Daily Markets Briefing: STI down 1.5%

Initial support pegged at 3135.

OCBC Investment Research said:

Losses on Wall Street overnight are likely to dampen local sentiment further this morning, possibly extending the STI’s 2-day 1.5% slide.

Nevertheless, we expect the initial support at 3135 (61.8% retracement of 2931-3464 rally) to hold for now, given that the market has been quite oversold over the past few sessions.

However, any technical rebound may just be a “dead cat bounce”, and many are likely to use it to unwind stale long positions.

As such, it looks unlikely that the STI will be able to retake the key support-turned-resistance provided by the 1-year uptrend line (currently around 3210).

And should the 3135 support give way, we could see a deeper pullback towards 2991 (61.8% retracement of 2698-3464 rally).