*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 are any questions, please contact me (Jay)

STI gapped up yesterday morning in reaction to the positive closing of the DJI market. During the morning trading session, STI managed to break above 2920 resistance level and reached a high of 2925 level. However, STI failed sustain this breakout during the day and selling pressure starts to seep into the market again. Traders reacted negatively when the European market opened flat. This negative sentiment caused numerous counters to return their gains from the gap up opening. Thus, STI eventually ended 3.72pts lower. Last night, DJI tried to trade higher but it failed to do so and ended 11pts down. Will STI be able to break of the 2920 resistance level today? Or will STI retrace back to its consolidation’s lower range of 2880 level?

STI ended with a black candle after a strong gap up movement. This candle indicates that the market attempted to turn bullish but it failed to sustain it. It can also mean that STI is having trouble breaking its immediate resistance of 2920 and might need sometime in order to break it. The short-term indicators continued to show bearish momentum and this explains the reason why STI is unable to break 2920 resistance level. However, Stochastic is now out of the overbought zone and RSI is now only slightly above the overbought zone. This is a good indication that STI’s consolidation is about to complete. STI can be expected to continue to test its resistance level at 2920 level today.

The banks failed to trade higher yesterday after the strong attempt to break their recent high during the morning trading session. Both Uob & Ocbc faced strong resistance from the 200ma resistance level and were unable to test that level. DBS attempted to go for a higher high be ended up forming a bearish engulfing formation. As DBS is trading above 200ma, it might find support at 200ma line. The offshores were performing bearishly yesterday and created a drag for STI. Kepcorp continues to retrace further as it is still seeking for a support level to form a higher low formation. A good support level for Kepcorp lies at 10.30 level where 20ma also provide a confluence.

Most of the properties attempted to trade strongly higher yesterday as they had tested their respective support levels. However, they failed to maintain the bullishness and close lower than their strong opening before market closes. This sector could be the sector the contributed to the selling sentiment that happen before the market closes. Both Citydev & Capitaland formed long upper shadow yesterday which indicates that they have trouble breaking a resistance level. 200ma resistance were seen trending close to their upper shadow and this could imply that they were unable to break the 200ma line. Lastly, the commodities were the most bullish sector among all yesterday. Wilmar was the strongest as it managed to break its recent high and maintain its day as a long white candle. Indoagri had confirmed its bullish reversal pattern and it have formed a higher low formation. Hence, Indoagri is likely to head towards its recent high where 200ma resistance line is residing there too. If Indoagri is able to break this resistance level, it will seek the next resistance level of 1.55 or even 1.62 level.

In conclusion, STI will continue its struggle to break its resistance level at 2920 level. Numerous individual counters in different sectors are facing 200ma resistance line which they might have trouble breaking them. In order for STI to break out from its 200ma resistance, it will require the banking and offshore sector to be able to break for a higher high. Currently, the commodities will continue to sustain STI’s level while the rest of the sectors complete their retracement. Henceforth, STI is expected to continue to consolidate today and attempt to break 2920 resistance level. Selling pressure can be expected to happen before closing today as trades might avoid weekend risk.

Long traders make use of the retracement opportunity in various counters to execute a long position. Breakout strategy can still be adopted as long as it yields good risk reward. Shortists have to continue to start on the sidelines as the odds are not on the shorting side currently.

*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 are any questions, please contact me (Jay)

STI attempted to rebound yesterday despite the weak opening and trading day. STI gapped down slightly to 2900 level and it started to experience selling pressure during the late morning session in reaction to DJI’s previous night closing. This selling pressure caused STI to hit as low as 2883 level. When STI hit its intraday low, bargain hunters started to flow into the market again to pick up bargains which caused STI to bounce back towards its opening price again. This intraday rebound caused STI to close at 2904 level which is just merely 1.93pts low. Hence, STI closed flat yesterday. Last night, DJI had a bullish day and ended up 83pts higher. This could bring some bullish sentiment for STI and might help STI to break out is consolidation for the past few days. Will this really happen today?

STI closed with a white hammer pattern yesterday. It can be seen as a white hanging man pattern because it is now hovering at 200ma resistance line. However, its white candle body states that STI is still trading bullishly. Its long lower shadow indicates that it might have hit a possible support level and refuse to break it. Hence, the underlying strength might still be bullish. The short-term indicators continue to show bearish readings and STI is still undergoing retracement momentum. Although the retracement is not significant, STI could be forming flag like formation. Its current overbought condition might continue to dampen STI’s upside. Henceforth, STI might continue to consolidate between the range of 2880 – 2920 levels before it can go higher. Breaking out of 2920 level will indicate that STI’s upside to continue and it will head for the next resistance of 2950 level.

The banks continued their consolidation movement yesterday as they are lacking of catalyst to trade higher yesterday. Most of them we able to rebound off from their lows yesterday and managed to recover back higher than their opening levels. There might be a good chance of them breaking out of their consolidation range today. The offshores were trading weakly yesterday as they are still retracing to their support levels. Most of them are now close to their support level and were holding well. Some lower shadows were seen and this can indicate its support level formation. What is lacking now is formation of bullish reversal candle to help them to trade higher again.

The properties continue to retrace yesterday as they were still attempting to find a support level. Majority of them formed lower shadows and this might indicate that they might be ready to rebound from their support level. Citydev is now trading between 100ma & 200ma with a flag formation. If it manages to breakout from this flag formation, it will continue its uptrend. Most of the commodities were trading strongly yesterday. Despite their weak opening, majority of them managed to rebound from their lows and close higher. Olam and Wilmar managed to confirm their bullish candle and head higher. This would mean that they have already formed a higher low and should be heading to form a higher high formation. Indoagri and Noble grp are now sitting at support levels and might be ready to follow Olam and Wilmar to form higher low formations.

In conclusion, STI will likely to continue to consolidate between 2880 – 2920 levels today. There is also a chance of breaking out from this consolidation range. Breaking out of this range depends on the strength of various sectors. The leading sector should be the banking sector and the offshore sector. If they are able to break their range today, STI should be able to head for its next resistance level. STI’s next resistance level now stands at 2950 if 2920 resistance is broken. Commodities can also be another possible sector to start its bullish movement as most of them are now at their support levels. STI’s retracement could have ended.

Long traders can continue to look for counters to go long. Breakout strategy can be adopted at this point in time as there are numerous flag formations. Going long at counters at support levels can be found in the commodities sector. Shortist must be aware that there is a higher chance of STI heading higher. Hence, shorting should be avoided to prevent losses.