STI closed 3,176.91 on 14th Dec 2010, dropping out of the uptrend channel since hitting an intra-day low of 3,118. With the potential of head-shoulder formation realizing, investors in general are cautious and hence lack the strength in moving up. A head-shoulder formation is only valid when STI breakdown at the neckline of 3,120 with high volume. Normally after breaking down at the neckline, there will be a back-test ( moving back up ) at the neckline and failure to break the resistance at the neckline will duly confirm the head-shoulder formation. At the moment, can only conclude a potential head-shoulder formation and not a valid one. With that, STI support is at the 3,120 region for the time being.
Investors who are on the cautious side, should be careful when buying near the neckline level. Market could either rebound from there or breakdown and form the valid head-shoulder formation.
Long term investors, fundamentally Singapore economy still holding up well and any dip could be an opportunity to accumulate.
Immediate support 3,120, immediate resistance 3,185
