Daily Market Outlook for 30/6/2011

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For the first time after 2 weeks, STI manages to test 3080 level as a resistance yesterday. The market bullishness was encouraged by DJI’s strong overnight closing the previous day. There were some selling pressures yesterday after the market open but buyer overweight the sellers and caused STI to closed higher. The traded volume increased slightly too. As today will be the last day of the month and half year, “window dressing” effect might continue to impact the market. Will STI confidently trade above 3080 resistance level today?

STI formed a white candle with long lower shadow yesterday. This candle formation looks like a white hanging man. This price action signifies that STI faced selling pressure but it is still able to maintain its bullishness. Another observation is that STI had closed above the 20ma line. It is uncertain for now on whether STI have broken the resistance level or it is just a whipsaw. The indicators generally still remain bullish. Stochastic which had triggered bearish crossover yesterday failed to continue it bearishness and it might form a bullish crossover today. Hence, the market’s bullish strength might continue to hold for today.

The banks were holding its bullish strength strongly yesterday which is lead by UOB. UOB which has been trading below 20ma for the past few days managed to break its MA resistance and trade above it today. Hence, UOB is likely to continue towards 19.60 resistance level to test it again. The offshore did not have strong market action yesterday as they are struggling to gain momentum to be bullish again. Kepcorp which have yet to form a lower high formation rebounded slightly yesterday to test the 20ma line. It might continue to attempt to break this 20ma line today.

“The properties were trading slightly higher yesterday but there is no strong bullish movement in them. They had a strong opening yesterday but the buying strength did not stay yesterday and hence, most of them ended up as a black candle. The commodities were fairly mixed yesterday as they did not have a clear trading direction yesterday. Indoagri, Noble grp and Olam are still trading close to 20ma and have yet to form a lower high clearly. Any further bearish movement in them would indicate a lower high formation. ”

“In conclusion, the STI is now trading at the key resistance level of 3080. It is now quite uncertain on whether this 3080 resistance will hold. Today could be the day to confirm whether 3080 resistance level will be broken. In order to break this resistance level, the banking sector could be the key sector to push STI higher. However, the properties and commodities might give STI a tough time to trade higher as these 2 sectors has potential to trade lower today. Therefore, I am expecting to see STI to continue struggling to break 3080 resistance level today. Downtrend for the market is still intact but the current price action is threatening the downtrend to fail. Given the fact that “window dressing” effect might be in effect, bullish strength is still likely to happen today but I do not expect a very strong bullish action today. Traders both long and short must be quite confused right now and many would continue to stay sideline. Hence, the strategy for now should be a very cautious approach. Shortist whom had accumulated shorts for the past few days are threaten to close their short position but do stick to the proper cut loss plan. Long traders might be enticed to enter the market right now but they have to bear in mind that the market is now trading at resistance level. Therefore, it would be better to stay sidelines for now. ”