Cool79

PostPosted: Sat Jul 21, 2007 2:33 pm Post subject: Bearish Indicators - Sell into strength! Reply with quote
http://sg.uobkayhian.com/page/site/p...tech_20jul.pdf


Markets- Opportunity to sell into strength
There are several bearish indications on the Singapore bourse which suggests that the broad
macro trend has weakened considerably. We think any rebounds should be used as an
opportunity to sell into strength.
1. The index's move to recent high of 3688 and the swift 106 point correction from that signals a
swing failure and a potential double top.
2. No longer broad based rally. As stated earlier in the week, the rally was far from broad based
as banking stocks and property stocks had stalled and the move to new highs was due to select
oil and gas plays. The 14 day money flow index on the index thus showed a negative divergence
as the index headed towards 3688. Additionally while the index rally to the upside was not broad
based, the recent declined to 3580 was broad based and across all sectors.
3. Spike in volume suggests euphoric peak. 2 days ago, market volume spiked up to 9.2 billion,
which was the highest in more than 10 years. The bulk of these were due to speculative small
cap plays. Yesterday's market volume dwindled to half of that level despite a recovery in the ST
index. This suggests that risk appetite has shrunk dramatically amid substantial share overhang.
This in our opinion is the most bearish factor in the near term.
4. SGX Property index which had lagged behind the ST index for more than a month has
corrected below an important support level and a 5 week
5. The rise in the US indices comes even as the US Dollar Index forms new lows. This is a
bearish divergence and suggests that a topping out process could be forming. Additionally, the
DJIA will be forming a major parallel channel resistance near 14100 level.
While, the ST index could potentially regain half of its recent losses, the risk/ reward profile is no
longer deemed attractive. We recommend reducing long exposures.