Referring to Singapore Industrial Index (STI), having a good steep run up in such a short period of time, some form of pull back is quite common, allowing it to rest a little before continuing its charge ahead. Yes, I am talking about the formation of resistance, likely to be at 2284. and later a new support which is still not visible yet.

Will STI plunge from here? If we were to look at the real economy, which still appears very fragile, the chance of further decline is possible.

However, there is a saying that stock market runs 6 months ahead of real economy, in which case the much talked about "green shoot" could mean the real economy is going to turn around in 6 months' time. Sounds too good to believe? Only time will tell.

If STI is able to break out the current resistance at 2284, the "green shoot" will grow into a big plant. Otherwise, STI will form support, stay sideways before turning either bearish or bullish.

Stay alert.

Another bright day, thanks to the good shows performed by Dow Jones last night. Many traders are getting anxious now, kept wondering whether it would be too late to buy later, if they don't buy now.

Well, if the trend turns up, for sure there will still be plenty of time to go long. One has to be certain the uptrend is clear, that means to let the market charts its own course with more bullish confirmation.

Should one wish to be early birds, make sure to stop loss if the uptrend turns out to be another false one, as evidenced by previous failed attempts (twice) by STI to reverse from bottom.

It might not be a good idea to be early. It is true that "early bird catches the worm". But it is equally true that "early worm gets caught by the bird". :)

STI suffers 'window-undressing'

Most analysts expect a difficult year ahead with much uncertainty shrouding the economic outlook

IN YESTERDAY'S report on the penultimate session for the year we pondered the possibility that the Straits Times Index (STI) might be 'window-undressed' instead of enjoy the widely-expected 'window-dressing' on its final day.

One reason for considering such a possibility was that the index had already moved up sharply on Monday; another was based on the argument that if window-dressing is aimed at making the books look better, then maybe the smart money would take the opportunity to dump bad assets, or sell into strength.

Whatever the case, the STI yesterday stood 16 points higher at 12.30pm probably because some in the market anticipated a final-second push, but after completion of the post-closing adjustments, it recorded a nett loss of 9.09 points at 1,761.56 probably as the smart money quickly sold into strength.

The final reading means that the STI lost just under 50 per cent for the year, both in local currency and US dollars. At the risk of understating the obvious, it was a disappointing performance, given that the bulk of analysts had this time last year predicted the index would rise above 4,000 by year-end.

It was also a disappointment to those who bought in response to Wall Street's Tuesday rally, though the latter was in all likelihood also due to window-dressing since it came in the wake of the release of awful consumer confidence and housing numbers.

Turnover yesterday excluding foreign currency issues was 457 million units worth $493 million, high by recent standards for a half-day session.

Excluding warrants and the index's advance-decline score of 7-20, there were 148 gains versus 118 falls in the broader market, suggesting that many players had no time to react to the late selloff in the index.

Not surprisingly, stocks which had led the STI up in 10 minutes between 12.20-12.30pm all ended weaker at 12.35pm. SingTel, for example, rose to $2.63 but ended unchanged at $2.55, DBS sold for $8.60 but ended a nett one cent weaker at $8.42 and UOB was ramped up to $13.18 before finishing at $12.92 for a nett loss of eight cents.

Unlike the over-optimism which marked predictions 12 months ago, analysts this time round are under no illusions about the market's prospects in 2009, especially in light of a worsening economy and a deteriorating earnings outlook. Most expect a difficult year ahead with much uncertainty shrouding the economic outlook.

Speaking of earnings, China shipyard Cosco Corp on Tuesday issued a profit warning because of doubtful debts and higher shipbuilding costs. It said its subsidiaries have received requests to delay payment from customers in view of the adverse global economic climate and the deteriorating shipping industry outlook. It warned that 2008 profits will be lower than 2007's. It saw net profit attributable to equity-holders of about $337 million for 2007.

'This guidance deviates significantly from FY08 consensus estimate of $425 million and our own forecast of $465 million,' said Kim Eng Research. 'We are downgrading Cosco to a 'hold' and cutting our price target to $1.35.'

The local broker said it now expects Cosco to report $321 million for 2008 and cut its FY09 forecast by 30 per cent to $408 million to account for further contract delays and cost overruns.

It also warned that there is risk of further downgrades because it is unable to determine the full extent of provisioning needed. Cosco's shares yesterday fell eight cents to 95 cents with almost 30 million shares done.

Source: Singapore Business Times - 01 Jan 2009

This morning STI seemed to be immune from Dow Jones' overnight plunge to 6-year low. STI only fell by 12 points as I write, staying above 1,600 points

Calm before the storm?

Mr Market anticipates Dow Jones to rally tonight?

Finally, Dow Jones Industrial Average broke down the crucial support at 10459 last night, continuing its down trend movement. The high volume transacted seems to suggest more downsides are expected in the short term.

From the record high of 14198 traded on 11/10/2007, Dow Jones has lost 27%.

Dow Jones lost 21% year-to-date.

Refering to Singapore’s Straits Times Index (STI), after 2746 was broken down on 19/8/2008, it was indeed "all hell break loose" as anticipated. That is the fantastic side of Technical Analysis because IT WORKS!

Looking at the current weekly chart, STI merely dropped by 11.6 points for the week. But on the daily chart, it presents a very volatile week, having plunged to as low as 2308, before closing at 2559. The week high and week low is a whopping 268 points difference.

The Candlestick bullish hammer seems to suggest in the short term, there may be some upsides. But the upsides are likely to be capped by the overall down trend of the STI chart. STI will likely be caught in between the Fibonacci 38.20% retracement of 2900 and 2278 range in the medium term.

It is still too early to determine if STI has bottomed out because its medium-term down trend is basically still intact. However, last week’s low at 2308 is a possible bottom to watch out for if it can be maintained, breaking down of which the down trend will zoom down like Formula One’s speed.

More daily bars are required before the direction of STI can be ascertained.

In the meantime, there is still some fast money to be made, but the trading horizon must be kept short with strict stop loss order.

Singapore Straits Times Index (STI) broke the psychological support 2500 this morning, signaling more downsides in the short term.