STI has broken the critical support of 2746! Expect more downside risk!

August 25, 2008 · Filed Under Investment, Short term - Medium term · 2 Comments 

Dow Jones rallied 1.7% to close at 11628 last Friday. However, this increase was insignificant because it wasn’t backed up by strong buying volume. A more likely reason for this surge is due to the US$6 tumble in the oil price. Dow Jones is now experiencing very strong resistance at the downtrend line and 11638 level. Even if this resistance can be broken, it will face another barrier at the 11867 level.

 

Last Friday, NASDAQ increased 1.4% to close at the 2414 level but with declining volume, which is a negative sign! It’s next resistance is around 2464 level. If this level were to be penetrated, then the next obstacle will be the stubborn 2533 level.

 

S&P 500 rallied 14.48 points to close at 1.1% higher before the end of last week, but with a shrinking trading volume. It’s next resistance is 1313, after which the next barrier will be 1368.

 

STI closed at 2723 points last Friday, down 74.2 points or 2.65% for the whole of last week. It has broken the critical support of 2746 and this spells MORE downside risk! The next support is at 2665. If this level were to be broken too, then we can expect another 200 points tumble to the next lower support of 2456!!

A rally in S’pore due to the surged in US market may not be sustainable this week due to the drying up of liquidity. The total turnover last Friday was only just S$864.1 million, below the S$1 billion mark. New money taken in by offshore Asian funds shrank from US$803 million 4 weeks ago to a mere US$22 million in the week ended 13thAugust. With the absence of a significant influx of foreign money, we may not be able to see a sustainable rally in our stock market soon. So the best thing to do now is to still perform  “SHORT-SELLING” or “SHORTING” as we can expect more downside since the critical support of 2746 has already been broken for STI.

Cheers :)

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