Wall St continued to fall yesterday led by oil and metal producers. Worries that economic growth could slow due to rising oil and commodities prices. Tech stocks such as Google posted the worst 4-day slide in its history. E*Trade tumbled 59% after the company said that its earnings fell short of forecast. Citigroup went as far as saying that the company could go bankrupt. Apple also lost 7%.
Now with Dow close to the 12,900 level, there could be a potential minor rebound in the coming days. Nevertheless, selling pressure is still present in both Dow and Nasdaq. Now, we may have to wait and see if the market eases lower to retest the Aug low. If Dow breaches the Aug low, we could have a Dow Theory Sell signal, which is very rare.
STI's gap support held well. Yesterday's hammer candle is bullish but it needs further confirmation. Maintain a wait and see for the light pocketed investors while deep pocket investors should start to nibble. Gap support 3,470-3,520. Resistance at 3,600 followed by 3,660-3,688.
KLCI is also holding above its last week's support of 1,380. A break (and close) below the support would signal the start of an immediate term downtrend. Note: the longer term outlook is still very bullish. Aggressive investors should start to buy now just above the 1,380 support. Conservative ones should wait a while longer.
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