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STI halted its descend yesterday as the fears of the European debt crisis started to easy after previous day’s sell off. STI opened lower with a gap down but it was quick to attempt to rebound despite hitting as low as 2887 level. STI managed to sustain its rebound with the help of positive HSI during the day. Before closing, STI managed to stay at 2900 level and eventually closed at 2903 level. STI is merely 2.69pts higher but the trading volume is getting higher than the previous day. Last night, DJI traded 19.98pts higher ending up as a flat trading day which stopped its downward movement. Will STI be able to stay at 2900 level today? Will STI be ready for a rebound?
STI’s candle was seen to be a white candle body with lower shadow. It can be read as a possible hammer formation but it does not have long lower shadow. It can also be seen as a bullish thrusting pattern which could reverse the short-term movement if it is being confirmed. The short-term indicators were still showing bearish momentum but they were starting to show signs of weakness. With the indicators seen to be in the oversold position, downside will likely be limited while rebound possibilities will be greatly increased. STI’s current support level stands at 2880 level and this support will limit STI’s downside. The immediate resistance is found at 2910 level where 100ma trends there. In order for substantial rebound to happen, STI must first be able to break this 2910 resistance level before it can test the gap resistance between 2950 – 2987 levels. Henceforth, STI might trade between 2880 – 2910 level for now.
The banks were trading strongly yesterday as they managed to bounce off from their 20ma support line. Possible strong earnings could have helped the banks to rebound strongly. Uob is now testing its gap resistance between 18.41 – 18.59 levels and have to yet to break it to confirm its uptrend continuation. Ocbc had attempted to confirm its invert hammer formation and it triggered bullish signalling its continuation of the uptrend formation. The offshores slide further after Sembmar announced it lower than expected results with drop in earnings. This caused Sembmar to gap down deeply causing it to trade below the 100ma line. Sembmar might be heading towards 4.48 level to test its support. Sembcorp and Kepcorp were both trading at 100ma line and were unsure whether to follow Sembmar’s footsteps. If they fail to hold at this support level, they will be heading towards a much lower support level.
The properties were trading lower yesterday in anticipation to their upcoming 1Q earnings. Last evening, Citydev announced their earnings for the 1Q to be lower. This might bring selling pressure to Citydev today. Citydev might head towards its 200ma line at 10.05 level today. Kepland and Capitaland were both struggling to hold their support at 20ma line and there is still no clear sign of their possible rebound. The commodities continue to be plagued by the bearish sentiment and their attempts to rebound were unfruitful. Wilmar was the worst performer yesterday after it had announced its worst than expected 1Q earnings. Its poor earnings had lead Wilmar to gap down strongly breaking multiple support levels in one go. The immediate support level for Wilmar stands at 4.15 level currently. Olam and Sakari also suffered strongly selloff yesterday as they continue to seek for a support level.
In conclusion, there was more selling sentiment than buying sentiment yesterday despite the bullish closing yesterday. The banking sector was the only one that manages to push STI to have positive closing. 1Q earnings report had greatly impacted the prices of various sectors and will likely to continue for today and next week as more earnings will be reporting soon. Despite bearish observations, STI’s bearish sentiment seems to be weakening after analysing the short-term indicators. Strong rebound will only happen when STI manages to break above 2910 level. However, STI is still running the risk to head lower to test 2880 support level for today.
Long traders should continue to wait for proper support confirmation before entering counter trend long positions. Shortist can start to rip off profits once their targets are met. Adding new short positions should be avoided.