SET Index : Odds favour a rally…but only just.

The SET is currently trapped within a channel with 1040 at the resistance end, 950 as key support and the 1000 mark as the dividing line between bull or bear control.

We might be wrong, but it seems the SET will break one way or the other by next week, so if you go by the bullish scenario citing earnings, bad news fatigue, maybe a spot of pre election ramping, then a triple top at worst, and possibly a new high for the SET to nearer 1080 may be your call. The bears might contest oil will spike to levels that stocks can’t handle, that the SET does not yet have the institutional volume support to rally strongly and maybe mention all is not well in the Arab world, which warrants a pullback to nearer 900-920.

Our view? The odds favour a rally – albeit not by much. Trading against Bernanke’s tsunami of cash is hard to justify.

SET Index : Tuesday’s close leaves options open

If the Arabs in the Middle East and North Africa take a break and stop rattling the oil markets the SET would probably comply with a swift rebound. However, when the Arab get miffed, all bets are off, and from what we have reason the situation today, there is room for some very bad news.

So if we play out a bad news from Libya scenario, which we’ll give 75% of playing out overnight, chances are the quite little spinning top on the SET day chart will end in a pullback to between 965 and 970.

An evening of quiet on the MENA front should see the index head back to or very near the 1k mark.

 

The SET on Tuesday

Just as things were starting to look really quite good the Libyan meltdown should force a decent pullback this morning. The first gap on the chart should be closed – meaning a dip to 982-983 is excepted, and if very lucky (if you missed this rally) it may dip to 978 or so.

However the market will likely rebound very quickly, be it later today or alter in the week, so follow the cash, and re enter the many stocks that have seen massive foreign buying over the past week or so : Banks, energy, some property, perto etc.

 

SET : Looks too good be to be true

As is often the case, the SET’s rebound this week after the very trustable morning doji star formation created late last week has seen gaps all over the place, and is very similar to  the rebound moves on the Index seen on the day chart 3 times since November 2010. This time however volume remains too light in our view, and a spot of profit taking seems very likely later today or early next week. Buying at this stage is too late in our opinion, and indeed taking profit is our call.

SET Index : Chinese CPI could force a sell-off to 950 or so Tuesday.

The SET and indeed global stocks, commodities and forex await Chinese consumer price index data Tuesday, and if it prints a strong number the chances are stocks will pullback, including the SET, metals will probably bounce a tad and oil trade down to last week’s lows.

The SET has major VST resistance from 970 to 973, and if the Chinese CPI points to strong inflation – which it should unless someone has been playing about with the input data, then we should see the SET head right back to 950 or so, with 959 the day breakdown point. As such, an early bounce will offer a shorting opportunity, or for those who long from late last week, a final exit opportunity for the rebound trade.

The SET has a bad habit if creating lots of gaps on the chart, but at least it has the manners to close them pretty quickly for the most part. Monday’s gap will be filled very soon we caution – to 951.74.

However a daily close or two below 940 is needed to really turn this market bearish, and with a massive amount of global economic data releases this week, external shocks could effect what is already a shaky market in Bangkok.

SET Index : Wait for the 912-923 support zone

The SET Index behaved as forecast and closed the September 2010 gap to 973.21, but will of course need to come done quite a bit more over the coming week or so. There is some support at 923 or so to 912, and this range is but a bad day or two away. We think there should be a technical bounce if this range is hit by Tuesday, but for the time being, do not be fooled by the dead cat bounce moves.

SET Index : Watch 973-974 as key support today

The SET wants to rebound, but is being held back due to local issues. How long this drag effect will last is anyone’s guess, and for today watch key support at 973-974. it will likely be tested, but we need a close below 970 to properly confirm anther downside wave to nearer the 920—930 zone later this month or even in to early March. The SET needs to post a strong weekly close above the 1000 mark to end the indecision in the charts, but we are confident it will do so in the not too distant future, so treat near term weakness as a time to accumulate quality at decent prices.