Dark Cloud looms... ...

A dark cloud looms after a day a bearish of trading. This dark engulfed Friday's sunny spot too.

This doesn't look good. The technical signs are clear. The bears are grabbing the bulls by their horns and flipping them around. It makes you wonder why you ever loved bears when you were a kid. These big and cuddly creatures can be quite fierce.

This marks the start of the formation of a third peak on the downswing for the STI ever since the first bearish peak formed in December 2007. Considering that fundamentally, the markets in the region and the US are weak, the general trend shall remain negative for now. Further considering the market cycle from a wave principle perspective, the market is likely to dip under 2800 points to its all year low and range for a while after that.

No worries for bargain hunters out there. Bargain hunting season shall come in due time (next 2 months are so). It really depends on how you look at it. One can start a shopping spree when the market hits a low and starts to range for a while, or join the crowd on the onset of a breakout (which is likely to be a good one this time). From a "risk and return" point of view, there is no advantage in going in to early and waiting the range-market out. You'll have to endure the pain of inter-mitten paper loses for the dividends.

For now, the outlook for tomorrow is that the market is likely to open a little higher. This phenomenon has happened 4 times in the last 6 months. Twice it closed higher, twice it closed lower. This time however, my take would be that it will close lower. The basis of this is that, in a bearish market, there has already been 5 nice white candles and a doji in the last 6 trading days before this.

This ends today's insight. Watch out for a face lift to this website very soon.