Market Outlook for 09/03/2011

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STI was extremely bullish yesterday as it had broke out from the tight trading range. As pointed out yesterday, braeking 3080 level would only mean that the market had turned bullish and the market would be heading towards 3120 level. If 3120 is tested, it would be showing that downtrend might have ended and the trend could have changed to sideways or even chance of being uptrend.              
              
STI’s candle yesterday was a long white candle indicating a strong bull in play. But it was pretty surprising as the bullish candle did not come with high volume. This could mean that the market is still pretty cautious one the upside. But at least, STI now is trading above 20ma (3060)and this 20ma could turn out to be a strong support level if the market can’t break 3120 level. And this 3120 would be a major resistance level which was pointed out for the past few outlooks. Hence, I expect STI to have trouble breaking 3120 level and might retrace back to the 20ma level when it tested 3120 level.              
              
The banks were one of the participant in contributing to the surge of STI today.They brokeout of 20ma resistance and is now trading above it. Hence, they should be heading towards another resistance level before they would come back to test the 20ma again. The offshores carried on to perform wonderfully again as they carry on their bullishness. Sembmar was exceptional as it is now trading at historical high level. Upside room could still be expected for the offshores.              
              
The properties did not enjoyed the bullishness yesterday as they carried on to struggle at their resistance level or perhaps the market yet to rotate to properties play. I reckon that the market might rotate to start participating in trading the properties in the bullish direction today if the rest of the sectors are sluggish. Lastly the commodities were also pretty sluggish as they maybe trying to form a new support level before they would be able to continue its bullish trend. Similar to properties, they might have a chance to enjoy rotational play for this few days. Noble grp and Golden Agri is pretty attractive as they are trading close to 20ma as support.              
              
In conclusion, STI has at last broke out of the tight trading range and is heading towards 3120 level. It now has a higher probability of turning uptrend. But what is lacking right now is a higher low formation which i expect it to form at 3050 or 20ma level. Since the prices had already rallied, it will be wise not to chase the prices and patiently wait for a good retracement before entering long positions. As for those whom had been trading on counter trend, it would be wise to take partial profit when STI hits 3120 level so as to prepare to pick up more position once STI retraced to support level. Strategy for today would be avoid shorting but be prepared for the long side. Of course, to be patient for a good retracement before rushing in to buy.