Daily Market Outlook for 15-Sep-2011

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Yet again, STI attempted to trade higher yesterday during the opening session but encountered bearish pressure during the day. The selling pressure was caused by weakness in the HSI market despite positive closing from the US market. The selling caused STI to hit a low of 2704 level before it started to rebound during the day. Before market closes, the Europe market displayed bullish strength which caused STI to rebound and closes at 2739 level. A nudge higher than the previous day’s closing. With strong gains in US market last night, will STI be able to continue its attempt of rebound today?              
              
STI ends its day with a black candle with long lower shadow. This formation is similar to a black hammer with exception that its lower shadow is not long enough. The significant of the lower shadow tells that STI might have hit a support level and is attempting to rebound. However, based on the short term indicators, STI is still showing bearish momentum and might continue to have bearish movements. But, Stochastic have turned into oversold region which can imply that the downside could get limited. Therefore, STI might continue to test 2680 support level and any attempt to rebound might be capped at 2740 or even 2800 resistance levels.                 
              
The banks continue their bearish streak as they failed to show a convincing rebound. Their downside might start to get limited as the short term indicators are entering into the oversold region. Once their support level is reached, a rebound should be expected for the banks. The offshore is one of the stronger sectors yesterday as it manages to close higher yesterday. Only Sembmar managed to close as a white candle and it is now trading much closer to the 20ma. Mini descending triangle might be forming for Sembmar. For the offshore sector, their immediate support level is a key level to determine whether their downtrend would continue.              
              
Similar to the offshore, the properties sector managed to end its day with a positive sentiment. Most of them ended their day with long lower shadow which is likely to be the sector that contributed to the rebound for STI yesterday. Capitaland and F&N are now seen to be trading slightly above 20ma and its trend might continue to be sideways. The commodities continue to show mixed movement yesterday as they were unsure of its upcoming direction. Most of them tested the 20ma as support yesterday but the support level is holding well. Therefore, all of them were still trading at their 20ma support level. No significant rebound has happen yet.              
              
In conclusion, STI’s every attempt to trade higher in the morning were being brought down by selling pressure and caused it to close as a black candle. Its movements yesterday also bring some justification that buyers are interested to hold STI. The current situation seems to be a tussle between the bulls and the bears but the bears still have an upper hand. An increase in trading volume yesterday implies that more intense battle was going on between the bulls and the bears. Currently, there is still no clear sign on who will be winning but indicators have indicated that the bears are getting weaker. 2680 support level will continue to hold STI while 2740 or 2800 resistance level will prevent the bulls from going higher. Long traders and Shortist should continue to stay sidelines as entering the volatile market right now can leave us with battle scars. Patience is needed now to wait for a clear direction before a good decision can be made.