Daily Markets Briefing: STI down 0.9%

Key hurdle pegged at the 3200 mark.

OCBC Investment Research said:

Persistent weakness on Wall Street overnight could weigh further on local sentiment this morning, even after yesterday’s 0.9% slide.

Although the technical indicators suggest that the market is oversold, the selling pace has picked up and the average value traded has increased sharply from S$0.43 to S$0.53.

If the index breaches 3135 (61.8% retracement of 2931-3464 rally), it may indicate that the STI is embarking on a new downtrend.

More worrying is the breaching of 1-year uptrend line at 3210 recently – failure to retake this support-turned-resistance could see a deeper correction back to 2991 (61.8% retracement of 2698-3464 rally).

On the upside, 3200 remains the key hurdle, while the parabolic buy signal will only be triggered at 3289.