Technically, STI long term trend still neutral while short-term wise, it is bias towards upside. Stochastic has shown signal of cutting up while RSI moved up above 50% level. However, any upside might be capped due to the weak DI pair still negatively spaced. Downside also limited as the ADX signal is flattish below the 20 level. For the whole of the week, STI was merely ranging between 1,690 to 1,730 with an attempt to test the support at 1,680 but failed to break down and a breakout from 1,730 also failed to materialize. With indicators pointing towards a possible short-term upside, the 1,730 resistance might be able to break this coming week and if so, the next resistance level would be 1,800 level. However, a breakdown at the 1,680 level would lead to STI re-test the 1,600 and then 1,550 level.
For the coming week, apart from taking cue from the status of Obama's stimulus bill, US economic data, heavy corporate earnings also weighing in investors sentiment. DBS, SingTel, StarHub and Capitaland are the few heavy weight to be reporting their earnings for the coming week.
For short-term investors/traders, market has a higher chance of rallying up and hence taking long position might be more rewarding than short position. However, do maintain the strict cut-loss rule if market sentiment suddenly turns against the flow of play.
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.
