Daily Market Opinion for 28-Jun-2012

Daily Market Opinion for 28-Jun-2012
Daily Market Opinion for 28-Jun-2012

At last, STI had ended its retracement by surging strongly yesterday. STI opened slightly lower at 2802 level before it started to surge slowly. Buying strength was seen throughout the whole morning session, lifting STI to as high as 2834 level. However, the buying pressure does not stop at this resistance level. STI managed to break through this resistance level with the help of bullish European market opening which caused STI to reach as high as 2846 level. Hence, STI concluded the day by closing at 2841 level which traded 35.97pts higher than the previous day. Last night, DJI managed to gain 92.34pts higher. Has STI completed its retracement? Will its uptrend movement continue?


STI closed with a long white candle which can be deems as bullish engulfing pattern. This pattern is a very bullish pattern and normally confirms the formation of a low. Hence, STI has formed a higher low formation which indicates that its uptrend will continue. Furthermore, breaking of the 200ma line at 2830 level also indicates that STI’s upside will likely be sustainable, given that STI still manage to trade above it today. Short-term indicators turned bullish after yesterday’s sharp movement. The Histogram and Stochastic triggered bullish signal and were likely to help STI to head higher. Henceforth, STI will likely to test the next resistance at 2850 which confluence with the 50ma resistance line. STI would probably hover at this resistance level before it can head higher to next resistance of 2880 level.


The banks rebounded strongly from their support levels yesterday. Uob and Dbs were able to hold their support at 50ma line and bounced off to form a higher low formation. They are likely to continue their uptrend and could test their recent high today. Ocbc has managed to recover above its 50 & 100ma line yesterday. Higher low was also formed for Ocbc and it will likely to head towards its higher low also. Hence, the banks have gained bullish momentum after yesterday’s movement. Upside movement is expected today which their target will be their recent high level.


The properties were able to strengthen slightly yesterday. Citydev seems to be rebounding slowly from its 100ma support level and could probably head higher but in a slower fashion. F&N managed to confirm its bullish gravestone doji yesterday and this indicates that it could have form a higher low and F&N will likely to surge higher to test its recent high. Kepland attempted to break out from its short-term sideways but it fails to do so yesterday. Its resistance at 3.15 level seems to be firm but if it manages to break and stay above this resistance level, it will indicate uptrend continuation with a target towards next resistance of 3.20 level. Overall, the properties were also showing bullishness but were lacking of bullish strength currently.


The offshores were seen rising sharply yesterday. Kepcorp and Sembmar rose sharply after they were able to trade above their 20ma line. However, they both face resistance from their gap resistance that was formed recently. Kepcorp managed to break this gap resistance and it should be heading towards its 50ma line at 10.36 level. Sembmar, however, is still trading in the gap resistance range of 4.56 – 4.62 level. Sembmar will likely to follow Kepcorp’s footsteps to break this gap resistance and head towards is 50ma resistance line too. Sembcorp is still struggling to keep up with its counterparts yesterday. It manages to recover to the congestion zone where all the MA lines are. The big resistance for Sembcorp currently is 5.00 level. If it manages to break 5.00 level, Sembcorp will be able to reach its recent high of 5.09. Overall, the offshores will likely to continue their bullish movement today.


The commodities were selectively bullish yesterday. Indoagri managed to rise sharply by breaking its recent high and 50ma resistance line at 1.32 level. It will likely to continue its bullish movement towards its 200ma at 1.39 level. Golden agri also manages to bounce off from its 20ma support and it managed to form a higher low formation. This indicates that it will be heading towards its recent high of 0.67 level. Olam, Sakari, Wilmar were still awaiting for buying pressure to start on them. Wilmar will probably receive it first as it is trading at 20ma with bullish white candle. If Wilmar is able to trade higher than 3.59 level today, it will indicate a higher low formation with upside to at least to its recent high of 3.70 level. Hence, the commodities have not shown much bullishness yet, but if their bullishness sets in, it will be able to propel STI to a much higher level.


In conclusion, STI managed to form a higher low formation and is likely to be sustainable. Numerous sectors had also confirmed their support level and formed higher low formation. There are still upside potential for STI as the surge yesterday was mainly contributed by the banks and offshores. Properties and commodities will likely to provide more upside strength for the index. Upside target for STI currently stands at 2850 level. STI will likely to hover around this resistance level unless the properties and commodities were able to gain more bullish strength. If STI is able to break it today, the next resistance from STI will be at 2880 level. Hence, STI will likely be trading at 2850 level today.


Long traders have to be selective on picking stocks to long. Stocks that are still trading close to their support levels can be selected for long position. Shortist should continue to stay sidelines until a proper bearish indication appears.


*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)