Daily Market Opinion for 29-Jun-2012

Daily Market Opinion for 29-Jun-2012
Daily Market Opinion for 29-Jun-2012

STI encountered a volatile day yesterday. STI opened with a gap opening in reaction to DJI’s overnight bullishness. This bullishness managed to continue strongly during the morning trading session which pushed STI to as high as 2869 level. The recent high at 2861 level seems to be broken but this bullish did not manage to maintain. HSI went into red after lunch hours and created a drag for STI to head higher. Furthermore, weak European market opening due to woes in the European crisis affected the traders’ sentiment before closing. Hence, STI returned all the gain back and eventually closed at 2846 level. STI ended with only a mere 5.22pts higher. Last night, DJI opened in deep red but it managed to recover its losses and close 24.75pts lower. Will STI be affected by DJI’s negative closing today? Or will STI ignore the negativity and head higher today?


STI ended with a black shooting star pattern yesterday. Given that this shooting star appears at the resistance level of 2850 which has confluences with 50ma resistance line, it means that STI is having trouble breaking this resistance level. This bearish candle can also indicate that STI might not be able to continue its bullish momentum and could retrace soon. However, the short-term indicators were giving another picture. The histogram and stochastic were showing confirmation on their bullish momentum and is likely to continue. Hence, it will likely to lift STI back to test this 2850 resistance level again. Even if the price retrace, the retracement will likely be limited by the support level at 2830 level where 200ma support line also stands. Therefore, STI might be trading in a very short range between 2830 – 2850 level today.


The banks ended flat yesterday despite its attempts to trade higher yesterday. Long upper shadow was seen in both Uob and Ocbc bk which both ended slightly lower than the previous day. This indicates that they were facing resistance from their recent high but with their indicators still indicating bullishness, they might attempt to test their resistance again. Dbs was the only one that ended slightly higher, but it also ended with a bearish candle. Its lower shadow formation could be indicating that its resistance turn support level of 13.77 level is preventing Dbs from falling further. Overall, the banks might continue to attempt to test their resistance levels today.


The properties were generally trading stronger yesterday after confirming their support levels. Citydev managed to break their recent high yesterday and if likely to continue towards its resistance at around 11.00 level. F&N managed to creep up slightly and its doji closing shows some reluctance in heading higher. Kepland has been attempting to break 3.15 resistance level and it managed to break its yesterday. However, Kepland ended with a black candle with long upper shadow made one wonder whether it has truly broken out of the resistance. If Kepland is able to close with a white candle today, it will have confirmed the break out to continue its uptrend.


The offshores were the most bullish sector yesterday as they managed to continue their bullish momentum strongly. Sembcorp and Sembmar showed strong bullish movement yesterday. Sembcorp was attempting to catch up with the rest of the sector and is now able to trade above its cluster of MA lines. Sembmar has managed to trade above its 50ma line and is now facing its recent high of 4.73. If it manage to break this recent high, it will mean that Sembmar will be heading for the next resistance of 4.80 level. Kepcorp also did well yesterday but it faced its 50ma resistance at 10.35 level and was unable to break it. Today, it might attempt to test this 50ma resistance again as its indicators are still showing bullishness. Hence, the offshores will likely to continue their bullishness today.


The commodities were trading mixed again as only a handful of counters were able to trade higher. Indoagri was the star yesterday as it managed to gap up and stay bullish. However, Indoagri is now trading at 200ma resistance line and is unsure of whether this resistance will be broken. Its horizontal resistance stands at 1.40 level and could be tested again today. Noble grp, Olam and Sakari were seen to be trading weakly yesterday. They are likely to continue to test their support levels before they can continue their bullish movement today. Golden agri had attempted to trade higher yesterday but it faced resistance from its 50ma line. With its joint venture news that it had announced yesterday, Golden agri might continue to test this resistance level today. Overall, the commodities will likely to trade in a mixed fashion but if Noble grp, Olam & Sakari were able to bounce off strongly from their support, STI will benefit from it.


In conclusion, the negativity from the bearish candle might not extinguish STI’s bullish flame to rise. The underlying bullish momentum is still firm as the short-term indicators have yet to show signs of weakness. Various sectors were also showing that their bullishness are holding well for now. To exercise a level of cautiousness, if STI is to retrace, it might be testing its immediate support level at 2830 and will likely to hold there. Otherwise, STI might continue to test its resistance at 2850 and could even break it to end the month of June. Speculations of window dressing effect might also help to sustain the bullishness today.


Long traders can continue to pick long positions that are trading at support level. Alternatively, breakout strategy can be adapted but not advisable at the moment. Shortist should continue to stand aside despite bearish candles appearing.


*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)