STI closed 2,857.67 on 11th May 2010. It pulled back despite the news of EU bailout package representing market still weak and cautious. The followings are the several key value that should be taken note of.
2,580
This was the support value before it managed to break 2,700 last year. Any drop below this level could signal a fundamental change to the downside of Singapore economy. The Europe crisis is of similar scale to the Asian crisis in 1997 and if cannot contain within Europe, it will spread out to US hurting its recovering and then to Asia.
2,700
This level was a resistance STI tried to overcome multiple time last year before finally broken it. As such any downside from now should find this support be a firm one.
2,754
This was the equilibrium for STI over a period of 3 year from 2007 till now. This level should act as a moderate support and STI could fluctuate around this level doing consolidation.
2,820
This is the first level of support for STI at the moment.
2,940
This acts as a resistance for the time being. A breakout from this level will negate the bearish trend STI is having now and resume the uptrend
3,120
This is the first target for the uptrend if 2,940 is broken and turn support.
3,460
This will be the second target and probably target for year 2010 upside on STI. Beyond this level, will signal a fundamental change of the Singapore economy to the upside.
At the moment, though STI is range bound within 2 ranges. The first range is between 2,820 - 2,940 and the second range is between 2,700 - 2,820. STI could consolidate in these 2 ranges for weeks or months before the next major movement kicks in.
For short-term traders, the 2 ranges could provide trading opportunities by trading from the support to the resistance.
For long-term investors, can consider slowly accumulate around the 2,580, 2,700 and 2,820 level. Also have to cautious that if STI does breakdown at 2,580 which means fundamental change in Singapore economy to the downside, any investment will be based on valuation and fundamental of the individual company.
