Technically, STI long term is now in sideway trend, short-term wise it appears to be on an uptrend. The DI+ has crossover to the DI- but with ADX dropped below 20, the upside lacks the momentum. If ADX is able to move up to 40 level, the uptrend would be of great strength and potentially moves above the 1,950 level to allow the long term trend to change to an uptrend. Stochastic signal has yet to cut down hence signaling short-term still have some upside. RSI stayed above 50% level but remained flattish indicating short-term lacks the strength for upside. As such, STI appears to be resisted at 1,800 level for the time being and immediate support is at the 1,750 level.
For the coming Christmas week, it will be a 3.5 trading days week and market is expected to be quiet, range bound with thin volume as most fund managers will be away on holiday. On Friday, US President George Bush gave the 3 US automakers US$17.4b emergency rescue loans, taken from the US$700b financial rescue package, this should give some time for the automakers to survive during this period till next January when Barack Obama officially becomes US President and takes over the full responsibility of rescuing the US auto industry. This should give some good news to STI for the coming week but expect the rally to be limited due to lacking of fresh buying interest during the festive season. For last week, property stocks were on a rally due to anticipation of lower interest rate which could benefit them but the coming week could subject to profit taking and hence a pull back. Offshore&Marine, Commodity and Planation stocks took some beating last week due to sliding of crude oil price to below US$40/barrel despite OPEC cutting output of 2.2million and may continue the drop if crude oil price is unable to rebound from the slide. S-Reits could be the sector to watch for the coming week as they have been oversold badly for past weeks and with lower interest rate, their refinancing worries might be fading off and attract interest from funds again.
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.
