FTSTI closed 2,430.96 on 17th Jul 09, a new high for 2009, above the previous resistance level of 2,424. The turning point was on 14th Jul 09 when it failed to breakdown from the neckline of a potential head-shoulder formation. This was mainly due to better than expected corporate earnings from US banks and tech stocks like Goldman Sachs, JP Morgan, IBM and Intel. Fresh funds were seen flowing in coupled with short covering led the index to rebound from the neckline and create a potentially mini rally till probably mid to end of August 09. The projected target for this potential mini rally could be in the range between 2,600 to 2,700. Main focus of this possible mini rally will be on corporate earnings.
Technically, the short-term GMMA indicator was being compressed around the period 9th - 13th Jul and with the long-term GMMA indicator still on an uptrend, the rally started when the 3-day short-term GMMA signal expanded on 14th Jul ( the pink colour link of the 5 set of short-term GMMA lines ). Short-term wise, STI might see a pull back within the next 2-3 days as suggested by the almost toppish signals from Stochastic and the cutting down of the DI+ signal in the ADX chart. This could be the chance for those who missed the breakout on 14th Jul and believe in a forecoming rally to buy in.
On the corporate front, the coming 2-3 weeks local blue chips companies like KepCorp, SembMar, UOB, DBS, OCBC, SingTel, StarHub, Capitaland, ST Engg, SGX, NOL, SIA, SIA Engg, Kepland, etc would be releasing their earnings. So far SPH has produced a within expectation set of earnings and that lifted the bearish sentiment a bit. Moreover, MTI also released a better than expected 2Q09 GDP last week and technically Singapore could be out of a technical recession by next quarter.
These good news have caused funds to rush into the market so as not to be under-perform by the index and also a potential upgrade of fair value on the blue chips by analysts. From now till probably end of August when most of the companies will be finished releasing their earnings, a better than expected result could see the stock prices move up further. Any dip during these periods could be well supported by funds coming in to buy up the stocks.
The worse might be over and probably March low won't be revisited and for investors who missed the opportunity in the March period, advice would be slowly collect on dip, adopt Dollar Cost Averaging method. There might be another dip from September to October periods when all the companies announce their earnings and market has no fresh lead for further rally. That could be another opportunity to buy in. For short term traders, stick with short term trend which is up now. Any attempt to short the market might not be wise.
