Saturday, February 26, 2011

STI outlook

First of all, thank you those who have attended our monthly client seminars on Thursday, hope that you have benefited from our 3hr sessions and bring back some knowledge of trading. We will be having a more exciting topic next month, do keep a look out on our emails or sms. =)

STI jumped 52 points on Friday! Many will ask if this is a dead cat bounce or a real rebound. Well, I have to say that it is hard to tell with just 1 day of rebound but whether real or not realwhat is important for us to know is to buy or not to buy?

From the STI index chart, we analyse and found the following points(disclaimer, just for your info) :

  • - If you are have seen STI on 15 years chart you will see that the 200ma is very significant line to determine the long term trend, now we are still below 200ma (200 days moving average)
  • - If we buy when STI cross above 200ma, we have 80% chance that the index will rally for at least the next 3month(base on STI chart 10year).
  • - Currently the 200ma is sitting at 3052
  • - From the lowest point, we might see consolidation for 1 week before the bear turn into bull
  • - The last year correction STI went 127pt below 200ma, we went 90pt below this time.

Our advise is to slowly accumulate if you are aggressive investor, maybe you can load 30% of your money into stocks now. *** Make a stoploss if you are wrong, do not lose more than 5% of your capital each time. If you are conservative investor wait to see STI go above 3052.

Long term: STI ETF, Kep Corp, Starhub, M1

Mid-term: Sunvic, Hi-P

Short Term: UIC, Thinkenv, Ramba

Lastly, stay away from those stocks that have drop tremendously (52weeks low), Wilmar, yanlord, tigerair, SIA…… a lot more. Do not buy these stocks..

Keep in mind: What goes up, will come down. What goes down, may not come up!!

Have a great weekend!

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