Market Outlook for 15/04/2011

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As expected, STI did not manage to continue it surge yesterday and retraced slightly. It gapped down in the morning and the day ended 13 points down.  Although it is 13 points down, it still stayed above 100ma which is still within my expectation for yesterday. As today is Friday, many would speculate that traders would sell to avoid holding positions over the weekend. Hence, would STI continue to retrace towards 100ma or STI would surge from today onwards?              
              
The candlestick that had formed yesterday shows a small black candle. Small black candle indicates that the bears are weak yesterday. This weak bear movement yesterday implies that the selling might struggle to continue today. Basing on the indicators, they are still showing bearish signals but they are getting much weaker yesterday. Stochastic D% is starting to get very close to the red line and MacD Histogram is getting narrower. Any surge in price again could cause them to trigger a bullish signal. RSI had, at last, dipped below the overbought position and might continue to go lower. Therefore, there is still chance for STI to dip towards 100ma level of 3037 and could be supported there as the bearish indication is getting weaker. Any white candle formation with the price closing in the positive region would cause the indicator to switch to bullish indication.              
              
Let’s look at individual sectors to further understand the potential of the sentiment for today. The banking sector was impressive yesterday as they manage to avoid the sell sentiment and their day ended with a white candle.  This shows that the banks are still in the bullish sentiment. The offshore sector had performed well yesterday; however, the bullish strength for the day was ended by a sell down before the market closed.  Sembcorp and Sembmar which are highlighted yesterday struggled to confirm their reversal. They ended up with an unconvincing confirmation candle. Hence, they might need another few days for further confirmation.             
              
Next, the properties sector was lack of excitement yesterday as they did not trade in a big range. Most of them end the day with a small white candle. The only property counter that ended the day with a bullish reversal signal is Kepland. If Kepland is to continue to trade higher today, it would have confirmed the bullish reversal. Lastly, the commodities failed to continue it bullish streak yesterday. Most of them ended up forming black candle but they are still staying at the support level. Golden Agri in particular had a long black candle yesterday testing the 20ma line. Watch for a formation of bullish reversal for this few days.              
              
In conclusion, STI might have a slight chance of heading lower today. However, the dip for STI is most likely going to be very limited or a weak one. 100ma support level will still carry on to be the key support level for STI. Breaking this level would change the whole game plan. Most of the sectors, in fact, remain pretty strong yesterday and they are now trading much closer to their support level. The banking sector or the offshore sector could be the key sector that would lead STI for today’s direction. The trading strategy today should remain the same. Look out for confirmation of bullish reversal and initiate a long position on them. Long positions that have been accumulated for the past few days might experience some downside movement. As long as they did not hit the cut loss level, they should remain fine. Shorting is not encouraged as the downside is limited.