FTSE STI fell 1.26% today, extending the fall since 23rd Sep 09 when STI failed to break the resistance at 2,700 for the 4th times. Technically, short-term wise, STI is facing a downtrend with possible support at the following levels; 2575, 2560 and 2520. Short-term GMMA has cut down and DI+ has also cut down to DI- in the DMI chart. Though long-term GMMA still showing uptrend, market in general lacks the catalyst to propel or rally upwards.
What is the possible catalyst to spark an uptrend rally ? This could be the forecoming corporate earning which will kick off on 12th Oct 2009 with SPH the first local blue chip to announce its earning. The positive and improving corporate earnings should be able to help STI to break the resistance at 2,700. What is currently weighing on the market that leads to a short-term downtrend are :-
1. still mixed basket of economic data from US economy
2. Shanghai market still unable to reverse the correction at the moment and investors are afraid of bubbles being created.
3. strengthening of Japanese Yen which is bad for Japanese economy is also bearish in general
4. investors are cautious of various Government in withdrawing the stimulus package. Too fast and too soon the withdrawal if the economy has not fully recovered will cause unrest to the market to the downside as liquidity will be drying up soon.
Even though we are talking about the coming corporate earning should be of improving number but investors still have to be particularly take note of the improve in profit level is it due to continue cost cutting measures from the company or the real revenue.
With all these issues weighing on investors, the market currently is trading side way or consolidating ( distributing ) waiting for the catalyst to trigger the next big movement ( down or up ).
For short-term traders, have to be extra cautious of current market so as not to be caught. Keep cut-loss tight and be quick in getting profit.
For long-term investors, who are very keen to buying in currently, advise is to spread out the purchase at various level.
