DJ INDU AVERAGE=8,504 (At critical support at 8,497 - yellowline 34SMA)
Renewed worries about the economy surfaced on news of a seventh monthly drop in industrial production, which overshadowed better-than-expected reports on home construction, building permits and inflation.
But most market watchers believed that the temporary pause (pullback) is necessary for the market to move higher later ? in fact, many said they would be alarmed if the market had continued to move up in an unbroken line as this would suggest indiscriminate buying.
Besides the mixed economic reports, the weaker USD and its impact on commodity prices and Treasury yields has become another of investors' main concerns.
For STI
Nevertheless, we can expect to see a retest of the same support, now at 2278, as our key support remains at 2194 (23.6% Fibonacci retracement of the recent surge from 1455 to 2424), which is also close to the lower Bollinger Band.
We peg the major support at 2053 (38.2% Fibonacci retracement of the same rally), which we think is unlikely to be tested.
On the sell-down has abated, we are still looking for the index to edge higher towards 2465, although 2400 may continue to pose as a stiff resistance.
Next Resistance level: 2465 (Double-bottom objective)
Immediate Resistance level: 2400 (Psychological cap)
STI Current: 2288.16 (Last close: -1.2%)
Immediate Support Level: 2194 (23.6% Fibonacci retracement of Mar rally)
Next Support Level: 2053 (38.2% Fibonacci retracement of Mar rally)
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