17/04/2009 Market Update

	Close	Change	Low	High			Shares	Value
STI	1,896	4	1,888	1,931		Volume Traded	2.00 bil	$1.12 bil

Trading activity dipped down significantly today. The heat was still mainly on the penny counters. I guess many investors out there are nervous about the weekend risk as well as the potentially choppy trading in the US tonight, as we await the results on Citigroup and GE's earnings. The preliminary April consumer sentiment report will be released as well.

STI chart indicates a second day of "opened strong, closed weak" scenario. This can be taken as a confirmation that a more significant pullback should set in soon. Yet we have to take into consideration that we might get some pleasant surprises from the US tonight. Nevertheless, I believe the optimism should be short-lived as traders quickly take profits off the table. Also take note that due to the market slowing down these 2 days, there should many contra traders stuck in the market already. As the contra cycle expires, these traders will have to unload their positions. This will be especially true for the penny counters because the action has been mostly on them. I am not too sure if this analysis is applicable to the blue chips because this time round, I have seen investors being serious about holding them for long-term gains.
What I can say for the blue chips is: most of them usually only managed to pull back to their 14-day MA and they would bounce back up. I don't know if this behavior is due to the traders playing them up during this rally, but if you are serious to collect the good stocks (regardless of whether you are short-term or long-term), ideally, park your buy queues near 14-day MA support. That will be the first strategic entry point.

Let’s see how the US performs tonight first before deciding our next course of action.

Property counters:

I notice that they have been facing fairly strong downwards pressure these few days as the rally tapered off. It should be good to start aiming for some of them in the event that they pull back.

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