The FSSTI Has rebounded off 2,211 to 2,332 last Friday. We also suggested going long on several stocks. Most of these have rallied in recent days. Our observations are:

1. The FSSTI is no longer overbought on a daily or weekly basis. There is also no sign of a trend reversal from an index perspective or bottom up perspective on index stocks.
   
   
2. The decline in FSSTI and HSI is a corrective structure and not an impulsive structure on hourly charts. Corrective structures are indicative of temporary pullbacks. Thus, we do not expect a steep sell-off despite recent negative news flow and concerns over the spread of H1N1 virus.
   
   
3. Expect choppy movements over the next two weeks. We do not expect the recent low of 2,211 to be taken out. A decline in the early part of the week should give way to a stronger rally, but previous high is not expected to be breached over the next two weeks.
   
   
4. Price action on the US indices is inconclusive at this stage. Critical support for the DJIA and the S&P500 are at their respective neckline support of 8,260 and 890, respectively.
   
   

Disclaimer:
We have based this document on information obtained from sources we believe to be reliable, but we do not make any representation or warranty nor accept any responsibility or liability as to its accuracy, completeness or correctness. Expressions of opinion contained herein are those of UOB Kay Hian Research Pte Ltd only and are subject to change without notice. Any recommendation contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee.

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