Straits Times Index facing threat of downtrend formation.

Straits Times Index experienced another week of blood bath as more market participants scrambled to exit the market due to concerns on world economic situations. During the early week, STI refuses to trade lower and was holding well. However, when there were talks of political unrest, many market participants decides to take the cautious approach and exit the market. On Wednesday, STI broke the important 20 week MA support at 3500 level. This break down had lead to strong selling pressure as breaking it symbolises reduction of uptrend formation possibilities. The bearish movement last week had coincides with the common phenomenon of “Sell in May and go away”. This could also have contributed to the bearish action during the week which leads STI to close at 3427.51 level with 85.72pts down for the week.

With such strong bearish action that …