Technically, STI long term trend is still neutral and required STI to breakout from 1,930 level to produce an uptrend. Short-term wise, STI is pointing towards the upside with resistance at the 1,930 level and immediate support at the 1,700 level. The DI+ has cut up from DI- showing good sign but a worrying factor is the ADX signal still below 20 level indicating a lack of strong momentum for the current rally. MACD, RSI and Stochastic are all showing more upside than downside in the short-term.
For the month of January, there will be several important events that could dictate the direction of STI.
1. Corporates 4Q08 earnings starting within this 2 weeks
2. Barack Obama officially becomes US President on 20th Jan
3. Singapore 09/10 Budget day on 22nd Jan
4. CNY 26th Jan, a tradition CNY rally
Wall Street also closed on a high on the 1st trading day for 2009 and that bullish sentiment could spill over to STI the coming week. For the month of January with those important events, STI might be firmed and biased towards the upside for the time being. However, one cautious is that corp0rate earnings for 4Q08 could not be better than 3Q08 and as the earnings are released in this month and next month, we would expect a lot of analysts downgrading of fair price for the stocks. As such, most believe after the month of January, STI will start to retreat and a possbility of hitting 1,200 level in months later.
For short-term investors/traders the month of January could be a good time for quick profit and remember to be nibble, don't be greedy and don't get caught as the financial fundamental globally has not changed to the good yet.
For long-term investors with at least 5 years investment time frame, when stock prices moved up is not wise to add on position as valuation could be cheaper in months later. Spread out the purchase and buy into it slowly based on valuation should be able to minimize the downside risk quite an amount.
