it will indicate that it will be retracing back to 2.84 support level. F&N continues to create historical high yesterday and its significantly high volume might spark further buying interest in the counter. It was announced that Ocbc and Great Eastern have been offered to buy their 18.2% stake in F&N. The buyer and price was undisclosed. Overall, the properties were struggling to head higher yesterday and if they close lower today, it might trigger retracement.

 

The offshores were mostly higher yesterday but buying strength was not seen in this sector. Kepcorp is now getting closer to its recent high of 10.94 level and it might attempt to break this high to head for the next resistance of 11.16 level. Sembcorp also continued higher yesterday and it will heading towards its resistance at 5.40 level. Sembmar is still struggling to form its support level of 4.94 and if it manage to rebound from here, it will likely to test its resistance at 5.06 level and even break beyond the resistance. Sembmar is now a laggard within its sector. Overall, the offshores were still showing bullish strength and they might continue to head higher this few days.

 

The commodities were trading mixed yesterday as they were still attempting to form a proper support level. Indoagri is still testing its flag break out level and it managed to hold well. With its white candle yesterday, there is a good chance that Indoagri is heading towards its recent high of 1.52 level. Sakari is still struggling to form a higher low currently and it is threatening to break for a lower low. It must recover beyond its 20ma line which is at 1.40 level currently in order to recover its uptrend momentum. Its Stochastic is starting to show weakness in the bearish momentum and if a bullish crossover occurs, it will likely to rebound. Lastly, Golden agri is now trading at its recent high of 0.73 level. If Golden agri managed to break this level today, it will be heading to the next resistance of 0.74. Overall, the commodities were still trading in mix directions.

 

In conclusion, STI’s sectors were not trading in tandem yesterday with some at resistance while some at support level. It is clear that the strongest sector right now is the banking sector and they will continue to lead STI towards 3030 resistance level. But if the properties and offshore sectors are able to continue their bullish momentum, it will bring more certainty to STI’s bullish momentum currently. The commodities will likely to continue to be a drag for STI but if they also turn bullish, it might even help STI to reach out for the next resistance at 3070 level. Henceforth, the risk of STI to retrace currently is low and one should expect upside for STI to continue.

 

Long traders can either long counters that are trading at support level or adopt breakout strategy for those that are trading at resistance level. Shortist should continue to wait sidelines till a clear sign of bearishness is being indicated.

 

*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)