Daily Market Outlook for 1-Dec-2011

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STI managed to reverse the previous day’s losses and ended up 14 pts up. It opened with a gap up but it did not managed to sustain the gains during the day. Selling pressure was seen during the mid of the day which caused STI to dive back into the red. However, STI stayed flat most of the time during the day, until the opening of the Europe market. The positive Europe market actions caused STI to surge back to its opening price and closed slightly higher than its opening price. Hence STI ended at 2702 level. Last night, Europe market closed very strong with most of them closing 3 – 4% higher. This brings very bullish mood to the US market which also caused DJI to surge 490pts which is 4% up.  Such strong closing of DJI will definitely bring a strong start to STI today. The key level is 2740 resistance level as identified during the start of the week. Will STI be able to break this 2740 resistance level? If 2740 level is broken, what is the next resistance level to watch out for?                
              
STI closed with a doji like formation with long lower shadow. The price action yesterday failed to continue the bearish movement of the previous day’s black candle. Furthermore, STI tested 2680 level and managed to bounce above it before closing. Hence, this indicates that the market is refusing to drop further. Therefore, STI’s bullish strength still remains and STI will have a good chance to surge towards 2740 resistance level. The indicators were still indicating bullish momentum. RSI and Stochastic is now out of the oversold zone and upside strength might be getting limited. Due to buoyant closing by the DJI market last night, it is very likely that STI can test 2740 resistance level today. There is a chance that STI might even break 2740 resistance level and test another resistance level. Currently, 20ma is trading at 2760 level and this might cap STI’s upside. Strong horizontal resistance stands at 2780 level which is unlikely to be broken.              
              
The banks managed to inch up slightly yesterday after a volatile trading day. UOB and Ocbc suffered extreme volatility yesterday as they swung strongly between negative and positive.  But their price action yesterday shows its reluctance to drop lower and hence, they might carry on heading higher. Most of the offshores managed to trade higher with exception of Sembmar. Sembmar faced resistance from 50ma line and did not manage to break it for the past few days. 3.68 support level is the key to determine whether Sembmar can rebound. Kepcorp and Sembcorp are also facing resistance from their respective 20ma and 100ma. Breaking 100ma might break their bearish momentum for the past few days.                
              
Most of the properties manage to trade higher after their drop the previous day. Most of them recovered most of their losses and are trading higher than Monday’s closing. Kepland was exceptional compared to the rest of the properties, because it failed to rebound yesterday. Instead, Kepland broke its recent low and it heads for another support level. The commodities were generally trading flat yesterday as they were lacking of catalyst to surge higher. Golden Agri is the only one that remains in an uptrend formation and its lower shadow formation shows that it is able to maintain its uptrend. There might be a chance that Golden Agri might be able to break its resistance level at 0.71 and head for a higher high level.              
              
In conclusion, STI’s intraday rebound had greatly boost trader’s confidence that STI still has room to rebound further. The rebound strength was mainly contributed by the banks and properties which indicate that they might still have upside room to go. Indicators still remains bullish and it is very likely that STI will test 2740 resistance level today. However, due to the buoyant closing by the DJI yesterday, one cannot rule out that 2740 resistance level can be broken easily. Hence, STI might seek the next resistance level at 2760 which is the 20ma line. In the best case scenario, STI might even test 2780 resistance level which is deeming to be a strong.              
              
Long traders might be able to harvest profits from their long positions today. Targets should have been reached and it will be wise to take as much profit as possible with some riding the upside. Shortist can get ready to look out for short positions and initiate shorts when there are bearish indications.