Stock market direction

Both malaysia and singapore stock markets have rebounded nicely after the big sell down few weeks ago. And now, I think the market is at a cross road again........

I expect most markets, including malaysia and singapore stock markets to take their cue from the US market after tonight's much anticipated FOMC rate decision meeting. I was told that most people are expecting a 50 basis point cut. And if that happens, we could see another short term boost in global markets.

Singapore Straits Times Index is now hovering around the 61.8% fibonacci retracement level of about 3500 points since the sell down from 3688 intra day high on 16th july to the intra day low of 2962 on 17th august. So if the 50 basis point cut materilized, STI may well try to retest the recent day high of 3561 and after that the next greater resistance at 3669.

Some "danger" signals to watch out for :
1. candlestick - doji formed on 14th sept is a warning signal of potential reversal signal
2. MACD histogram - forming lower highs while STI higher highs warns of potential weakening momentum
3. stochastics - forming lower highs while STI hit higher highs warns of potential weakening momentum

And of course what if the Feds disappoint the market by cutting the rate by 25 basis points only, then market may be disappointed and "lausai" again.

Whatever the case, we will continue to see lots of volatility in the near term.