Technically, the long term trend is still down despite the short-term trend is an up. The ADX chart might worth looking as DI+ signal is dropping towards the 20 level while DI- is moving back up the 40 level and this could signal the short-term uptrend might be facing strong resistance this coming week and STI will be pulling back. The DI+ and DI- pair still negatively spaced even though with the recent rally hence the upside is not there. MACD signals has converged with MACD histogram strongly in the positive region but the MACD signals still reside in the negative region, as such, short-term upside could be really limited for the time being. RSI moved up to 50% level showing strength in the recent rally and this is the level to be watch as past months RSI failed to break the 50% level to proceed further up. Stochastic on the other hand performed better as it broke the 50% level and heading towards 80% level and might have a little bit more upside before hitting the 80% level and turned down again; this was what happened around end of July 08. The present resistance was around the 1,923 level and immediate support looked like around the 1,700 level. If the 1,700 level is broken down, it will probably head down to test the recent low around the 1,470 level.
Last week, OCBC and DBS both reported their 3Q08 earnings and following UOB, both missed market expectation, repoting a drop in net profit. Furthermore, DBS also announced a 6% job-cut immediately mainly in Singapore and HongKong. There was also concern on the 3 local banks could suffer further if Las Vegas Sand is unable to continue the Marina Sand IR. In addition SingTel issued a profit warning prior to its earnings announcement this coming week. SIA also reported a fall in profit. The corporate earnings so far did not perform well and next year could be worse that is what current market sentiment is.
The list of companies due to report their earnings from this coming week onwards were :-
1. Noble -- 10/11/08
2. Biosensors -- 10/11/08
3. Synear -- 11/11/08
4. CitySpring -- 11/11/08
5. SingTel -- 12/11/08
6. Parkway Holding -- 12/11/08
7. Tat Hong -- 12/11/08
8. Goldenargi -- 12/11/08
9. Li Heng -- 12/11/08
10. SBS Transit -- 12/11/08
11. Wilmar -- 12/11/08
12. CityDev -- 13/11/08
13. ComfortDelgro -- 13/11/08
14. Ho Bee -- 13/11/08
15. Swiber -- 14/11/08
16. Celestial -- 14/11/08
17. CAO -- 14/11/08
Last Friday, US unemployment rate hit a high of 6.5% missing market consensus of 6.3% and with US already into recession, there is much focus on the newly elected president Barrack Obama how he will save the US and eventually the global economy from falling further. Even though with a bad unemployment rate figure, US markets still able to close positive on Friday probably due to bargain hunting and technical rebound from oversold supporting the index. With the positive close, STI might start off the week with a positive note but the very fundamental issue regarding the ailing economy still remain unchanged and hence any upside based on fundamental point of view will not be justified at all.
Last week, based on observation STI was playing a intra-day long and short squeeze trend and this volatility has caught many by surprise. This could be due to funds that were sold out in Oct due to redemption are holding cash now and coming in to swing to market to generate some profit that they deemed to loss during last month redemption selling. This trend could last till end of the month though. For short-term traders, advice is to remain cautious and alert as could be get caught trying to long or short the market.
For long-term investors with at least 5 years investment time frame, should be looking from fundamental point of view of a counter and decide on various entry prices to slowly collect, spread out the purchase and that could minimize the downside risk quite an amount.
