As the saying goes, “The market exists to make as many fools out of man as possible”. It is an uncomfortably apt description for last week’s trading. In the previous post, i mentioned that the STI was about to move decisively, and the setup looked bullish. There was however, huge concerns over the state of the US economy and the ongoing Euro crisis. The bearish close below 1296 did point towards more downside as good old hindsight made it clear that the Head and Shoulders formation was completed. The 4 day slide alone has already exceeded the target price, so it does seem like the trading for the US market should be in the form of a relief rally and subsequently sideways movement.

Applying this analysis on the STI, it seems more likely that there will be a rebound rally before further dips. The STI is performing relatively stronger …