Daily Market Opinion for 5-Jun-2012

Daily Market Opinion for 5-Jun-2012
Daily Market Opinion for 5-Jun-2012

Yesterday, STI attempted to recover after it took beating on Monday. The rebound attempt started with a gap up during opening which tested the gap support between 2715 – 2737 levels. Buying strength was seen during the early trading session which helped STI to reach as high as 2730 level. However, sellers made use of this opportunity to sell on rebound which caused STI to slide gradually during the rest of the day. In the end, STI closed at 2712 level and still managed to close higher with 13.41pts up. Last night, DJI managed to recover a modest 26.49pts as market confidence build up slightly. Will STI be able to continue to stay positive today? Will it be able to break this gap resistance?                                                                                                                                                                           


STI has managed to the gap resistance between 2715 – 2737 levels and closed with a black candle with upper shadow. The upper shadow and black candle clearly indicate that STI is facing resistance from this gap resistance level. Furthermore, its upper shadow tested the horizontal resistance of 2730 level indicates that 2730 resistance is holding well. The short-term indicators continue their bearish momentum despite yesterday’s rebound. However, the bearish momentum seems to be weakening as the Stochastic lines starts to get closer to each other. If STI manages to break this immediate resistance of 2730 level, it might have a good chance of rebound towards the next resistance of 2780 level. Otherwise, STI will still have the potential to hit 2680 support level.


The banks showcased strong gap up opening yesterday but most of them failed to sustain the gains. Uob had gapped up strongly during the opening session but it failed to stay positive and at the end of the day, it closed lower instead. It could be attempting to test its 200ma support at 16.85 level. Dbs is the only that manage to stay bullish throughout the day and it even managed to break its gap resistance. It could be rebound back to test its previous low level of 13.13. The offshores were trading mixed yesterday despite their strong opening yesterday. Kepcorp managed to maintain its support at its 200ma line while at the same time faces gap resistance. Sembmar is facing trouble yesterday as it did not manage to stay above its 200ma support at 4.24 yesterday and closed slightly lower. If this 200ma fails to hold, it will head towards 4.15 level for its next possible support.


Most of the properties managed to end only slightly higher yesterday despite their strong opening yesterday. F&N is the only one that maintained its bullish strength yesterday but it faced resistance from its gap resistance that prevent it from going higher. Kepland & Capitaland were showing some signs of refusal to drop lower yesterday as they formed lower shadows that tested their support level. If they fail to maintain their support, there might be further downside room to drop. The commodities were trading mixed despite their attempts to trade higher yesterday. Only Noble grp was showing bullish strength which helped it to test its 20ma resistance again. However, its upper shadow formation shows that 20ma resistance is still holding well. The worst performer for the commodities yesterday is Sakari where it tested and broke 1.20 support level at closing. If Sakari fails to rebound above 1.20 support level today, it might be heading towards 1.10 level for next support.


In conclusion, the bullish gap up by STI is lacking of conviction as most of the sectors were not able to maintain their bullishness during the day. This shows that the market momentum is still bearish and downside risk is still higher despite the positive closing. STI will most likely to stay resisted by the horizontal resistance of 2730 which confluences with the gap resistance between 2715 – 2737 levels. If STI forms another black candle today, it would mean that STI will more likely to test 2680 support level in the coming days. Henceforth, any bullish strength that is happening, STI will be resisted by its resistance levels.


Long trader should continue to wait sidelines till 2680 level is being tested. Shortist can execute some short positions if there is confirmation of resistance from the gap resistance. Shortist must also make sure that there is still good risk and reward before entering a short position.


*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)