The STI Index closed the week on the positive after a volatile week. Whenever, FED hint of reducing the asset purchase, the market drops. Is the FED reducing of asset purchase necessary bad? Personally, i think the FED's action is a good move over the long run. WHY? That is because the US must be recovering. It is akin to a patient on long term medication and was adviced by the doctor to reduce the dosage and finally stop it altogether. There might be some initial discomfort when the medication is reduced but the patient must have been recovering before the doctor advised the reduction. Thus, i am a strong supporter of the FED reducing asset purchase provided it does this on the basis of a recovering US economy.
1. From the chart, STI close around the long term 'Red trend line' for the week at 3,169 and continue to trade within the resistance/support at 3,240/ 3,060. In these perspectives, there is no big change: As long as 3240 is resistance and the index unable to break through, look out for a return to 3,060, and then to 2,950.
2. In the immediate coming week, a continual rebound towards the first resistance level of 3,240 'Dotted Green line' is possible as it levered on the positive momentum from the prior week
3. A continuation of the uptrend will only be uphold if the index can rebound above 3,300 and stay above. This is critical as it will recover more than 50% of the prior weeks losses.
4. If none of the above happens and the index close below 3,060 again in the coming weeks will likely trigger a bearish scenerio.
