Daily Market Outlook for 10/6/2011

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STI again attempted to trade higher yesterday but it struggled to hold its gains before the market closes. With concerns of economic data announcement of the US market, the market decides to take the cautious approach and jumped out of the market before it closes. This caused STI to close 5 pts down, marginally lower than the previous day. Trading volume was much weaker yesterday as many carry on to stay sidelines. Will STI continue its weakness today as today is Friday?

A black inverted hammer a-like candle was formed yesterday. This signifies that the bulls in the market did attempt to take control but the bears are still strong. Bullish reversal will only confirm if the market trades and close high than the candle’s high today. Hence, it must trade higher than 3115 level today. However, as it ended as a black candle, there is a higher chance that STI might remain weak today. Based on the indicators, the bearish strength is still intact but it is very weak right now. Stochastic is likely to trigger bullish crossover if STI closes higher today.

The banks were lack of significant trading actions yesterdays as they failed to maintain their gains during the day. However, they are still reluctant to break their respective support levels. DBS in particular showed a black inverted hammer with its upper shadow testing the 20ma. This candle could mean that DBS is facing resistance from the 20ma and is struggling to break it. The offshore were more on the bearish side yesterday with exception of Sembcorp. Although Sembcorp ended its day with a white candle, it closed near to 100ma resistance level. Therefore, it might face some resistance today.

The properties got weaker yesterday as it had lack of catalyst of trading higher yesterday. After the market closes, the government announced more land parcel sale; this could impact the property prices and could create selling pressure for the properties sector today. The commodities also suffered bearish movement yesterday as they failed to retain their gains in the morning. Selling pressure was throughout the day as there is lack of buyers to support the prices. Indoagri in particular might have confirmed its lower high formation and could fall further.

“In conclusion, the market is now lacking of catalyst to trade higher as gloomy economic news are flowing around. Traders were still reluctant to take in big positions and many still chose to stay sidelines. US market’s overnight rally might bring some bullishness in our market opening but whether the bullishness can be sustained is really questionable. However, if STI manages to stay positive for the day despite the Friday sentiment, it would mean that we might see a bullish week for next week. For now, I am pretty uncertain what would happen for today. Key support of 3080 level still remains. Upside could be resisted by 3120 level. Traders should still be staying sidelines as this could be the best approach for the current market trend. Risk takers could consider looking at the long side to take some risk. ”