Daily Market Opinion for 27-Jun-2012

Daily Market Opinion for 27-Jun-2012
Daily Market Opinion for 27-Jun-2012

STI started the week by retracing further yesterday. STI opened with a gap down at 2803 level before it attempted to rebound again within the day. Intraday rebound was seen to happen gradually throughout the day and more buying activity was seen nearing Europe market’s opening. The main contributing factor that helps STI to attempt its rebound during the day was HSI’s positiveness. However, STI was unable to sustain its gain before market closing and ended the day at 2805 level. STI was down by 9.63pts yesterday. Last night, DJI recovered 32.01pts, slightly higher. Will STI be able to recover yesterday’s losses and rebound? Has STI hit its support level?


STI ended the day with a white inverted hammer. White inverted hammer is a bullish reversal candle which requires confirmation before one can deem that a reversal is happening. In order for this inverted hammer to be confirmed, STI must be able to trade and close higher than 2815 level. However, the short-term indicators continue to show bearish momentum and there is still lack of weakness in the momentum. Hence, STI might still have downside room today and it could be heading towards its 20ma support line at 2790 before a proper rebound could occur. Or STI might attempt to confirm the white inverted hammer and start its reversal at this point in time.


The banks continue to experience selling pressure today as they have yet to test their support levels. Uob is now nearing its multiple MA lines support levels that is between 17.75 – 17.94 levels. Dbs is also within its multiple MA lines support levels. Currently, Dbs’s strong support level stands 13.38 level and it will likely to test that level. Ocbc has been suffering much for the past few trading sessions. However, it is now at its support level which is around 8.54 level and it could reverse the selling pressure if buyers are willing to push the price beyond its 100ma line. Overall, the banks might still be struggling to find their support levels and slight selling pressure is expected to be seen.


The properties were seen to be hold comfortably at their respective support levels. Citydev continues to be well supported by the 100ma line with 3 consecutive white candles at this 100ma line. Citydev’s 100ma line support will likely be very strong because of that. Capitaland is also sitting firmly at its 20 & 200ma support line but its 50ma is currently constricting its upside. If Capitaland is able to break its 50ma at 2.67 level, more upside is to be expected from it. Lastly, F&N has managed to test its 50ma support line and closed with a gravestone doji. If F&N is able to close with a white candle today, a reversal will be in its cards. Hence, the properties seems to be ready to form a higher low formation currently because their support level are holding strongly and white candles are seen at its support.


The offshores were still struggling to stay bullish yesterday as the falling oil prices continues to deliver selling pressure to this sector. Kepcorp is still struggling at its 20ma line and was unable to trade about its 20ma line yesterday. If Kepcorp is able to trade above 10.05 level, it will have good chance to test its 50ma resistance line at 10.35 level again. Sembmar fell below its 20ma support line yesterday. If it fails to reverse above 20ma line today, it will mean that Sembmar is heading lower to test its 200ma support at 4.30 level. Overall, the offshores are in a crucial level where it can determine whether they will be maintaining their uptrend formation chances or they will revert to a sideways trend. If they are able to trade positively today, the offshores will still have good chance of forming uptrend formation.


The commodities were trading mixed yesterday as they were lacking of direction. Indoagri and Olam managed to hold their support level well yesterday. If they are able to break their 50ma resistance line, it will mean that they will be continuing their uptrend movement. Sakari & Wilmar continues to hover at their 20ma support line and there is still no clear sign of reversal at their support. They will likely to continue testing their support today. Golden agri is managed to recover above its 20ma support line yesterday and might be poise for further upside movement. Hence, the commodities will likely to be trading mixed today as they might continue to test their support levels.


In conclusion, STI’s gap support between 2814 – 2821 levels has failed to hold its support. Hence, STI will likely be testing its 20ma support line. The banks and offshores sectors might drag STI lower today while properties and commodities might hold the fort. However, if the banks and offshores were able to rebound today, it would help STI to rebound. Bullish reversal candle was formed yesterday and if STI manages to close above 2815 level, it will indicate that STI might be forming a higher low formation. Otherwise, do expect STI to be testing 2790 support level before it can attempt to rebound again.


Long traders can continue to look out for long opportunities on counters that are trading at support levels. Shortist should stay aside as the downside is getting more limited.


*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)