Article from DBS Group Research (23rd March 2009)

Investors should capitalize on anticipated final downward move to 1275-1300 and continue to accumulate early cyclical plays

We maintain our technical view for the STI to trend lower to 1275-1300 before reversing up. The technical rebound by US indices during the past two weeks has fizzled out. We see the Dow and S&P500 heading for 6070 and 570 respectively, before a bottom occurs. STI should begin its final down-leg to 1300 before a strong upward reversal lifts it to a 38.2% upward retracement level at 2030 in coming months. Investors should capitalize on this anticipated final downward move and continue to accumulate early cyclical plays such as basic resource, banks, real estate and technology.

While our STI 1300 view remains unchanged, the chance of it heading there is also lowered given the strength exhibited by other Asian bourses. STI 1300 will be negated if the index is able to rise above 1685. If this scenario occurs, the bottom would have occurred at 1455 on March 10th and the 38.2% upward retracement should reach 2145 in coming months. A rise in the S&P500 above the 806 level will also weaken the case for STI to go down to 1300.

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Markets have rallied beyond the 1700 mark at this point of time, will we see STI below 1400 again? Hmm.. current sentiments seems to be turning slightly, esp with markets cheering on all sorts of news.