After 2-3 weeks of corrections, STI and Asian stocks in general staged a strong re-bounce. It sprung back 1.8% and closed at 3025. That was a week when STI breaches 3000 over the last 6 months. It was also the first time a major upward movement seen after 3 weeks of near daily sell down.Is this just a dead-cat bounce? From the strength of it, it seems to be a credible force. Its volume was healthy for any upward movement. However, given the backdrop of high volume sell down over the last few days, the volume registered may not seem high. This is a tricky situation. Even though the move seems to come from a credible force, there is overhanging worries. This is were Technical Analysis fails. In the end, we will need to see 2 main factors: one, the potential political turmoil in Asia particularly in China due to uprising in Africa and Middle East. The Jasmine Revolution movement has to be contained before it germinates. Two, the US economy recovery. Will the QE2 be pulled off the table sooner than expected? The pulling off of liquidity will certainly dent the market. Early next week will have to be closely watched. The Libya unrest and US Fed announcements will certain play the main role in determining where the market is heading.
From the look of it, this is a potential pivot point of the market.
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