Saturday, June 23, 2012

Brace Up for Rocky Week Ahead - STI

Dow posted its second largest day decline in this year on Thursday and the market has been rocked with Spain, Fed's continued wait-and-see measure and China's weak economic data over the week. A hugely rocky trading ensued in the entire week and what does this spell for the STI in the week ahead?

Outlook - Watch. With the quadruple convergence of the 4 key MA lines, the STI is definitely feeling the heat. Weakly overcoming the 200d MA, it had been trading on its support for the entire week and closed almost on the 200d MA line. Short term trend-wise, the 20d MA is upwards sloping with possible higher spells ahead but fraught with plenty of obstacles namely the 50d (or 55d) MA and 100d MA which also coincides with the 2900 key resistance.
(On a side note, the last time 4 key MA lines joined together and prices crossed it was in Oct/Nov 2011 which sent prices skyrocketing in the next 3-4 months; a really key stage of the picture lies in the weeks ahead)

  • MACD - Has increased tremendously over the last 2 weeks and there are signs of some possible wane in the positive change in investor sentiments. Nonetheless take note that MACD has yet to cross the 0 line so things are still fragile as it is looking.
  • RSI (25d) - Having some difficulties crossing the 50% line.
  • Bollinger Bands - Prices been perched on the upper bollinger band for the last 3-4 trading days.

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