Daily Market Outlook for 21-Sep-2011

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STI rebounded yesterday reversing the losses of Monday. STI started the day flat during the opening session and throughout the morning session. However, bargain hunters started to flood the market during lunchtime which pushed STI higher. More buying strength was seen once the Europe market opens with a positive note. The bullish sentiment was developed due the positive sentiment of the Europe debt crisis. The bullish strength managed to retain till closing which ended the day with 23pts higher. Last night, the DJI closed only 7 pts higher despite trading 100pts higher during the majority of the day. Concerns of the outcome of the FOMC meeting weights the US market down. How will these concerns impact STI today?              
              
STI closed with a white candle which engulfs the previous day’s black candle. The previous day’s evening star formation failed to confirm as the price did not trade lower yesterday. The white candle formation might also be attempting to close the small gap that was created by Monday’s drop. This price action maybe indicating that a lower high might not be formed yet and 2800 resistance level might be tested again. STI might not be ready to retest 2740 support level again. Based on the indicators, they are still showing bullish momentum and might be getting weaker. If the indicators are showing more weakness, then we can expect STI to be dropping.              
              
The banks managed to rebound slightly yesterday but they did not manage to recover all the losses that were made on Monday. Their bearish reversal candles were not confirmed too. Hence, the banks could still be consolidating for a clearer direction for today. The offshore did not break their major support level but instead, it rebounded off the level. Kepcorp enjoyed a strong rebound yesterday which brings it back to 20ma level again. A potential reversal in its trend can occur if it manages to break the 20ma and the immediate resistance of 8.80.              
              
The properties enjoyed the biggest rebound among all the sectors. Citydev and Kepland managed to bounce back to its 20ma level, while Capitaland and F&N managed to stay above its 20ma support. Despite such strong rebound, F&N and Kepland were showing weakness in their indicators and might potentially trigger a bearish signal if they trade lower today. The commodities also contributed significantly to STI’s rebound yesterday. Majority of them manages to recover their losses partially and some of them even surpassed its Monday’s drop. Golden Agri is surprisingly strong as it manages to break 50 & 100ma resistance level. However, it is now facing another strong resistance level which is formed by the 200ma line.              
              
In conclusion, STI might still have some bullish momentum currently. But its upside will still be capped by 20ma or 2800 resistance level. Signs of weakness in the bullish momentum are still seen and hence, breaking of 2800 resistance level is going to be tough for STI. Therefore, STI is more likely to consolidate at current level and might even go lower today. If STI drops lower than 2750 today, then we will see STI to be testing 2740 level again. If it does not happen, then STI should be trading within 2750 – 2800 range. Long traders might felt that they had missed the opportunity to bargain hunt. But under such condition where there is bearish underlying, it would be safer to just avoid the market for the time being. Shortist might be shaken by yesterday’s surge. As long as the short position’s cut loss point is not breached, there is still a good chance for the short target to be met.