STI has BROKEN 2665 support level! Expect another 200 points TUMBLE to 2456!

September 7, 2008 · Filed Under Investment, Short term - Medium term · Comment 

Dow Jones closed at 11220, down 2.8% or 323 points for the week. It simply did not have enough strength to break the strong resistance of 11638. Furthermore, it broke the 11340 support level with BIG volume. This is a very negative sign which shows “distribution” or unloading by the big boys or big funds! We may see further weakness and the next support level for DOW Jones will be 10680.

 

NASDAQ plummeted 4.7% or 111 points to close at 2255 for the first week of September. It has broken both the support level of 2345 and long-term support line with BIG volume, this spells trouble!! It may tumble further and be supported at the 2155 level.

 

S&P 500 slipped 3.2% or 40 points to close at 1242 for the week. It broke it’s stubborn support of 1256 with increased volume. It is now testing the 1219 support level. It’s next support will be another 51 points down at 1168 level if it continue to fall.

 

STI GAPPED DOWN 51 points or 1.97%. to close at 2574 last Friday! It has broken both the 2700 and 2665 support levels with big volume, a very negative sign!! STI ended the week down 6% and is currently at a 2-year low since 4th October, 2006. It is likely to tumble further till the next support level of 2456. If this 2456 level were to be penetrated too, then we can expect another 200 points collapse to 2277!

Negative market sentiment has been driven by weak U.S. market as well as growing concerns that global growth is seriously slowing down. Market sell-down was fueled by the report that the U.S. unemployment rate jumped from 5.7% to 6.1% – its highest since September 2003. This raised concerns about the pace of consumer spending in the months ahead. Continued concerns about the potential for further write-downs at financial firms and speculation that more hedge funds could be in trouble and on the verge of liquidating assets also cast a pall on the market. Many investors are either taking cover to pare their losses or simply watching from the sideline. U.S. data due to be out this week includes consumer credit, pending home sales, retail sales for August and trade balance for July.

I want to reiterate that holding stocks now is VERY DANGEROUS! For those of you who proclaimed yourselves to be “long-term investor”, this time round u are NOT going to be one, instead u are going to be a VERY “long-term investor” because we are now going through a GLOBAL FINANCIAL CRISIS! It is going to deliver even more devastating blow than the Asia financial crisis in 1997, 1998. Congratulations to those of US who are still hanging on to our short positions!! I simply cannot understand how one CANNOT make money by doing short-selling in the current bear market!

Happy SHORTING! Cheers :)

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