Daily Market Outlook for 16-Sep-2011

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Yesterday was the 4th attempt that STI tried to rebound. This time STI managed to sustain its gains for the day and closed 26 pts higher. The day was also a struggle between the bulls and the bears as selling pressure were seen during the day forcing STI to hit a low of 2741 before it rebounded to close at 2765.The bullish strength before market closing was caused by the positive note from the Europe markets. Last night, DJI closed firmly with 186 pts higher. Will STI continues its rebound today? How far can it rebound?              
              
STI closed with a black hammer formation. This formation indicates that STI attempted to trade lower but the bulls were able to counter the selling pressure and forces the price to close higher. This is a sign of bullish sentiment in play. This bullish sentiment was reinforced by bullish signal being triggered by the indicators. Therefore, STI is expected to trade higher today. However, as the 20ma is above the current price level, it might create a resistance around 2786 level. Furthermore, the gap resistance of 2770 – 2823 and in conjunction with the horizontal resistance of 2800 levels might cap the upside movement.                  
              
The banks halted their losing streak with a strong reversal yesterday. Most of them ended its day with a bullish reversal formation and is set to rebound. The target for their rebound is likely to be towards their respective 20ma line. Their gap formation might also provide some upside resistance. The offshore were lack of trading actions yesterday as they did not have significant movements for the past few days. Both Kepcorp and Sembmar are now trading at the 20ma as resistance which could be a key level to watchout for. If they fail to break the 20ma today, it might be a possible lower high formation.              
              
The properties were trading positively yesterday which caused some of them to be trading above the 20ma line. Capitaland and F&N were now significantly above the 20ma while Kepland is slightly above 20ma. Citydev is still struggling to head towards 20ma line. The commodities were one of the strongest sectors yesterday as they contributed significant to the bullish strength of STI. Olam was the top performer as it closed 3.8% higher. The rest of the commodities attempted to trade higher but failed to maintain most of their gain. However, they were still above 20ma which might give them some strength to overcome their immediate resistance levels.              
              
In conclusion, STI had made to be able to successful make its first successful rebound yesterday. This rebound is likely to bring in more confidence for the bullish side the next few days as the indicators were triggering bullish indications. Various sectors also support level run and make it likely to be a sustainable rebound. However, the gap resistance, between 2770 – 2823, is still yet to be closed and would likely to prevent STI from going higher. 20ma at 2786 and horizontal resistance at 2800 can also prevent STI from going higher. Furthermore, various sectors were also facing their immediate resistance level and they seem to have trouble breaking them. Henceforth, STI is likely to be going higher today but one must be ready to face selling pressure once the resistance levels are being tested. Long traders might want to chase this bullish sentiment wave but they have to beware of the limited upside. Rapid trades are needed to be done for Long traders. Shortist must have gotten excited as STI is getting closer to the intended resistance level for shorting. Upon a clear formation of a bearish reversal pattern, Shortist might want to initiate some cautious short positions.