Market Diary:
World Indices:

Tuesday, February 22, 2011

STI Plunged 51 Points, What's next?

STI plunged by 51 points today. According to the news, it was due to the unrest situation in Libya and high crude oil prices. It is interesting that the fundamentalist always need to attach a reason to the price action whereas such action has had traces from the price chart since one month ago. Anyone care to scroll down this blog would have found a price target of 2,975 and subsequently 2,920 since January 23~25. At that time, the unrest in Libya has not surfaced yet and crude oil prices wasn't a great concern. So is Libya and crude oil the real reasons or are we attaching these reasons to the price action?

Back to the market, STI broke the 200 days moving average ( MA ) today. The last time it has broken the 200 MA was May 2010. 200 MA is deemed as the divider between the bull and bear. Obviously, when prices are trading below the 200 MA, the bear is having fun.

There is no change in the market view. We are still looking at a minimum target of 2,975 based on Point and Figure chart and 2,920 based on candlestick chart. RSI is once again in oversold zone, it is possible that we see some rebounds before retesting the targets.

Finally, Dow is very overbought both in the daily and weekly chart. STI / HSI have been falling over the past weeks but Dow was lifted by hot money. When the hot money no longer able to lift the index, it is their turn to plunge and that may trigger STI / HSI to plunge some more to hit our target.

Point and Figure Chart - New sell signal was generated