Singapore Market Outlook – 3rd March 2011

Hi all. I will begin posting the daily outlook that Jay writes for his clients. As clients of his, they ought to get first bite hence the posts here will be a delayed one. I will also not post the picks and entry/exit/cut loss levels for the trade. These have to be done by Jay himself if he chooses to do so.

So with that said and done, here it is! With disclaimers of course. Everything’s written by Jay and I am posting it on behalf of him, to share with everyone.

PS : In case you are wondering, I hold a long position on CityDev from last week, Wilmar from yesterday and OCBC today.

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*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 is any questions, please contact me (Jay)              
              
STI was quick to make a retracement yesterday as it gapped down after the drop in the US market. This drop did not get supported by the support level of 3040 which also means that STI is back to be trading below 200ma again. Whatever bullish actions on Tuesday was quickly erased by yesterday’s market action. However, STI still have a chance to form a higher low at 3000 level with would be the only higher low support level left. Hence, would today’s market action test this 3000 support level?              
              
Looking at its candlestick, STI formed a bearish harami formation at 200ma which could indicate that the bear is taking over. However, it is interesting to note that the black candle yesterday came without significant volume which could mean that the bears might not be very strong. Having said that, harami formation needs a confirmation. Hence, if STI is to trade and close below yesterday’s low, STI will be heading towards 3000 level. However, as STI is now trading very close to 3000 level, there might also be a chance that STi would test 3000 level and bounce off quickly. If STI is to rebound instead today, It might be capped by 200ma which stands at 3040 level. Therefore, most likely, STI might stay in the tight range of 3000 – 3040 for today.              
              
The drop for the banking sector was not very significant as it has retrace back to their support level and stayed above their respective support level. But UOB in particular is impressive as it stays on the high side and ends the day as a white candle. The bearish day yesterday did not do much impact on the Offshore sector as they were still trading close to their previous day’s closing price. This bullish strength could be due to the rise in oil prices. Hence, I do expect this sector to carry on to remain strong.              
              
The property sector was also not showing very strong bearish yesterday but in fact, most of them ended the day with a white candle. This indicates that the properties’ bullishness is still holding very well. Lastly, the commodities sector was one of the contributor of the drop in the index. Although they are the contributor, the drop was pretty selective, Olam and Golden agri. For the rest, they were holding pretty well and some even ended up as white candle.              
              
In conclusion, the drop yesterday was not really a broad base one and in fact, there are still numerous counters showing bullishness despite the bearish movement by the STI yesterday. For today, STI might most likely struggle between the tight range of 3000 – 3040 level. Hence, I am expecting the market to be lack of clear direction between this range for today. The strategy for today would be staying a side to wait for clearer directions and not to initate any new or even close positions.