Technically, long term is on a downtrend. Mid-term might see some rebound and short-term wise could be between downtrend and a bottoming process. Note the volume of STI has declined on a daily basis for last week and this could be a process of bottoming. In the ADX chart, DI+ and DI- still negatively spaced but there is an attempt for the DI+ to move up and DI- to move down and with ADX around the 35 level, this "convergence" process might be of some strength and hence a tendency of a short-term bottoming and rebound coming. MACD histogram though still in positive region but it moving down towards the zero line. MACD signals still in convergence mode but its lying in the negative region has not indicated any trace of an uptrend. RSI looks more promising for a short-term upside as it slowly moved up to 70% level even though the index was down 5.6% for the week. Stochastic indicators after 1 whole week of selling has cut down and moving down towards the 50% level and will need another few more sessions to determine whether the 50% level can hold. If that could hold, a short-term rebound might materialize. Current resistance is at the 1,950 level, first level support is at 1,700 level and if that can't hold, possibility of STI retesting the 1,500 level.
Last week, almost all the companies have reported their earnings and judging from the result so far, only Offshore&Marine and Commodity companies were still able to report strong earning in the last quarters whereas the rest have more or less suffer profit slide already. The very resilience Offshore&Marine companies might be due to their very strong order books obtained during the bull periods and their earnings might be able to stay resilient for maybe another 1 or 2 more quarters unless contracts cancellation or clients default hit them. As for commodity stocks, the resilient could be due to the commodity peak recently and with crude oil price on a slide, possible recession worldwide coming next year, demand for these commodities will be dropped and hence their earnings will be hit too in the next 1 or 2 quarters.
With corporate earnings come to a close, investors now switch the focus back to the real economy. Tracking economic data, financial news, global leaders' actions and other markets direction for lead. Note Singapore will be announcing its 3Q08 estimate of GDP this week and PM Lee also announced over the weekend that next year budget will bring forwards to Jan instead of the usual Feb period and sounded some measures the government will be focusing on during the budget. This might give some support to the STI.
For short-term investors/traders, advice is to maintain cautious as market still display the very volatile trend and very often within the same day long and short squeeze can occur.
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.
