Market Outlook for 04/03/2011

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STI tried very hard to break 3040 as resistance yesterday by trading above it most of the time of the day. However, the bullish sentiment was quick to subside when selling came into the market in the afternoon trigger fears in the market which encourage people to jump out of the market. Did they jump out at the right time or wrong time?              
              
Looking at its candlestick, STI did not confirm to the bearish harami yesterday. However, it ended up as a black shooting star yesterday. This formation further reinforces that the resistance level of 3040 is really a tough nut to crack. Therefore, if STI is trading below yesterday’s low, It could form the reversal and form a lower high formation. Lower high is a sign of downtrend continuation which is pretty worrying. But as I had pointed out yesterday, STI could also have a chance to form a higher low at 3000 level which could start to form uptrend. However, if 3000 fails to hold after confirmation of this shooting star, We are in for a downtrend ride again towards 2900 – 2950 support level. Hencefore, we have to be very cautious about how STI confirms this shooting star. Looking at the indicators, it seems that the bears are coming back for now.              
              
The banking sector yesterday were pretty lack of direction and were similar suffering the same faith as STI, selldown before market closes. Again, OCBC and DBS stayed at support level while UOB start to form bearish reversal. The commodities were lack of direction yesterday too but they are starting to form bearish reversal also. Particularly Noble grp and Golden Agri. Olam seems to have confirm its bearish reversal. Hence do expect the commodities to lead the drop.              
              
The property sector was the worst hit among all the sectors as they formed bearish reversal candle at resistance levels, except Citydev. Any further downside today means confirmation for the properties to form a lower high which signifies continuation of downtrend. Hencefore, they might be leading STI’s drop also. Lastly the offshore sector. The offshore sector is the firmest of all as it refuse to drop despite the general market bearishness. They did not really form a very bearish formation but they generally end the day flat.              
              
In conclusion, the way the bull was countered by the bear is pretty worrying as this shows that the resistance level is very strong. It would take a lot of effort from individual counters to turn very bullish to break it. Generally, most of counters in the sectors are starting to show some short term bearish signs in the indicators. Hencefore, the chance of retracement is pretty high and today is the key day to confirm the short term bearishness. If the day still ends as a black candle which closes lower than yesterday’s low, This would indicates downside movement for next week. Hencefore, the strategy for today would be yet again avoid on the long side. For shortist minded, watch out for confirmation where the market price trades lower than opening and even trades lower than yesterday’s low. But again, downside is very limited, you have to trade fast in and out. Otherwise, you might lose out in the end. So, it might be better to just patiently stand aside for the time being.