SG Market Analysis -- 24th Nov 08

STI closed 1,662.10 for the week ended 21st Nov 08, down 97.04 points or 5.52% from previous week. In total it has fallen more than 10% from 2 weeks ago. STI started the week already under selling pressure and the index fell for 4 straight days in a row from Monday to Thursday and only a Friday intra-day reversal ended a 4-day loosing. STI market reacted to weak US economic data, failure of the 3 US automakers bailout, bad financial news from US banks and in our home front, Singapore 3Q08 GDP revised down 6.8% from previous estimate of down 6.5% and MTI is projecting a very low GDP from -0.5% to 3% for year 2009. A high chance Singapore might enter a full-blown recession next year. However, there are still some good news as FY09 financial budget will be brought forwards to Jan 09 instead of Feb 09 and Government would expect to handout stimulus package to help the country to ride over the tough times ahead. A S$2.3b stimulus package was just proposed last week. In workforce number, after DBS 900 job-cut, NOL was next to follow with a 1,000 workforce downsize ( mostly in North America ) and Citigroup global retrenchment of 52,000 ( in which few hundreds will be from Singapore ). More retrenchment could be in the pipeline for next year.

Technically, long term trend has not changed and still down unless 1,950 is able to break to reverse the downtrend. Mid-term trend could be a rebound and short-term wise after last Friday intra-day reversal, a possible bottoming process looks on the way. From the look of it, STI might be doing a double-bottom to double-top formation with the double-top resistance at 1,900 level and support around the 1,500 level. In the ADX chart, the 2 DIs still negatively placed but DI+ is showing sign to moving up while DI- is coming down. The trend should signal a short-term uptrend. MACD histogram still remain in the positive region despite the 4-days fell and MACD signals still yet to cut down. Stochastich signal after Friday is showing sign of cutting up however RSI indication is not so bright. It ended at the 30% level and yet to show any sign of u-turn up. The 1,700 is the immediate level STI need to move up and hold above it the next trading sessions in order to have some further upside to 1,900 level. Failing to do that STI might just sink down again to re-test the 1,500 level.


For the coming week, market should be directed by Citigroup's news, the 3 automakers' fate and how the president-elected Barack Obama forming his administration and what plans does he has to help the economy recovery. In home front, investors will be looking at the Government for any detail action of how aids would be given out to help the economy.

For short-term investors/traders, the level to monitor would be the 1,500 level for support and 1,900 for resistance if last Friday's rally could sustain. Volatility would still be there and advice is be cautious in entering a position and be alert to take profit before the market moves the other direction again.

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.