FTSE STI closed 2,672.60 for the day, failing to break the 2,700 resistance level. In general, STI long term is still on the uptrend as indicated by the long-term GMMA indicator. Short-term wise, STI still in the uptrend but failing to breakout from 2,700 might soon result in pull back soon. With earning season starting mid-Oct, the failing to break the 2,700 level could see STI pulling back for consolidation prior to the start of the earning season next month. The consolidation if does happen, could possible see STI testing the support level at 2,600 and 2,520 level. A breakout from the 2,700 level could see a possible target of between 2,850 - 2,950. Looking at the component index stocks which responsible for the STI value, the yet to move up are the banks and the defensive counters ( SingTel, StarHub, SPH, ST Engg, SMRT, ComnfortDelGro, etc ). A breakout from the 2,700 level would need these stocks to move higher. Other component stocks like Property, Commodity and Offshore/Marine have been rallied in past weeks and they are now under selling pressure for profit taking.
For short-term investors, cautious has to be exercise at this stage of the level. Any failure to breakout from 2,700 level prior to the start of earning season next month, will see consolidation kicks in and an attempt to long at current level carries quite a moderate level of risk.
For long-term investors, opportunities should arrive when STI pulls back for consolidation to the 2 support levels at 2,520 and 2,600 level.
The breaking out from 2,700 level might materialize with better corporate earnings as the catalyst to rally the market upward and if that is so, investors could slowly accumulate during the consolidation phase.
