07/04/2009 Market Update

Finally, our market decided to take a breather from the recent run-up. STI pull backed 45 points to close at 1,802, just slightly above the minor support of 1,800. At one point of time, it hit 1,795. Volume traded can be considered impressive except that it's a far cry from the past few days. There were 1.22 billion shares done worth $1.08 billion. The main decliners are the financial and property counters.

The US futures are pointing to a weak opening at the US tonight. Though our market had discounted in a weak US performance tonight, how it closes in the morning will play a bigger part in determining our market strength tomorrow.
Chart wise, the minor support at 1,800 will probably break. The next supports are at 1,780 and 1,730. Start buying more if STI ever trends near them, especially for those longer-term investors who have been waiting for prices to go lower. Don't wait too long because this might be the only major pullback we will experience before the market swings up again.
The financial and property stocks will probably have some more downside to go before they find stronger support, whereas for the other cyclicals such as O&M and shipping counters, I am not too sure how much they will retreat because in this recent rally, they didn't really run up that much (if we compare them with the financials and properties). Therefore, we should get ready to accumulate on these higher beta stocks as they consolidate downwards.

As discussed previously, the safe-haven stocks are rebounding up now as people seek refuge in them when the higher beta stocks start to take a hitting. For the shorter-term traders, it is time to do a contrarian switch – take profits for your defensive counters and get ready to collect the higher beta stocks. Longer-term investors basically just have to concentrate on collecting their favorite stocks on the low side as much as possible.

Note: Kindly read my first post, About Myself, on my disclaimer. Thank you.