Technically, STI long term trend is still down and need to break the 1,950 to reverse that trend. Mid-term wise showing sign of an uptrend and short-term is a very typical directionless range bound trend between 1,600 - 1,700. The DI pair is still negatively spaced suggesting no bullish sign observ
ed. However, the ADX line ( the green line ) is slowly tappering off to the 20 level indicating directionless trend. MACD signals still in convergence mode with the MACD histogram still remain in the positive region. However, the MACD signals still lie in the negative region, therefore any rally is not expected to hold. RSI appears to be slowly moving up towards the 50% level probably suggesting downside is limited for the time being. Stochastic signals has cut up and could signal a short-term upside is on the way but probably cap at the 1,700 level. STI so far is able to hold around the 1,570 support line ( forming a double bottom ) but cap at the 1,700 level as resistance.
The coming week is a short trading week for STI and with probably the bailout of the 3 automakers dictating the direction of the global markets. As year end is also 3 weeks away and if there is the traditional year end rally, STI might in building up towards the rally. Unless there is sudden unexpected good or bad news else STI should be trading range bound.
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.
