Blue Chip Bargain Hunting

STI 31st August 2010

Late bout of bargain hunting practically saw the STI recovered from a 30 pt drop.

This is an encouraging sign for several reasons :

1. Late buying is usually a sign of investors confidence.

2. Volume is high.

3. Intraday low shows that support around 2025 is extremely strong. Past few sessions have failed to break it and it rebounded strongly.

4. GMMA is merging, and has not crossover. Short term averages are likely to turn up soon.

5. Stochastic is just mid way through and has yet to reach overbought region.

6. Momentum is also starting to turn up.

7. 50 day moving average lends further weight at 2025.

Chances are high that the index should continue to go up. Immediate resistance around 2963.

Those who accumulated last week can look to add to positions (remember to cater for risk and not overbuy).

On an individual stock level, some of the following stocks as seen its technicals improving :

1. Singtel

• Breached strong resistance at $3.07
• Stochastics not yet overbought
• High volume
• Recovered and trading above long term moving averages (50ma, 100ma, 200ma).

2.Cosco

• High volume
• Recovered support of $1.55
• 50 day moving average turning up, and may seperate from 100 day moving average.
• Uptrend line still intact
• Stochastic turning up

3. Wilmar

• Extremely high volume
• Stochastic turning up from low end
• Still in a downtrend, but 50 day moving average may turnup and cut the 100 day moving average soon
• However, strong resistance at $6.4

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