STI Update

STI index retraced the complete downswing from 1780 to 1455. The index fell 13 points on Friday.

The index has stayed above its 50 day moving average for 5 trading days now. Any fall is healthy if the index can stay above its 50 day moving average.

A similar situation occurred in Jan 2009 where the index went above its 50 day moving average only to make a new low of 1455 on 10 Mar 09.

A bullish scenario will be for the index to fallback to its 50 day moving average before making a bullish move that takes out the high of 1780.

Support level is at 1711 and 1657 respectively. Resistance is at 1780, 1844 and 1959.

US Market Update

Dow Jones rebounded from its low of 6440 set on 9 Mar 09 to end at 7278 yesterday. That is about 13% rebound in the span of 2 weeks.

The rebound has taken the index right up to its 50 day moving average. Last night the market was not able to take out the 50 day moving average. That is not a good sign. However, it may turn out to be just a pause before the index attacks its 50 day moving average again. A lot will depend on whether there is any good news to lift the market next week. The index has fallen back into its downtrend channel and if it is not able to go above it's 50 day moving average next week, the downtrend will resume and index may test the low of 6440 again.

The 7392 level now serves as a critical resistance that the index needs to overcome in order for the rally to continue. Support level is at 7041.

This is not the time to establish huge positions. It is best to let the market decides which way to go below going in for the ride up or down.