Profit Taking in the Morning
STI was bullish in yesterday trading: Opened at 2968.27, went to a low of 2959.64, before closing at a high of 3025.2. Selling was prevalent in the morning but towards the late morning, the index was a one way traffic up to close at the high.
This is interesting considering US market tanked at the last hour of trading with Nasdaq led the downside on Oracle’s sale miss and concerns over future capital expenditure. Financials were knocked down further on more debt writedown predictions. Internals were still negative with volume increasing. US GDP grew at a feeble rate of 0.6% last quarter and is expected to perform poorer this coming quarter on fears of further global credit crunch.
Based on TA, STI has formed a engulfing Bull, which is a very strong bullish signals. However, it is currently distributing on an uptrend basis, which implies that the probability of it turning down is higher. William percentage is at extreme of 0% - an overbought region. Given that US market ended lower, STI is likely to open lower and recover within the first hour of trading. STI must stay above 3020 for further upside. Should STI fall below 3006, more selling will come. Based on TSC, STI must trade above 3069 before market sentiment can be considered as bullish.
Normal disclaimer applies. Please practice money management.
CK
