It has been a fairly volatile day. I observed quite a few things today. Firstly, STI encountered significant resistance when it reached an intraday high of 1,947. Then it eased all the way down to end the day in negative territory with a net loss of 14 points. The close was at 1,891. Volume traded surpassed yesterday's again at 3.79 billion shares worth $1.85 billion. It is obvious that the heat is still on the pennies. We saw heavy trading activity in those unfamiliar counters.
I have a few concerns here after observing today's performance. Chart wise, STI posted a relatively bearish candlestick today. I wonder if this marks the start of a strong pullback, though I keep seeing so much optimism coming from the other dealers. They have been busy playing all the penny counters these 2 days. And they are extremely enthusiastic on the market going higher and higher. I agree that STI is likely to break above 1,960 and create a new high given that we are seeing the fundamental figures bottoming, then we should experience some sort a consolidation. But it wouldn't come to me as a surprise should our hopes dash here due to certain unforeseeable circumstances, especially when the
Nowadays, we are starting to receive calls from quite a few dormant clients whom after seeing the markets rally for so many days, cannot resist the urge and insist on jumping into the market. These investors have not been well-informed and are desperate to buy counters which some are even unheard of to me, for fear of missing out on anything. This is not a good sign. I think as more of such people jump in, we will be very near the boiling point already. Maybe during these few days, the shorter term traders should start taking profits and lighten their positions whenever possible. We can always try to trade when there are other opportunities with lesser risks come along. The longer-term investors, I think it will be more ideal for us to buy only on stronger pullbacks - preferably when STI hits 1,835 or 1,790 if possible. Furthermore, I think we need to remember that during these 2 months, many counters on "CD" status will go "XD" thus theoretically, those stocks will experience some downwards price adjustment. Not to forget, there is this famous saying, "sell in May and go away", meaning that the fund managers will close off a lot of their positions before they go for their holidays.
Hence traders better be careful here lest this statement materializes next month. Investors need not worry too much and should rejoice instead because we are collecting the blue chips here. Such a case happening will simply let you buy more cheaply.
On the contrary, it is worth noting that analysts are starting to upgrade the target prices for some of the more fundamentally sound counters, indicating that the market fundamentals are deemed to start strengthening soon. Just don't get too carried away by this because by default, analysts use a 1-year view for their forecast.
There will be several important economic and earnings reports released these 2 nights in the
SIA:
It had retraced quite strongly these few days since the last high 5 days ago of $11.64. I guess this retracement is to discount in the poor passenger and cargo load factors for March. Take note that March's figure at 62.6% is slightly better than February's of 62.1%, though they are all far cries away from figures one year ago. The BT has also reported the likelihood of SIA shedding jobs following Quatas. Current support level at $10.80 has been tested aggressively for 2 days already but is still holding for now. At current price, I think it is quite attractive to keep a bit taking into consideration that the closing price is a Fibonacci retracement of about 30%. Though there is the risk that there could be potentially poor quarterly results to be released, thus pressuring the share price down, I think the expectations of a dividend payout between $0.50 - $0.75 should help to bolster this counter.
Note: Kindly read my first post, About Myself, on my disclaimer. Thank you.
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