Market Outlook for 23/03/2011

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STI confirmed the bullish reversal signal yesterday and is now trading towards the expected resistance level of 3010 – 3020 level. If STI manages to break this resistance level, it could have a chance of the trend changing to sideways or even uptrend.              
              
The candlestick formation yesterday shows that the bull is in play but is not as strong as the previous day. This signifies that the bullish strength is still intact but it is likely to be weak today. This could be due to the fact that STI is trading very close to the resistance level of 3010 – 3020 level. The indicators had confirmed the bullish signal and price is now more likely to bullish. Hencefore, I would not be surprised that STI might break this gap resistance and starts to trade towards 200ma which is currently around 3080 level. However, if today starts to form a bearish black candle, it could mean the bears are back into the market and  lower high would be formed.              
              
The banks were struggling to keep their heads up yesterday as they are currently trading very close to the 20ma resistance level. All of them ended the day with slight bullishness. As expected the day before, the offshores were the main movers yesterday as they now trading above 20ma. Sembmar, as pointed out yesterday, was particular strong as they have secure a large contract boosting investor’s confidence.              
              
The properties failed to carry on their bullish momentnum as they were the biggest mover the day before. Citydev and Capitaland seems to have a good setup for a short position but I have notice that there is a bullish divergence being formed. Hence, I would be extremely cautious if I decide to short them today. Lastly, the commodities, they are generally pretty mixed as they struggled with their immediate resistance levels. Indoagri which was a laggard in the sector tried to catch up yesterday by having a strong surge. It is currently trading quite close the the 20ma resistance level.              
              
In conclusion, the market has continued its technical rebound and is heading towards 3010 – 3020 gap resistance that confluence with 20ma. Looking at the respective sectors, It seems that STI might not have a large chance of breaking 3010 – 3020 resistance level. In conjuction of DJI’s bearish closing last night, we might see a possible bearish candle to be forming today. And hence, it could be a good opportunity to look at the short side. However, be warned that there is a lot of bullish divergence signals around that are not negated yet. Hence, Do short with caution and with small position as the odds are definitely lowered by the bullish divergence signal. I would like to adopt a mix strategy this time round as the market seems to be in the 50 – 50 mood. The Mix strategy would be going long on uptrending stocks while having some short positions to hedge each other until the market has a very clear direction.