SET Index : Outlook for Feb 21st.

A quick glance at the SET’s day chart shows clearly that almost all rallies over the past year or so have come as vertical ramps, with an angle of inclination during the first 4 or 5 candles of the bounce that defy gravity.

The average ‘rebound rally’ has seen 2 gaps on average, and this current bounce is no different, with 2 already.

With the 1000 point mark but a few buy orders away, we suspect the ENERGY sector will help out Monday and see the 1000 level hit easily, with 1002 and 1007 its next very short term price resistances for the next few hours of trade.

Capital inflows to SE Asia picked up last week, with Indonesia, Malaysia and Singapore all seeing their currencies strengthen against the USD to a greater extent than USDTHB.

On the chart below notice the strong rebound in the Negative Volume Index indicator which shows institutional buying power. Looks rather good, and even though retail buying remains a tad negative, given that foreign flows tend to dictate the direction on the Thai bourse, the early part of the week should have a cushion against a big correction.

The strong and seemingly unstoppable US market closed well Friday, and even though the American markets are closed Monday for the President’s day holiday (he needs one given the latest atrocity in vetoing the UN Security council resolution on Israel’s settlement atrocities) the Thai market could go on to 1015-1020 before encountering a more substantial price barrier.

The SET tends to post 3 to 5 candle reversal patterns when it reaches an overbought state, but as can be seen on the chart below there are o signs of a reversal just yet.

A spot of rotation in to energy, agri and possibly even conmat stocks could take the market to a one month high in coming sessions, and if indeed oil rallies strongly this week there may even be an opportunity fir the SET to get close to 1035-1040.

For the above VST bullish scenario to fail we assume a dose of very bad news on the local front would be needed, along with a hefty sell-off on stronger flows than seen on the way up – and a close below 973.

 

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