Will 3,300 hold?

- We had forecasted in our 28 Nov report that the rebound will wane out as it approached the 3,650 level, which has unfolded as per our forecast.

- The STI has failed to deliver a sustainable rally over the last 3 months since it rebounded off the 3,300 level in Mid-Nov 07. It tested this support level once in Mid-Dec 07 and is again approaching the 3,300 mark.

- As the decline over the last 2 trading days was made on the back of rising volume, we could see a little more downside from here, which would take the STI to our immediate support at 3,300.

- Elliot wave counts suggest the current down wave is segmented into 5 smaller waves. Currently, this puts the STI at the tail end of the current down wave (Wave V), which would take the index below our support level at 3,300 and we could witness the STI slips toward our 2nd support around 2,900 - 3,000.

- But should the 3,300 support level hold up strongly, we could be in store for a strong rebound that would take the STI towards the 1st resistance level at 3,650. However, it would face minor resistance at where the moving averages have converged around 3,500 - 3,550.