Daily Market Opinion for 13-Jul-2012

Daily Market Opinion for 13-Jul-2012
Daily Market Opinion for 13-Jul-2012

STI halted its 2 days ascend yesterday as regional market bearish sentiment dragged the index down. STI opened with a gap down after DJI’s previous night negative close and as unable to recover throughout the day. Trading activity was muted yesterday as it swings between a tight range of between 2966 – 2987 levels. Negative Europe market opening caused some selling pressure before closing and STI eventually close at 2972 level, 17.27pts lower. Last night, DJI opened in deep red but it managed to recover and close with merely 31.26pts lower. Is STI starting its retracement again? Or is STI getting ready for further upside?


A small black candle was formed by STI yesterday. This candle can be seen as a bearish harami pattern which indicates a possible reversal for a retracement movement. However, this pattern requires confirmation. If STI trades lower than 2966 level today, it will confirm this pattern and STI will likely to head towards 2910 support level again. Based on the indicators, the indicators were now showing mixed indication. Histogram continues to show bearishness while Stochastic triggered a bullish crossover. Furthermore, RSI is trading in the overbought region. Hence, the direction for the market today is uncertain and 2966 level will be the key to determine if a retrace would occur again.


The banks ended up slightly lower yesterday ending their upward streak. Uob and Dbs closed with a doji candle which indicates indecisiveness of the market. This means that these 2 banks might be taking a break before it decides to make any major movement. Ocbc also has similar movement but there is still some bullish element as the candle is white. Under close inspection, Ocbc seems to be forming bearish divergence during its uptrend movement. Trading Ocbc for the upside now should be done with caution. If Ocbc fails to hold is support at around 8.55 level, it will confirm this bearish divergence. Overall, the banks were likely to remain flat till a clear action is seen.


The properties were mostly slightly lower yesterday as they were unable to break their immediate resistance level. Citydev dropped the most in this sector yesterday. Its action yesterday seems to indicate that its previous day’s breakout for higher high is a whipsaw and this could lead Citydev to retrace further towards its 20ma line. Capitaland has been trading in a narrow range for the past few trading sessions. Its movement looks like a pennant like formation which could indicate a consolidation movement for upside. If Capitaland is able to trade above 2.96 level with high volume, it will certainly breakout for a higher high. Overall, the properties were trading close to their resistance level and were unable to break it. They will likely to consolidate further before a breakout could occur.


The offshores were trading mixed yesterday with Kepcorp being the only one that ended higher. Kepcorp had tested its support level for the past 2 days and it managed to rebound yesterday. Despite closing bullishly, its candle was an unconvincing one as it ended up as a doji. This means that Kepcorp is likely to hover around current level before it can continue to show further upside. Sembmar continues to be trading in a very tight range of 4.93 – 5.05 levels. If Sembmar is able to break above 5.04 level, it has the potential to reach the next resistance of 5.17. Overall, the offshores might continue to trade in a range before it can see any significant movement.


The commodities were flooded with selling pressure yesterday. The selling pressure was lead by Sakari yesterday as sellers rapidly pushed Sakari’s price lower. This caused Sakari to break its 20ma line and is unable to close above it. In order for Sakari to continue its uptrend and break 50ma resistance, Sakari must be able to recover above the 20ma at 1.39 level. If it fails to do so, more selling might push the price to its next support at 1.30 level. Indoagri lost its steam to head higher yesterday after strong buying on the previous day. Much of its gains were lost after yesterday’s bearish movement. Indoagri might attempt to test its support level at around 1.43 level again. Overall, the commodities seem to be facing trouble rebounding and will likely to continue to test their support level before any upside can be seen.


In conclusion, STI was indeed indecisive yesterday as the sectors were showing reluctance to head higher. Numerous sectors seem to be ready for retracement to test their support while some is still running sideways. With indecisive indications from the indicators, STI is likely to be trading indecisively today. However, if STI fails to hold above 2966 level today, it will mean that STI will attempt to retrace again towards its support level of 2910. If STI managed to hold at current level firmly, it will still have upside chances but upside movement will unlikely be happening today.


Long traders can watch out for counters that are trading at their support levels and wait for bullish candles to initiate long positions. Shortists might want to stay sideline for now as the downside is uncertain 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)