Daily Market Outlook for 4-Oct-2011

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STI broke 2650 support level easily as it gapped down to 2642 level when it opened. Selling pressure continued to be seen throughout the day causing STI to hit as low as 2604 level. Long traders were fleeing the market while Shortist flooded the market to catch a pie of the downward movement. Short covering was seen before market closes and causes STI to close at 2621 level, still above the immediate support level of 2580. Last night, DJI tried to hold their ground last night but failed to hold, hence, causing the market to close 258pts down. The selling sentiment was due to the Greek debt concern as the default risk is very high. With similar concerns like the US market, will STI continue its selling momentum today? Will STI’s immediate support level of 2580 level hold?                
              
STI ended with a black candle with lower shadow yesterday. It created a gap resistance between 2644 – 2659 levels. This gap resistance will provide a cap for STI’s upside for upcoming few days. With confluence of the horizontal support turn resistance level of 2650, STI might struggle to break the resistance level if a rebound for gap covering happens. However, the chance of rebound could be diminished by the indicators readings. The short term indicators were indicating bearish momentum and there are no signs of weakness in the bearishness yet. Therefore, more selling is expected to happen today. Going forward, STI might be testing 2580 support level or even 2550 support level if the sentiment is bearish.              
              
The banks were trying to continue their downtrend price movement yesterday. DBS was the first to break its recent low and is now heading lower for another support level. UOB and OCBC have yet to break their recent low and with such bearish sentiment current, it will not be surprising that it can break it easily. The bullish divergence signal for the banks might fail if they carry on trading lower. The offshore continues their bearish movement after they broke their recent low last week. Heavy selling volume was seen as they are still a distance away from their immediate support level. Kepcorp even broke its immediate support level and will be heading towards the next support of 7.24 level.              
              
The properties suffered the most selling pressure as some of them just broke their sideways support last Friday. Citydev broke its sideways support and is now heading its next support level of 8.71 which is a huge distance to the previous support of 9.38. Capitaland is also now in the danger zone of breaking its support where further selling pressure is expected. Selling pressure for the commodities continues as traders lost confidence in the commodities market. Sakari which had suffered massive drop for the past few weeks was not spared from the selling yesterday its bear flag formation for confirmed yesterday and that indicates that more selling is likely to happen for Sakari. Golden agri also broke its important support level and that will make its trend turn into downtrend.               
              
In conclusion, STI’s failure to hold at 2650 level would mean more selling is to come for this week. With escalating concerns for the Greek debt, investor will find it hard to be confident in buying and staying invested in the market. More selling pressure for STI can be expected today as the immediate support level for STI stands at 2580 level. Furthermore, the indicators were still showing bearish signs with no weakness in the momentum currently. Hence, there will also be a chance that 2580 support cracks and STI might be heading to the next support of 2550 before any significant rebound could happen. The banks are likely to lead the drop today. Long traders might have suffered as their cut loss points were breached. Entering new counter trend long position is not wise for now as STI had yet to hit a strong support level. Therefore, Long traders might like to stay aside to wait for clear signs of support. Shortist might be enjoying the ride down as their profits starts to grow. Greed might start to set in causing the Shortist not to take profit. It will be wise to take partial profits if the intended target has been met. Avoid adding more short positions as the market is not at resistance level currently.