Technically, STI long term trend has turned from down to flattish with mid term trend indicating an up and short-term pulling back. DI+ did a crossover for the first time since Aug 08 during the rally and soon cut back down with the pull back on Thursday and Friday. However, with ADX signal fell to 20, the pull back suggested lacking in momentum and should be well supported. RSI and Stochastic signals also cutting down further suggest a short-term pull back. The first level of STI support for the pull back would be 1,700, next 1,600 and then 1,570. The upside at the moment still cap at 1,950 whereby a breakout from that would signify the long-term trend turns into an up.
For the coming week, market will be looking at the US Senate disapproved automaker bailout deal as Bush Administration might tap into the US$700b bailout for finance sector to aid the automakers and US Federal Reserve cutting interest rate on 16th Dec 08 in which market expecting a 0.5% cut.
For short-term investors/traders who are aiming for the year end rally probably should start slowly collecting stocks that are forming bottom or trading sideway building a base. Normally blue chips will be the one that really rally hard and strong for the rally. Identify a few potential blue chips and concentrate on those for the year end rally.
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.
