Daily Market Outlook for 20-Sep-2011

*Disclaimer: This material is provided to you for general information only and does not constitute a recommendation, an offer or solicitation to purchase or sell the product mentioned. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of you acting based on this information. Investments are subject to investment risks. If there is any questions, please contact me (Jay)              
              
STI failed to trade higher yesterday as 2800 resistance level remains firm. STI gapped down slightly during the opening session but it failed to regain its bullishness during the day. More selling pressure happens during the afternoon session as the market reacted to weakness in the Europe market. Concerns on the Europe debts elevated yesterday as there was no concrete measures to help the Greeks. Potential defaults in the Greek debts were heavily speculated. Last night, the US market was down 108 pts in reaction to the Europe debt fears. Will STI continue to drop today? How low can STI go today?              
              
STI closed with a black candle formation that can be deem as an evening star formation. This black candle formation had broken the gap support that had created on Friday and it had even confirmed the resistance level at 2800. Lower high could be formed at this point in time if the market continues to trade lower today. Therefore, there is a possibility that downtrend might be formed. The short term indicators were starting to show weakness in the bullish momentum. If STI is to trade lower again, bearish sign might be triggered or confirmed. Immediate support for STI will be at 2740 level. 2740 support level can be a strong support level as STI did not manage to break it the last week. If this strong support level fails to hold, we will likely see STI to test the next support at 2680 level.                  
              
The banks failed to continue their bullishness last week as concerns of the Europe’s debt issue might affect their operations. The banks formed a bearish reversal pattern yesterday which indicates that it might face further selling in the upcoming days. The candle pattern also indicates that the banks had trouble breaking their immediate resistance level. Majority of the offshore did not manage to break their 20ma as resistance level. Kepcorp and Sembcorp are even threatening to break the support to go for a lower low. Possible descending triangle is seen for Kepcorp. Therefore, 8.42 support level for Kepcorp is an important support level to watch out for.              
              
The properties suffered selling pressure yesterday as participants of the market were not convinced of the upside potential of the properties. Kepland suffered the strongest selling pressure which caused it to break its 20ma support. Its major support at 2.84 might be tested again. Any further selling in the properties sector would threaten their trend to turn into downtrend. The commodities were the firmest sector yesterday. Minimal selling pressure was seen on them as rising commodity prices supported this sector. Most of them were still trading above 20ma with exception of Sakari. Sakari is now testing its immediate support level and might bounce  off from this support.              
              
In conclusion, STI is likely to be forming a lower high formation which can mean that the trend might be changing to downtrend again. 2800 resistance level should continue to hold while its immediate support level of 2740 might be tested this few days. Indicators have yet to turn bearish but weaknesses are seen. As various sector as trade very close to their major support levels, it will not be surprising to see prices rebounding from their support levels. However, if the sectors fail to rebound off their support level today, STI is likely to continue its bearishness and test 2740 support level. Tonight will be another round of FOMC meeting in the US. STI is likely to be trading cautiously, lacking of trading volume. Any big price movement during the day is quite unlikely. Henceforth, Long traders might be tempted to long at support level. But it will be wiser to avoid going long as the market trend is starting to turn bearish. Shortist might also want to stay cautious because the outcome of the FOMC meeting might create extreme volatility in the market. Staying sideline will be the best strategy for now.