Support appears to be at 2940. The phase chart shows clearly that the uptrend is still intact. Although the index moved into “Distribution” territory in late January 2011, the index managed to recover quickly and made its way back to “Bullish” phase. The phase chart has been in “Bullish” phase since 10 Feb 2011.
The phase chart is telling investors to be careful as the market is now in “Distribution” stage. The STI index is now facing resistance at its 200 day moving average. The rebound seems to be a bear market move with momentum indicators painting a negative picture.
Note that the STI has broken its double top formation and this indicates a potential for the index to drop to the 2900 region.
As the phase indicator is showing that the market is in distribution phase, it will be wise to step aside and wait for the dust to clear before going into the market.
