Daily Market Opinion for 26-Jun-2012

Daily Market Opinion for 26-Jun-2012
Daily Market Opinion for 26-Jun-2012

STI continued its downward movement yesterday despite DJI positive closing last Friday. After a gap down opening, STI was hovering around the gap support level between 2814 – 2821 levels. There were attempts of rebounds to recover the losses during the first half of the trading session. However, after lunch hours, STI fell back towards its opening when HSI started to trade negatively. Furthermore, European market opened with a negative note and caused STI to erase most of its gain in the morning trading session. Eventually, STI closed at 2815 level, 12.83pts lower. Last night, DJI reacted negatively towards the current European market situation. DJI was down by 138.12pts, returning beyond the gains on last Friday. Will STI continue to retrace further today? Which support level will STI test if it falls further?

 

STI closed as a short white candle body with longer upper shadow. This candle shows STI’s bullish underlying is still intact as it had successfully closed higher than its opening price while, long upper shadows shows that there is still willing buyers despite the selling pressure. This also enhances the strength of the gap support between 2814 – 2821 levels. However, the short-term indicators were still indicating bearish momentum. STI might continue its retracement today if this gap support level fails to hold. Given that the selling momentum might continue, STI might head to the next support level at 2790 level which will be supported by the 20ma line. Strong selling action will not be expected today as the past 2 days’ candles were showing reluctance of falling further.

 

The banks closed slightly lower yesterday despite their gap down opening. Ocbc bk was seen to be the lowest among the banks. Ocbc bk could be testing its support level at 8.58 level and could be holding its support well. The rest of the banks were seen to be holding well at their respective MA support levels but with their bearish momentum from the short-term indicators, they will likely to continue to test their support levels today. Henceforth, the banks might continue to encounter slight selling pressure today.

 

The properties were mostly trading mixed as they managed to hold their prices well. Capitaland and F&N were able to close flat yesterday as they are trading at their respective support levels. F&N form a bullish counterattack pattern and could probably form a higher low if the price trade higher today. Citydev and Kepland were still staying above their 100ma line and were not showing signs of deeper retracement. This could mean that their 100ma support line is holding strong and will likely to continue for today. Therefore, the properties were now at their support levels and will likely to hold well. There is a possibility of continuing its uptrend movement currently.

 

The offshores were unable to keep their heads up yesterday as they sunk further into red. Kepcorp continues to test its support level at 9.95 level and is refusing to break this support. Sembmar was seen testing 20ma support line yesterday and manage to stay at 20ma support line. Sembcorp was not looking good yesterday as it failed to hold above its 20ma line. However, it formed a black inverted hammer which showcased its attempts to rebound. Overall, the offshores might still be struggling to rebound till they form a white bullish candle at their respective support levels.

 

The commodities were mostly trading slightly lower yesterday. Noble grp and Golden agri were both seen to be trading slightly below their 20ma line. However, their white candle formation yesterday shows that it could be a possible whipsaw and they might recover back above their 20ma line again. Sakari and Wilmar were now trading very closely to their 20ma support line. If they are able to hold at this 20ma support line and rebound, a higher low formation might be seen. Overall, the commodities were seen to be mixed in direction as some were struggling to hold their support while some were attempting to trade higher.

 

In conclusion, STI is still likely to continue its higher low formation currently. The gap support level seems to hold well for now but given that the short-term indicators were still bearish and DJI’s negative closing yesterday, this gap support level might break. The sectors that might lead STI to break its support level could be the offshores and commodities. However, the properties and banks might reduce the downward impact today. If this gap support fails to hold, STI might be heading towards its 20ma support line at 2790 level to test it. Hence, STI might continue to experience selling pressure but it is unlikely to be a strong bearish movement.

 

Long traders can actively look out for long opportunities on counters that are trading at support levels. Shortist should have already close off or at least reduce their short position today.

 

*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)