SG Market Analysis -- 28th Jan 09

STI closed 1,685.23 for the week ended 23rd Jan 09, down 45.22 points or 2.61% from previous week. STI market fell since the start of the week on 19th Jan 09 when investors emphasis on corporate earnings, bad financial news and bad economic data rather than the anticipated Obama's inauguration and pre-CNY rally. Even with the extra-ordinary budget being proposed by the Government on 22nd Jan 09, the market still feel to react positively to it. Singapore released its 4Q08 GDP on 21st Jan 09, down 16.9% and revised downwards 2009 GDP to -2% to +1%.

Technically, STI long term trend is sideway and short-term is bias towards downside. The Elliot Wave 5 as discussed on last week didn't materialise and STI merely range trade between 1,680 to 1,760 for the week. STI is now at the critical level around the 1,680. Once the 1,680 is broken, STI might slide into a downtrend with first level target 1,575. There was an island reversal around the 1,680 level in early December and that is why 1,680 is of critical point now. Looking at the ADX, DI pair is negatively spaced but with ADX signal lying well below 20 level, the downward strength is not strong hence suggesting possible that 1,680 might be able to hold while STI continue to move in a narrow range. RSI has dropped into the oversold region and if sign showing flatting, STI might be ready for another oversold rebound. Stochastic is below the 20% level with the signals showing flattish sign possible bottoming around current level. For the coming week, the support level 1,680 and resistance level 1,760 will be main focus. Breaking down at 1,680 might continue to correct down to 1,575 and if breaks 1,760 level, it might trying to re-test the 1,930 level.


For the coming week, due to CNY, it will be a short trading week for STI before end of Jan concluded. With Singapore budget being put aside, investors will be mainly focus on corporate earnings especially the 3 local banks due to report next month, corporate news ( like rights issuing, etc ) and global financial news for any direction. Market might subject to another quiet trading for the coming week as investors might be taking a long CNY break. Unless there were woeful news, STI should be in range trading mode for the coming week.

For short-term investors/traders suggestion is to stay cautious as STI can go either way now with bias towards the downside more.

For long term investors, with corporate earnings going on, it is good time to read through the balance sheets and hunt for the quality stocks and buy into it when price becomes at attractive value. Spreading out the purchase would be good as it could minimize the downside risk.