Straits times index confirmed its uptrend, more upside is expected.

Straits times index confirmed its uptrend, more upside is expected.

Last week, STI enjoyed a bullish week where is managed to break out of the major resistance level of 3080 level. Breaking of this resistance level indicates that STI will be continuing its uptrend formation and likely to head much higher before a significant correction might happen. Concerns of EU situation coupled with lack of direction from the China market leads to weak sentiment in the early week. However, assurance from the ECB in Europe helped to lift up the market sentiment during the middle of the week which allowed STI to test 3080 resistance level. The breakout of 3080 resistance level happened when the market is positive about US’s job data on that night. US market’s job data showed an improvement on Friday night which allowed DJI to climb 34.79pts higher. STI closed for the week with 47.53pts up and ended at 3107.87 level. Will STI continue to climb higher? Or will start to retrace after such a strong movement?

STI’s chart will give us the hints of what is going to happen this week.

Trend: Uptrend, 20ma up, MacD above 0

 

Support: 3080, 3040 (20 & 50ma), 3000

 

Resistance: 3130,gap resistance (3139 – 3172), 3180, 3210

 

Observations:

Candlestick –Long white candle.

Histogram –4Gs. No bullish divergence.

RSI – At 59.8%. No bullish divergence.

Stochastic – At 94.4%. Overbought. No bearish crossover yet.

Bollinger Band – At upper band. Band opening up.

 

Conclusion:

As anticipated last week, STI did indeed break 3080 major resistance level after breaking the gap resistance of 3057 – 3066 level last week. Such strong movement has also confirmed that STI had formed an uptrend formation and it will likely to be sustainable for a longer period. The support level at 3040 is also proven to be a strong support level as it had helped to create a higher low formation for this uptrend movement. With both of these key movements that happened last week, it is certain that STI will continue to trade higher for the upcoming weeks. However, to be certain of the sustainability of the uptrend, further consideration should be taken from the readings from the indicators.

 

The mid-term indicators have confirmed their uptrend readings as the 20ma line is certainly pointing upwards currently. MacD line has managed to stay above the 0 line despite a bearish crossover in the previous week. Furthermore, RSI managed to stay above the 50% line. These are indications that the mid-term momentum is bullish. In the short term, the short-term indicators were still indicating bullish readings. However, Stochastic is starting to show signs of upside fatigue as it starts to trade into the overbought region. But on last Friday, STI has yet to close with a bearish candle and there might still be bullish strength to continue forward. Bearish short-term movements will only appear if there is formation of bearish candle in the upcoming days.

 

Since the indicators are still indicating towards the upside, STI will likely to head towards its new resistance level to test it. As 3080 level has been broken, it will not be heading towards the next resistance at 3130 level to test it. 3130 resistance level might be a tough resistance level to break as its have close confluence with the gap resistance between 3139 – 3172 levels. Due to the strength of this resistance level, it is quite unlikely for STI to break this resistance level this week. Furthermore, with stochastic trading in overbought zone already, it will be more unlikely for STI to trade beyond this resistance.

 

As stochastic is trending in the overbought region, STI could probably retrace during the week to test is breakout level before heading higher. The breakout level which STI broke is the 3080 resistance level. 3080 level will now turn into a support level for STI and as it has been a major resistance level, this new support will certainly turn into a strong support level. If there is any bearish candle formation for this week, STI will likely start a retracement movement to test this support level at 3080. As this support level is deemed to be strong, it will prevent STI from dropping further in order to maintain the uptrend formation.

 

In conclusion, STI will continue to trend higher in this bullish environment as it had confirmed its uptrend formation. With the bullish support from both the mid-term and short-term indicators, the uptrend formation will likely be sustainable leading STI to greater heights. The first resistance that STI will likely to face this week will be 3130 resistance level. STI will likely to face difficulty in breaking this resistance as it is deemed to be a strong resistance. STI is also facing likelihood of short-term retracement. If there is any bearish candle during the week, STI will likely to start a retracement towards its new support at 3080 level. 3080 will be a firm support level to prevent STI from sliding further. Henceforth, STI will likely to experience volatility this week within the range of 3080 – 3130 levels.

 

 

What to watch out for this week:

1) Testing of 3130 resistance level

2) Testing of 3080 support level

Trading strategy to adapt right now:

- Long traders whom have long positions last week can take partial profit when resistance levels are being tested.

- Shortist can start planning for counter-trend short strategies when STI is at its resistance level.

