STI In Bearish Mode

STI closed below its 50 day moving average on Friday. The market has been trying to stay on the recovery path but Friday’s bearish move proved to be too strong for the market to resist. The 50 day moving average closed below it’s 50 day moving average for this first time since late Oct when the market made its recovery move.

The stock market is being pressured by fears in Europe. The Spanish 10 year government bond yield hit a high of 6.75% and France is trying to hold on to its AAA credit rating. Germany is now seen as the only safe haven in the eurozone.

The phase chart is painting a bearish picture. The next support level is near 2700 level.

STI Weakness To Continue

STI closed with a gain of 54 points on Friday. For the week, the index was down 144 points. The carnage started due to a downside of US debt. Traders used it as an excuse to take money off the table. The index went decisively below its 200 day moving average, moving the index into bearish phase.

Looking at the daily chart, the market is still in bearish trend. Although there may be a rebound in the short term, the 50 day and 200 day moving average will serve as resistance level. Usually when market drops with such big volume, it will not be able to move above its 50 day and 200 day moving average during the first test. So expect the market to move down again after the rebound loses its momentum.