- 10/04/2010
- 03/05/2009
- 16/10/2007
- 21/08/2007
- 20/08/2007
Market Outlook
As seem from the daily chart, the Straits Times Index is now forming the right shoulder and this is part of the Head and Shoulders reversal pattern. Until the neckline support is broken, the head and shoulders pattern is not yet complete. However, if the neckline support does break, the projected downside target is around 2290. This is a drop of over 350 points from the neckline!
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Since the previous update, the STI has broken out and proceeded to make new highs hence ruling out the possibility of a bearish double top formation. Meanwhile, the long term GMMAs (Red) have compressed, reversed, expanded fully and is now moving upwards establishing a new uptrend. However the STI is ripe for a pullback as it has run up unabated since the pivot low established during the August market crash. A minor correction is healthy for the index as it provides a breather for it to move up higher. |
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First the good news. The STI Index has broken passed the strong psychological resistance of 3,400, as well as 3,450. This voids the possibility of the Head and shoulders formation (Hooray!!!). However ....(Darn it!!!) the possibility of a double top cannot be ruled out as yet. We should continue to monitor the index closely. Until a new uptrend has being established, we recommend short term trading, with the practice of tight stop loss discipline. 
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The STI has corrected from a high of 3,688 to a low of 2,962 before staging a minor rally. However we are not out of the woods yet.... 
STI Weekly Chart – Possible Head and Shoulders Formation? (Click Picture to Enlarge) |
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