FTSE STI hit a resistance at 3,165, pulled back tested at 3,120 and rebound from there. The rebound appears to be going to test the resistance at 3,165 again. However, looking at board market we do found sign of those blue chips and big cap stocks are currently trading at overbought region while the penny and laggard have the momentum to move up to their respective resistance level.
As earning season starts the week of 11th Jul 2011, the market might be behaving in a way of pushing up the stock prices and once result out, sell on news. From the various technical indicators this scenario is very possible.
Short-term investors are advised to maintain cautious when buying.
A possible approach could be to maintain a short position on the big cap stocks while holding long position on penny and laggard stocks to hedge against volatility risks.
