FTSE STI closed 3,212.10 on 16th Nov 2010 and is closed on 17th Nov 2010 for holiday.
Since hitting 3,313, it has pulled back 3.05% in line with global stock markets with concern over China will be intensified its cooling measures to curb inflation ( hitting 4.4% in Oct 2010 ) and Euro debt ( with latest Ireland requiring bailout ) despite early this month US Fed pledged to pump in another US$600b for its QE2 effort to stimulate US economic growth and bring down its 9.6% unemployment rate.
Looking at the chart, since the uptrend established in Jun 2009, STI is still trading within that uptrend channel and yet to be invalidated. Within that channel there is another sub uptrend channel developed since May 2010 and STI presently still trading within this sub uptrend channel. The immediate support as of now is 3,200 which happens to be the lower boundary of the sub uptrend channel. Has STI broken down at 3,200, STI still has 2,940 ( lower boundary of the bigger uptrend channel ) as a major support before the whole uptrend get invalidated.
There are several support levels which one might look at
1. 3,200 -- immediate support and lower boundary of the sub uptrend channel
2. 3,040 -- a double top resistance ( Apr, Aug 2010 ) turned support
3. 2,940 -- the lower boundary of the bigger uptrend channel
4. 2,650 -- the last support line for STI, anything below that Singapore economy in general has turned to possible recession.
A drop to 3,200 from 3,313 is 3.41% pull back.
A drop to 3,040 from 3,313 is 8.24% pull back.
A drop to 2,940 from 3,313 is 11.26% pull back.
A drop to 2,650 from 3,313 is 20.01% pull back.
Technically a pull back of 20% or more from peak is considered entering bear market. Hence, the last line of defense for STI at 2,650 is of critical. Unless Singapore is considering going back to recession again else chance of breaking that support is not high.
A "healthy" correction of between 5% to 10% is normal for an uptrend market. Therefore, STI might not be able to rebound from 3,200 if broken and the next support level could be between 2,940 to 3,040 levels.
Investors could slowly accumulate at the various support levels.
