STI outlook

Okay i will do a quick one here before i catch the showdown between Liverpool and arsenal. I haven't been looking at much charts this weekend as most long positions have already been initiated on Friday.

I like the way how things are shaping up; the local index conveniently retrace and head downwards again after she hits key resistance in the backdrop of deteriorating outlook for world growth as unemployment and housing data in the Us remains weak and the Chinese economy has grown at its slowest rate for the past 11 months. Those who shorted last week are probably jumping for joy and looking at more downside to come next week as they have anchored their bearish view on the waves of bad news and data coming out. These people will probably hold on to their shorts and will only give up when STI hits the roof and set new highs. From a technical perspective, i am starting to see support coming in and i think the intelligent contrarian should step in here and ride the next up trend.

The only thing that's troubling me is the extreme volume we saw on last Friday's session. It can be institutions stepping in and scooping up shares which is a good thing as i think they wouldn't do so unless they think shares are now undervalue and a good chance of moving up in the near future OR retail investors buying the dip which is bad as from my experience when these investors treat every retracement as a buying opportunity chances are the upside is limited in the intermediate term. I guess is the former as like i said general sentiment is bad and most people would not have the balls and brains to long here.

I think many stocks are showing great charts and good upside potential. Pick the ones with a good risk to reward ratio.