On Monday, we had issued a report indicating that the index will very likely stage the best rally since January 22 and potentially head uptowards 3140.
As of today, the index has already rallied to a high of 3057,with banks leading the way. We now lower our immediate target to 3070-3090as the range matches a trendline resistance and a fibonacci projection zone.
Additionally, we see no indication for either that a lasting bottom is in place or even a pattern indicating that the index has completed an initial corrective phase for both the STI and the HSI. Several stocks had registered some 20-30% gains in the past 4-5 trading days.
Our recommendation is to lock in some of these gains and switch into defensive stocks like SingTel, ST Engineering, SPH and SMRT or even into defensive shipping trusts.So long as the index fails to cross 3090, our working assumption is that the index is in a consolidation phase. As such a further decline towards the 2800 level cannot be ruled out.
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