Daily Market Outlook for 23-Aug-2011

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STI had a volatile day yesterday as it attempted to trade higher (reaching a high of 2749) and also lower (reaching a low of 2680). Despite the volatility, STI ended up 1 point lower than the previous day. This volatile movement created confusion among the traders as they were uncertain of whether to buy or to sell. This volatile market action for the day was primarily lead by HSI as HSI also have similar movements. Last night, DJI was showing some strength as speculations of FED chairman speech is expected to lift the sentiment of the market. Will STI continue to show some strength today or will it continue to be as volatile?              
              
STI closed as a white hammer like formation with upper shadow yesterday. Its white body signifies that yesterday’s market was a bullish one and it had attempted to rebound as upper shadow was shown. The long lower shadow tested the support level of 2680 signifies that the support level is holding well. In the indicators, they were still showing bearish momentum and are more likely to continue. Although the candlestick was showing some bullishness, this bullishness might be capped by 2740 resistance level and bearishness might persist until STI hits 2680 support level again.              
              
Although the market was showing some strength yesterday, the banks struggled to hold their gains yesterday. Most of them ended up as black candle with long shadows with significant volume. Therefore, they might continue to suffer selling pressure today. The offshore were showing strength yesterday as they ended up on the positive territory. They also ended the day with a bullish reversal formation at their respective support levels. This show that they refuse to break for lower low and rebound can be expected for them. Hence, the offshore might contribute some bullishness to the market today.              
              
The properties were also showing strength yesterday with exception of Kepland. Kepland broke for a lower low yesterday and is heading towards to test its support level at 2.85 level. The rest of the properties on the other hand were showing bullish reversal signals. Citydev appreciated the most yesterday and it might even test 20ma as resistance. The commodities were trading mixed yesterday as they were not moving in tandem. Wilmar, Golden agri and Indoagri closed as a white candle showing bullishness, while Noble grp and Olam were attempting to break for a lower low.               
              
In conclusion, as various sectors were moving in their own directions, it had caused STI to close in an indecisive manner. The offshore and properties were giving bullish strength to STI while weakness in the banks were capping the bullish action. Such indecisive movement might continue to persist today. However, it will still be certain that STI will continue to be capped by 2740 resistance level and downside will be limited by 2680 support level. Hence, STI might be trading sideways today. Long traders should continue to stay aside because any rebound attempt for the market would be limited. Shortist might want to take some profit off the market as numerous counters have hit their recent low levels. Initiate short position only when there is confirmation of breaking for a lower low.