The STI managed to gap up and open at 2394.17. It managed to clear previous resistance of 2395.25, which is suppose to be a good sign of a new uptrend formed from here.

 

However, market did not sustain for long, and started falling right before Hong Kong Market opens. Though the HSI gaps high and move even higher, it soon ease back and fills the gap in the afternoon session on 10min timeframe.

 

On HSI index (10min chart) and STI index (10min chart), both are short term bearish, but more evidences are needed to confirm that we are still in a bear rally instead of a new bull run. Judging on the current market conditions, we don’t find it ideal for trading.

 

For traders who had position overnight from yesterday, they are likely to suffer the dips during the AM session. Most of the shares are seen drifting with no clear direction.

 

Nonetheless, we have highlighted 2 sectors to “look out” for immediate reactions when market gives more confirmation next week.

 

Our Focus is on Financial and Property Sectors

 

 Let’s begin with the Financial Sector –

In respond to the latest news update on the acquisition of Merrill Lynch by Bank of America, the investigation and the outcome of the merger will have a direct impact on the Dow Jones, and in consequence, the rest of the Indexes as domino effects. Should Merrill Lynch fall through the deal and collapse, it might spark another round of selling spree.

In addition, as the financial stocks fail to perform on last rally, financial sector would herein be more prone to sell off, even before the outcome of the merger is made known due to panic selling on the basis of speculation.

The weakest among the 3 prime banks is OCBC. OCBC had broken down the ascending triangle formation; the reaction of this stock should be the 1st to trigger upon any changes in investors’ confidence. The other 2 are namely, DBS & UOB.

 

(Latest Article Release on BOA, please refer to http://www.marketwatch.com/story/lewis-fed-asked-us-to-delay-any-merrill-break-up)

 

 

With respect to the Property Sector –

Property has outperformed during the last rally. It is most likely the first to collapse should the STI confirmed to be bearish.

1st on property list is City Development and follow by Capital Land.

 

 

In Summary, 

 

On weekly chart basis, STI was up by 67.27 points with a total volume of 17.28 billion. 

This week, the STI is down by 20.88 points with lower volume of 12.39 billion. 

This goes to tell that this week selling is not intense, hence, we might be expecting a pause in the market. 

Let’s continue to wait for more signals to confirm if the market will continue its uptrend or reversal.