Market Outlook for 08/03/2011

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Indeed, STI was trading in a tight range between 20ma and 200ma which remain pretty indecisive for the day. The market actions were lack of excitement and the volume was low. Traders were stepping aside cautiously and were waiting for a clear direction to be formed. Similar to yesterday, a break of 3080 resistance would indicate the market turning bullish or a break of 3050 support would indicate the market continues to be bearish.              
              
Looking at yesterday’s candle, STi opens exactly at 200ma and close exactly at 20ma. The shadows indicates that STi refuses to break either levels. But I am glad to see that white candle was formed for the day as it implies that the bullish sentiment is around. Similar to yesterday, we have to watch for a break of 3080 resistance level to conclude the bullish trend. The indicators were some what promising as the stochastic has start to turn back upwards quickly despite of bearish crossover recently. MacD had a very clear bullish crossover and is starting to apporach the 0 line. These are signs of strength but not confirmation of uptrend yet, Hence, 3080 could be an important level to break before further uptrend confirmation could be seen.              
              
The banks are generally still hovering at the support level except for UOB which tested the resistance level in the similar fashion as friday. They ended the day with a white candle which could means that the bullish sentiment is still holding well. The offshores did particularly well yesterday where strong bullish action happens for both Sembcorp and Sembmar. Sembmar was trading very close to its historical high right now. These actions would mean that they are now trading uptrend already.              
              
The properties were lack of actions yesterday again as they struggled to trade higher than friday. Capitaland and Kepland still remains at 20ma as resistance and failed to break the level. Capitaland in particular, might face danger of retracement currently if it trades lower than yesterday. Lastly, the commodities was also trading in a very tight range yesterday. Golden Agri in particular is starting to retrace towards 20ma and might form a support over at that level which could be similar to Noble grp’s actions.              
              
In conclusion, the lack of market direction right now is contributed by the tight support and resistance range from 20ma and 200ma. Breaking of either of the level would give a much clearer direction. The key levels of 3050 support and 3080 resistance remains until the market decides which way to do. But I am glad that the market decides to end the day with a bullish note and this gives hint that there is a chance of the bullish direction. However, the direction in the end depends on the sentiment for this few days. Hence, I would expect the market to remain pretty flat for today but I would also not rule out a chance of STI to break 3080 level. So for our strategy today would be still carry on  to be cautious and avoiding new trades would be the best for now.