Market Outlook (10/04/10) STI may be due for correction soon!

In last week, STI gains 16 points from the opening of 2955 and close higher at 2971 to mark a white “shooting star” candlestick to show the weakness in rally ahead. The VOL in this week is LOW as well but slightly higher compared with the previous week. "Investors are looking at smaller-cap plays right now. I'm pretty bearish on the STI because of the technical picture. I think it will drop below the 2900 level before the end of this month," DMG analyst James Lim said.

Technical analysis show market may be due for correction.

1) Shooting star display at the top of the resistance is a show of weakness in rally.

2) STI did not break convincingly for the 61% Fibonacci resistance at 2970

3) The rebound begun since 8 Feb 10 and till now there is no slight pullback/correction thus forming a “very steep” rally.

4) Trading VOL has been decreasing lately which show the unwillingness of investors coming in.

5) The Psychology resistance of 3000 will not be easy to break as well unless we can see good earning reports in next few weeks to demonstrate the strength of the economy

In the next coming week, Singapore will have heavy calendar of company earning report. All of that should provide a better look at how the economy performed in the first quarter. Another highlight will be Fed Chairman Ben Bernanke's Congressional testimony on the economy Wednesday. 

The Greek debt crisis will stay in focus, as speculation swirled in markets Friday that there could be a weekend bailout. China also releases GDP and other indicators on Thursday. 

Important resistance of STI: 3000

Immediate Support of STI: 2950

MY TACTIC: Hold your current portfolio and DO NOT BUY now unless you are confidence of the company earnings in this quarter