Saturday, February 11, 2012

STI approaching 3000 points

Back in 2011, the STI closed off at 2646 at the end of year 2011. When we stepped into year 2012, the new year rally started. Some people called this the Capricorn effect where many investors start to rebalance their portfolios and starts to buy the various stocks. The STI closed off at 2960 after hitting at a recent high of 2992. That is more than a 10% increase since this year has started.

I would think that the 3000 points is a strong resistance. 3000 is a psychological barrier to many investors and some of them will start cashing out at the range of 2900-3000.

Based on the chart above, the RSI and stochastics are hovering in the over bought regions for a while already. The resistance level is around 3008 points and the immediate support is around 2940. If the resistance of 3008 can be broken through, we can see a next resistance at 3090. I would think that the immediate trend of the STI should fluctuate between 2875 to 3090 for the next 2 weeks or so.

For me, I will continue with dividend play. Keep REITs and high yield blue chips that will give me a consistent source of dividends. For existing shares that I already own, unless there are drastic changes to their business fundamentals, I will keep them for dividend income. If prices drop, I will consider topping up. If prices continue to rise, my overall portfolio valuation will increase. 
WIN - WIN. =)

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