Market Outlook (03/04/10) STI expected to re-test important resistance at 2950!

In last week, STI gains 35 points from the opening of 2908 and close higher at 2943 to mark a solid white candlestick despite lack of conviction in its rally due to LOW VOL yet again. The VOL in this week hit another LOWEST record AGAIN for the 2010 and slightly lower compared with the previous week. Traders and analysts feel that the market is likely to see further upside as companies are due for their first-quarter earnings announcement starting in the second week of April.


On Thursday, STI was helped by the news that China Purchasing Managers Index showed that manufacturing activity in Asia's second biggest economy grew for the 13th straight month in March. In addition, the HSBC China Manufacturing Purchasing Managers Index rose to 57.0 in March, the third-highest level in the history of the survey, from 55.8 in February. Thus Straits Times Index managed to gain 55.56 points (1.9%) higher at 2943.02 points with ONLY 1.42 billion shares changed hands

Fed Ahead

On Friday, there has been a swirl of speculation that the Fed would raise the discount rate when it holds a regularly scheduled, bimonthly board meeting on Monday. But J.P. Morgan economist Michael Feroli dismissed the speculation, saying the Fed's very announcement of the meeting seems to have caused the chatter in what was a thinly populated market Friday. He said, in a note, that when the Fed did raise the discount rate, it did so after holding a non-regular meeting.

Important resistance of STI: 2950

Immediate Support of STI: 2885

Next Immediate Support of STI: 2850 

MY TACTIC: STI will re-test the important technical resistance at 2950 next week. Thus I would advise investor to monitor the VOL on next MON for any “breakout” from this 2950 resistance. Further upside will be expected when Singapore companies are due for their first-quarter earnings announcement in April. Pick your counters carefully and likely to be rewarded with profits.