Straits Times Index - First gap was covered this afternoon

On Friday, we noted that the FSSTI had formed 4 consecutive gaps and it was at overbought levels. We suggested that the index should at least correct back part of the gaps. It has done so now, as the index has corrected below prior gap, a runaway gap at 1664. We also stated that we did not think that a bull market had begun and instead suggested that what we are witnessing was a bottoming process. The current pullback has now confirmed our views. Chances are that we could see a rebound off current levels, which will be followed by another down leg.

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