The market resonated around 3200 today and closed at 3204.51, up 15.31 points. This was supported by gains in the counters like Wilmar, SIA, DBS and OCBC.
This is a good sign. If the market continues to oscillate around this level, 3200 could become its next support in the event of a breakout. As of now, it is safe to estimate that the support remains at 2800 +/- 100 and the resistance at 3200 +/- 100. I would expect my estimation to hold in the short-term given the limited options for liquid investments.
Even though the possibility of a breakout remains, one can expect the market to plunge thereafter. The reason for this is that current sentiments remain bleak and such a high, sparks of selling. In the case of last week's drop, it is yet to be confirmed if sellers were going short on Thursday. My guess would be that no matter what the case, today's high can be expected to spark a selling spree tomorrow and that cause the market to change direction. The magnitude of the change can well upset the direction of this temporary bull.
As mentioned before, we can well be at the second wave of an upswing but what it looks like at the moment, is a top of a range market. The future is now filled with uncertainty and we can only wait to be sure. My take is to start selling before the selling spree to lock-in profits or cut losses in preparation for the next downswing.
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