Daily Market Outlook for 21/6/2011

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After a whole week of bearish movement, STI manages to stop the losing streak and ended up 8 pts higher. STI attempted to trade higher yesterday but faces another round of selling pressure after lunch because HSI failed to trade positively. Furthermore, it was dragged lower when DJI future opened negatively. The trading volume yesterday was pretty average since the market was lack of catalyst to be more actively traded. Will the expected rebound happen or will STI continue to move lower today?

A white inverted hammer cum bullish harami was formed yesterday despite bearish sentiment kicks in before market closes. This formation could be a possible bullish reversal signal as it formed near the support level of 3000. This formation had also turned the indicators to trigger bullish indications. Both RSI and Stochastic still remain oversold but if there is a continuation of bullishness today, they might be heading out of the oversold region. Therefore, bullish momentum is still expected to happen of which the rebound could head towards 3040 resistance level.

The banks formed bullish reversal signal yesterday as they remains bullish during the day. Selling pressure were lacking for the banks as they ends up higher than their opening price. Uob confirmed its support at 100ma and would be heading towards 19.04 resistance level. The offshore were pretty bullish yesterday as they managed to hold well at their respective support levels. Sembcorp in particular held at 200ma with a one white soldier formation which could continue it upside movement towards 20ma as resistance which is now at 4.97 level. A possible lower high formation might be formed there.

“The properties ended its losing streak and it formed bullish reversal formation yesterday. F&N and Kepland were in the limelight as they rebound strongly yesterday. F&N now is likely to head towards 5.80 resistance level for a possible lower high formation. Kepland too, had a strong reversal signal and its upside could continue towards 3.66 resistance level. The commodities were lack of bullish action yesterday as most of them ended up mixed for the day. Straits Asia which failed to hold its support at the 20ma last week, has now managed to hold at 50ma as a support level. With its formation of a bullish reversal, it is likely to close its gap resistance between 2.96 – 3.00 level. .”

“In conclusion, STI has now managed to form bullish reversal signal which is likely to end the bearish streak. A positive closing with a white candle today would confirm the rebound to be heading towards the immediate resistance of 3040. Currently, there are no strong signs that 3040 would hold strongly as a resistance level. Hence, I would not rule out that 3040 resistance level would be broken in the upcoming days. The upside chances are further confirmed by various sectors as they too formed bullish reversal formations. However, from the observations from the different sector, they are getting closer to their respective resistance levels and therefore, upside should be limited even if 3040 resistance level is broken. Long trader might now be very eager to go on the long side as there is bullish signal. It is good to be reminded that the upside is getting limited; hence, taking profit quickly is essential if long positions are entered. Do make sure that there is good risk reward for the long positions. Shortist might be tempted to go on the short side as the sudden surge is very attractive to go on the short side. However, STI has yet to reach 3040 resistance level to form any bearish signs. Therefore, it will be wiser to be patient to wait for a bearish reversal sign to be formed at the resistance levels. ”