Despite most US stocks closing lower on Wall Street on Friday night, the STI opened mildly higher this morning, likely inspired by the firmer Nikkei index in early morning trading. However, as the US index futures retreated sharply thereafter, the index followed suit and closed midday near its intraday low with a 1.6% loss.
Overall volume improved slightly, up about 13.5% from the morning session last Friday, even as losers overwhelmed gainers 272 to 92. On a sectoral basis, all sub-indices are in the red except for the FTST Utilities Index. The average value per share was also lower at S$0.75 as compared to S$0.90 midday last Friday.
From a technical standpoint, the formation of a spinning top candlestick Friday (signal of indecision), coupled with today's sharp retreat could suggest that the index has topped out and is likely to face further correction in the near term.
Our initial support is pegged at around 2235 (Jul '09 low), ahead of 2194 (23.6% Fibonacci retracement).
On the upside, the immediate cap is at 2319 (30-day moving average), ahead of several prominent peaks around 2350-2361 in Jul '09.
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