Daily Market Opinion for 19-Jun-2012

Daily Market Opinion for 19-Jun-2012
Daily Market Opinion for 19-Jun-2012

STI was buoyant by the results of the Greek Election as the party with pro-bailout plans was being elected. With such buoyant mood, STI gapped up strongly as fears of European Crisis starts to ease. The opening price immediately reached 2849 level which broke the resistance level of 2830. However, this bullishness failed to sustain as seller made us of this opportunity to exit at a higher price. Buyers were not able to counter the selling pressure and STI started to creep lower during the day. When the European market opens weak, STI started to be depressed deeper hitting as low as 2821 level before closing at 2824 level. Despite such strong opening, STI was merely 13.22pts higher. Last night, DJI ended 25.35pts lower which was plagued by concerns after Greek Election. Has STI confirmed its uptrend formation? Will the uncertain situation in Greek trigger another wave of selling?                                                                                                                                                          


STI closed with a long black candle after a gap opening. This black candle shows that the resistance at 2830 level is strong and is preventing STI from going higher. There is also a small gap support that is being formed between 2814 – 2821 levels which STI might retrace to close this gap. The short-term indicators were seen to be mixed now as the Histogram continues to be bullish while the Stochastic seems to be weakening. However, one significant observation is that Stochastic is now trending out of the overbought region. This means that STI might still have good chance of heading higher. Despite the bullish possibilities, STI’s important support level now stands at 2775 level where it will determine whether STI’s uptrend formation is sustainable.


The banks attempted to trade higher yesterday but they ended up with a long black candle. They were facing their respective resistance levels and were unable to break it. If they were to trade lower than their yesterday’s low, a possible retracement towards 20ma might happen. That will confirm the formation of higher high for the banks and uptrend will be formed. The offshores also failed to maintain their bullish opening yesterday. Kepcorp and Sembmar faced resistance from their resistance lines and were unable to break them yesterday. They might have a chance to retrace towards their 20ma line if they trade lower today.


The properties were also struggling to maintain their bullish opening while they managed to close with some strength. Kepland had the strongest bullish showing yesterday as it managed to maintain its gap opening and even closed higher. Citydev’s candle formation is a black hanging man pattern which indicates that it could be a possible high. However, it could be supported by the 100ma support line at 10.50 level. If Citydev fails to hold at this support, it will retrace towards 20ma line. The commodities were trading mixed yesterday as they started to lose upside steam yesterday. Only Olam and Sakari were able to show bullish strength yesterday. Olam is now testing its gap resistance between 1.875 – 1.97 levels, while Sakari is also facing 20ma & gap resistance between 1.305 – 1.365 levels. If Sakari is able to break these 2 resistance levels, it will be heading strongly towards next resistance of 1.41 level.


In conclusion, multiple sectors were facing resistance levels yesterday which are preventing STI from heading higher. Currently, many are facing the risk of retracement to form a high. However, their retracement might be supported by 20ma line as many will likely to form a higher low. These are signs of uptrend formation. Hence, STI might experience retracement if these sectors like the banks and offshores start their retracement movement by closing lower today. If STI fails to hold at its gap support between 2814 – 2821 levels, it will indicate a deeper retracement towards 2730 level again. If this retracement did not happen, STI might be able to break 2830 level and head towards the next resistance of 2880 level.

Long traders can consider taking partial profit when their targets are met. Adding new long position today might not be a good strategy as prices closer to resistance. Shortist can consider counter-trend short position when there is bearish confirmation but the risk reward might not good and hence, quick profit must be taken.

*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)