A Look At the Big Picture - DJIA: The DJIA typically leads the market sentiments around the world. After a bout of negative news, bearish sentiments finally come to an end. Confidence is building up in Obama's team to reverse the economic crisis. Bullish reversal indicators are spotted om the DJIA chart. The long hammer supported with high volume on Thurs showed a resilient test of the 8196 support level. Fri's high volume and white candle close of 8281 provides further confirmation of bullish reversal. In the next few trading days, DJIA will be attempting to break the 20 and 50MA resistance at about 8600. Amidst all the gloomy economic figures and negative earning reporting, a break above 9000 (which will also be the 100MA resistance) will provide a very strong indication of investors' confidence and see the start of a bull rally. However, if the test at 20/50MA fails, the DJIA will likely go into a bear trend to test last Thurs' support level. We are in a critical crossroad in the next 2 weeks. Will the DJIA break the resistance? I'm not very hopeful at the moment.
STI: 1716 is a key support level to watch. The bear is taking a breather with a white candle closing on Fri. In the coming week, STI will take cue from DJIA and likely to be running on the "Obama" and "Singapore Budget 2009" steriods. Why do I say the market is on "Steriods"? Well, it is likely to be short-lived, unless the DJIA is able to break the 9000 resistance. The quarterly and annual earning reporting season is here. Figures will be dismal. However, investors are likely to brush aside those negative news and cheer to Obama and our Budget as "Good news" will prevail in these 2 events. After the euphoria is over, many would come to their senses and realise that the market has been overpriced. This is the next big drop that I'm waiting for. Meanwhile, I'll be riding on the steroids to look for LONG opportunities in some of the Blue chip counters. However, I'll square off my positions by end of the week as the long CNY holiday poses too much uncertainty. The next few trading sessions will likely see STI testing 1800.
My Stock Pick from Indicators Watch:
LONG on UOB, SIA, SGX, Sembcorp, Beauty China & Raffles Education
Disclaimer: My assessment of STI is for fun reading only. It is not an inducement to buy or sell nor an investment advice. By reading this blog, you have agreed that I shall not be responsible for any profits or losses based on the information provided.
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