Tuesday, January 15, 2013

ShareInv - Profit Taking In STI?

Below is my Article on shareInv.com on 14 Jan 2013

Last week, the Straits Times Index (STI) lost 7 points to close lower at 3,216. STI formed a new high of the week at 3,237.78 on Monday, while the rest of the days were in fact quite disappointing.
Dozens of corporate earnings reports are expected this week including J.P. Morgan, Citigroup, General Electric and Intel. Their view of future business prospects seems to be important in this quarter and could provide some indications on the global economy this year.
Economic data in the coming week includes the Empire State survey and the Philadelphia Fed survey. There are also inflation data, with PPI released on Tuesday and CPI on Wednesday. Retail sales will also be important, with the December report expected to be released on Tuesday.
China released its data of GDP, retail sales and industrial production last Friday. Better-than-expected export data drove shipping sector and commodities higher globally.
In addition, the Singapore government announced end of last week another comprehensive package of measures to cool the residential property market.

Trading strategy wise, bear in mind, January is the earning session again! We have to check the earning release date and do more research before entering any stock. STI has already rallied more than 10 percent since November 2012, and we see that the RISK of holding stocks is getting higher as the market is getting extremely overbought. It has been an exciting week for penny stocks last week, but the lackluster movement in STI could be due to profit taking from most professional traders and fund managers. Banking stocks such as UOB, OCBC, DBS as well as CityDev could be your shorting candidate if investors need to hedge their portfolio. Immediate resistance of STI will be somewhere around 3,250 with support at 3,090. Investor may consider taking some profit off the table in coming weeks before any bad news hit the market again.