Market Outlook for 21/03/2011

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Last week, STI failed to hold itself above the 20 and 200ma as nuclear crisis in Japan starts to emerged. On tuesday, STI had a biggest drop for the year triggered mainly due to worsen nuclear reactor in Japan. The drop on tuesday broke the recent lower low level of 2960 and confirmed that STI’s trend has revert back to downtrend. Hence, continuation of downtrend this coming week could be very possible.               
              
On friday, STI failed to hold on to its gains in the morning and came tumbling down before the market closes. This signifies a very bearish movement as the bulls very immedaitely countered by the bears.  However, this bearish movement did not break the support level of 2920 level and could remain supported. But if STI fails to hold at 2920 level, the next upcoming strong support level would be at 2880 level. Looking at the indicators, there is a small possibility that STI might hold at this 2920 support level and rebound for a lower high. 2960 level remains to be its immediate resistance level. But if 2960 resistance cracks, STI might be heading to close the gap at 3010 – 3020 level.              
              
The banks were just like STI, struggled to overcome the bears and ended the day with a long black candle. But most of them close near to their support level and its indicators are showing signs that it might have a rebound. The strongest offshore sector was not even spared as people rushed to exit their position before the market closes. They seems to be struggling to break the 20ma resistance level as they are trading quite close it.              
              
The properties which was the weakest sector of all suffered the same fate as the rest. But this sector did not enjoy the gap up like the rest of the sector and hence, their drop for the day was not very significant. lastly, the commodities also failed to keep its heads up as the bear came in to selloff before closing. The commodities is showing similar traits as the offshores are they are now trading pretty close to the 20ma.              
              
In conclusion, the market is still in a bearish motion as people scramble to exit the market to avoid the weekend risk on friday. Majority of the counters are still holding well at their support level and they have signs for a good rebound. For this week, if there is no increment of bad news from Japan, we could possibility see a techincal rebound for STI to reach 2960 level or even 3010 – 3020 level. But do take note that this rebound would be a good setup for short position. If there is bad news this week, we would most probably see STI to break 2920 support level and eventually reach 2880 support level. Therefore, the best strategy right now is to wait for a significant rebound before we look to initate a short position.