SINGAPORE STOCK MARKET NEWS
Overbought signals in place but not distribution signals ……

3august06

Slight profit taking today is expected since many stocks have moved from oversold into overbought levels (stochastics). When we see a Group of stocks moved into a particular position eg many now in overbought levels, the odds of a correction is high. As long as the correction is shallow and on thin volume, the market may still have a bit more upside since many stocks have yet to release results.

I have mentioned earlier that we are in the 3rd week of upward move which started mid july. Again, based on historical data, the mid july rally usually loses steam after 2 to 3 weeks.

Also, I have not seen the negative broad base distribution signal yet (ie volume expansion, day range expansion and close near day low). If we see that, beware !!

Until that happens, specific stocks may still have upside potential. As more and more stocks report their results, we should see the market beginning to lose its momentum. I believe expectations on many stocks are high, so even if they report good numbers, there will not be many upgrade reports.