Market Diary:
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Sunday, January 24, 2010

DJIA / STI January 25 - 29

One week ago, we mentioned Dow was testing an up trendline ( thick black line ). If it bounces up from there, it is a sign of strength. Conversely, a break below will be a sign of weakness and will give in to a flatter trendline ( thick blue line ) as the next possible support.
As it turns out, Dow pierced the thick black trendline decisively and plunged by 4.1% to 10,172 last week. It is now supported by the thick blue trendline confluence by 100 SMA & the thin black horizontal support line. RSI has dived to near oversold. Quite likely, we will see prices reverse from here. But in case this is wrong, we may see 9,700 as next support.

Locally, STI did get very close to the 2,785 identified in our last post ( intra-day low 2,791 ).

Several scenarios for Monday following DJIA 216.9 points plunged on Friday:

1. STI negate the - 216.9 loss of Dow and proceed to have technical rebound
2. STI response to the -216.9 loss of Dow in the morning but rebound soon after
3. STI continues the losses of last Thursday & Friday

Unless 2,785 is taken decisively ( if this happens, next target is 2,730 ), otherwise it could be a good time to enter under scenarios 1 & 2.