Daily Market Outlook for 9-Nov-2011

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Despite breaking news on Italy’s debt issue over the holiday, STI still managed to close its day higher. The morning trading session started with bullishness but it was later dragged down by the weak Asian market during the lunch hours; Causing STI to turn slightly red before rebounding. Positive opening from the Europe market has caused STI to recover from its intraday slide which caused it ended 18 pts higher than the previous trading session. Trading volume continues to remain thin as most traders were still exercising caution. Last night, DJI manages close 101 pts higher despite a volatile session yesterday. Will STI be able to propel towards 2900 resistance level since its immediate resistance of 2850 level has been broken yesterday?              
              
STI ended its day with a white candle with both lower and upper shadows. This candlestick indicates that there is some indecisiveness in the market as there is creation of upper and lower shadows. However, as it managed to break 2850 resistance level yesterday, it is still indicating that there is still bullish potential in the current uptrend. Short term indicators have triggered bullish signals yesterday, of which, Stochastic’s bullish signal on the previous has been confirmed. Hence, the bullish short term indicators should contribute to STI’s current bullish momentum. The immediate resistance for STI remains at 2900 level and it should be tested within this few days if the bullish momentum still persist.              
              
The banks had a mixed day yesterday as they were uncertain of the outcome of the possible impact of Italy’s debt issue. DBS was the only one that traded higher while Ocbc and Uob retreated lower. DBS is now near to its recent high of 12.89 and might be threatening to break for a higher high as its bullish signals has been confirmed. The offshores were the one responsible to drag STI into the red territory yesterday as they experienced volatility yesterday. These offshore counters formed long lower shadow yesterday and this indicates that there was selling pressure seen during the day. However, buyers came into the market to support the price and thus, they ended close to their opening price levels. This volatile price action could be due to its gap covering effect, as their gap support is still holding well.                 
              
The properties were also trading mixed yesterday as traders were uncertain of the market direction. Citydev and F&N were the bullish performers yesterday as they managed to end up higher despite some selling pressure during the day. Bullish signals were also triggered by both counters yesterday and hence; further upside could be seen for them. The commodities were generally bullish yesterday as they managed to rebound off from their lows yesterday. Indoagri, Noble grp and Wilmar took the bullish lead yesterday as they ended up higher than their previous day. Wilmar, in particular, has not formed any obvious higher highs and lows yet. Hence, it might start to form when it hit the resistance at around 5.70 level.               
              
In conclusion, STI’s bullish momentum managed to sustain despite more bad news from the Europe side. It is a good sign that this uptrend of STI is likely to continue. Bullish signals have been triggered and some are confirmed; Hence, STI could continue to head towards its resistance at 2900 today. Due to the uncertain situations in the Europe side, many traders will remain cautious and therefore, it is quite unlikely to see high trading volume which can push the price sharply upwards. The key sectors that will pull STI higher today are likely to be the Properties and Commodities sector. Bank and offshores might create some drag for STI.                  
              
As the market ended up in a very mixed fashion yesterday, both Long traders and Shortist will be unable to find good trading opportunities. Long traders, however, got a better winning chance as the uptrend momentum is still intact. There could still be some counters trading at support level with good risk and reward that has yet rebound. These could be good counters for the long side. Shortist on the other hand, have to wait patiently for counter trend opportunities.