Singapore shares lose ground on Europe fears
Posted: 08 October 2012 1907 hrs

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SINGAPORE: Singapore stocks fell on Monday as concerns over the eurozone debt crisis overshadowed surprisingly good US jobs data which showed unemployment close to a four-year low.

The 30-share ST Index fell 31.22 points, or 1.0 per cent, to 3,076.65 after hitting an intraday low of 3,072.47.

Decliners outnumbered gainers 350 to 117, as trading volume rose to 1.79 billion shares from 1.35 billion on Friday.

DBS Group sank 1.45 percent to S$14.25 and City Developments fell 2.34 percent to S$11.67.

Asian markets fell too.

An underwhelming return for Shanghai after a week-long holiday added to the glum outlook for the day, while the euro erased gains made in New York on Friday.

Sydney eased 0.28 percent, or 12.5 points, to 4,481.9 while Seoul closed off 0.67 percent, or 13.28 points, at 1,981.89.

Hong Kong was 0.89 percent lower, shedding 187.82 points to 20,824.56, and Shanghai closed down 0.56 percent, or 11.75 points, at 2,074.42

Tokyo was closed for a public holiday.

Wall Street gave an anaemic lead despite Labour Department figures showing the official jobless rate fell to 7.8 percent in September, the lowest level since President Barack Obama took office in January 2009.

The data from its establishment survey was less buoyant, showing a modest 114,000 net new jobs produced. But previous months were revised higher, underpinning the better showing in the September data.

US investors initially sent shares soaring after the numbers were released before those gains were wiped out. The Dow closed up 0.26 percent, the S& P 500 ended flat and the Nasdaq eased 0.42 percent.

And while the closely-watched jobs data provided some hope for the world's number one economy, the ongoing crisis in Europe continued to take its toll on sentiment.

There was a cautious tone as the European Stability Mechanism (ESM) was to launch later Monday with an inaugural board meeting, and European Union finance ministers were due to meet.

Last-minute disagreements over key ESM commitments have surfaced, with Germany, the Netherlands and Finland arguing that the fund should not be used to help banks already bailed out before it became operational.

This represents a potential blow for the likes of Ireland, which went bust after trying to keep its lenders afloat, and for Spain, which has also recapitalised some of its banks and secured 100 billion euros from its eurozone partners to do more.

There are concerns Greece will not get its next tranche of much needed bailout cash as it struggles to resolve differences with its EU, European Central Bank and International Monetary Fund creditors over its austerity budget.

And despite its parlous finances Spain continues to refuse to ask for a rescue that would also allow the ECB to enter the debt market to lower Madrid's borrowing costs.

" We saw on Friday the jobs data come out that was in line with expectations in terms of the payrolls, and US unemployment ticked down... Focus has moved back towards Europe," Jason Hughes, head of premium client management for IG Markets Singapore, told AFP.

" It looks like we're still going to have a wait-and-see approach from Spain. There isn't much pressure in the secondary bond markets at the moment to cause them to need to really act quickly," Hughes added.

The euro was trading at $1.2973 compared with $1.3031 late Friday in New York, while it was at 101.26 yen, from 102.48 yen. The single currency lost the advances it had made on Friday in the wake of the US jobs data.

The dollar fetched 78.19 yen from 78.64 yen.

Shanghai's negative return also weighed on Hong Kong dealers, with expectations dashed that a slight uptick in manufacturing activity would spur buying on the mainland.

On oil markets New York's main contract, light sweet crude for delivery in November, shed $1.38 to $88.50 a barrel in the late afternoon. Brent North Sea crude for November fell $1.12 to $110.90.

Gold was at $1,768.00 at 1100 GMT compared with $1,789.90 on Monday.

In other markets:

- Taipei fell 0.97 percent, or 74.76 points, to 7,615.89.

Taiwan Semiconductor Manufacturing Co. shed 2.09 percent at Tw$89.1 while Hon Hai Precision was 1.88 percent lower at Tw$88.7.

- Manila closed 0.11 percent lower, shedding 5.71 points to 5,434.13.

Bank of the Philippine Islands slipped 1.86 percent to 79.10 pesos while Megaworld Corp. gained 2.11 percent to 2.41 pesos.

Metropolitan Bank and Trust fell 0.48 percent to 92.45 pesos.

- Wellington rose 0.49 percent, or 19.05 points, to 3,923.91.

Contact Energy was up 2.43 percent at NZ$5.47 and Fletcher Building gained 0.13 percent to close at NZ$7.48.

- Jakarta fell 1.00 percent, or 43.08 points, to 4,268.24.

- Kuala Lumpur ended flat, nudging down 0.01 points to 1,660.22.

