Market Outlook

Sorry I have been away. Been quite busy doing up my new place, ID hunting, renos and all. Moving forward I am less likely to post, pending major market movement. For more info, do feel free to visit AK71’s blog with a link located on the right hand side.

The STI is ugly. It is sitting on a very important support right now with 2600-2640 being extremely critical. A break below 2600 with heavy volume could set an eventual target of around 2100. Will this be a double dip? A W shape recovery? No one will know till things have happened. For now however, the onst is for me to release more of my holdings as the market rebounds. This could include reits. For those in my CPF I do not intend to cut the positions as I want to maintain the excess amount beyond 20k to be in invesments. However to hedge against downside, I will have to short on the way down.

It is obvious like STI, capitaland has formed a very similar bear flag formation too. The price target of a bear flag confirmation on the STI is about 200-300 points down. Supports noted by 200MA which is somewhat near where the bear flag target is. Resistances include all the gap resistances above.

A few counters to note are noble and some other counters showing short signals with a very large pocket to go below due to the run up in prices without any meaningful supports created due to that. Yanlord has totally died and a few other counters. Buy signals have been failing since couple weeks ago and is a sign of a change in direction so please be aware of it.

The strategy now is to release holdings as the market rebounds and stick with cash. The chart is very similar to what happened in 2001-2003 and based on the prices after the rally it has gone way ahead of fundamentals and will need to correct. 2010 should see a relatively volatile season with trading opportunities if one is careful enough to take profits accordingly, or cut losses where necessary.

I will be looking at the market from both FA and TA on a longer term basis.  Remember I said I expected STI to hold at 2750-2800. When those cracked, the momentum has changed. I expect buyers to come in to support the prices at around 2600 but if it doesn’t hold, 2600 could very well break like it wasn’t dare as investors dump and traders begin short positions.

I will come back soon again!