Genting lost 1.5 percent to 8.68 ringgit, YTL Corp. shed 1.1 percent to 1.74 ringgit and Bumi Armada eased 0.8 percent to 3.65 ringgit.

- Bangkok lost 0.51 percent or 6.64 points to 1,304.71.

Mobile telephone giant Advanced Info Service fell 1.44 percent to 206.00 baht, while PTT dropped 1.24 percent to 318.00 baht.

- Mumbai slid 1.21 percent, or 229.48 points, to 18,708.98.

Reliance Industries fell 4.51 percent to 818.7 rupees while aluminium producer Hindalco slid 3.52 percent to 120.6 rupees.

- AFP/de

• Gallup: Romney is starting to close in on Obama, trailing by only 3 points in the seven-day rolling average. And that average only reflects two days of surveys post-debate, so the full effect won't be known until next Wednesday.
• Rasmussen: Rasmussen has had wild swings and tends to be Republican-leaning this election, but Romney holds a 2-point advantage here.
• Reuters/Ipsos: Here, the race has tightened from a 6-point Obama lead pre-debate to only a 2-point lead on Friday. But Saturday didn't provide any further bounce for Romney in the online survey.

• Florida: Two polls — from Rasmussen and We Ask America — found Romney in the lead here on Friday by 2 and 3 points, respectively. Both polling firms tend to lean Republican.
• Virginia: The same two firms — again, leaning Republican — found Romney with 1- and 3-point leads, respectively.
• Colorado: After Obama slipped up in the debate at the University of Denver, he saw a big, 7-point swing in this state in a Gravis Marketing survey. Romney now leads 49-46, after trailing 50-46 pre-debate.
• Wisconsin: This is the big one that should worry Obama. The Democratic-leaning Public Policy Polling found that Obama's lead had tightened from 7 points in its last survey to just 2 points post-debate. The reason for that is almost exclusively debate-related — 61 percent of Wisconsin voters thought Romney won the debate, compared with just 25 percent who saw Obama winning.

Wikimedia Commons / Gage Skidmore

Good morning. Here's what you need to know.

 

• Japanese markets were closed today, but the Hang Seng retreated 0.9 percent and the Shanghai composite slid 0.56 percent. Europe is in the red with Italy down 1.8 percent, and U.S. stock futures are down slightly, with the Dow off 47 points and the S& P 500 down 5 points.
• The World Bank cut its outlook for China's economic growth prospects, lowering its 2012 GDP growth forecast to 7.7 percent from 8.2 percent and its 2013 forecast to 8.1 percent from 8.6 percent.
• China's Golden Week retail sales growth slowed this year to 15 percent from 17.5 percent last year, highlighting the slowdown in China. Golden Week, which took place last week, is a seven-day holiday during which consumers typically shop and spend more than usual.
• Another bout of labor unrest stopped production at the Foxconn factory where the iPhone 5 is made, the second episode in two weeks. Workers are protesting the high-pressure, " overly strict" work environment.
• German exports rose 2.4 percent against expectations of a 0.6 percent decline, and German industrial production fell 1.4 percent against expectations of a 1.6 percent decline. Eurozone investor confidence rose to -22.2 from -23.2 last month, but missed expectations of a -20.0 reading.
• Eurozone finance ministers will meet today in Luxembourg to discuss the Spanish financial situation and proposals for euro-wide banking union. Tomorrow, German PM Angela Merkel visits Greece. Angela Merkel Is About To Get Some Brand New Perspective On The Devastation In Greece >
• The South African rand continues to plummet as strikes in the country's transportation sector destabilize critical supply chains. South Africa Is On The Brink Of Total Chaos As Strikes Are Leading To Fuel And Cash Shortages >
• California governor Jerry Brown took emergency action to lower gas prices in the state after an EPA regulation exacerbated a supply shortage. The state will now allow winter-blend gasolines to be sold before the typical November start date to alleviate the squeeze. California's Gas Price Nightmare In Two Maps >
• Hugo Chavez was re-elected as president of Venezuela Sunday, garnering about 54 percent of the vote. Americans Will Pay More For Gas If Hugo Chavez Is Reelected >
• The House Intelligence Committee will issue a report Monday warning U.S. businesses to steer clear of dealings with Huawei and ZTE, China's two biggest telecommunications firms. The report claims the firms pose a national security risk due to their connections with the Chinese government.
• Bonus: The FBI is investigating a suspicious package addressed to Bristol Palin containing a white powdery substance at CBS' Dancing with the Stars program.

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