The STI has been behaving strangely these past 2 days. Looking back, there was a bearish engulfing pattern on Monday. That was a potential reversal signal, but over the next two days, the index did not close below the low of the bearish engulfing pattern. So it wasn't a very strong reversal signal. The market tried to rally today, but was pulled down by heavy selling in the late afternoon. Looking at the Western indicators, the slope of the SMA (simple moving average) is still up, the slope of MACD is also up, but the histogram is coming down (indicating a decrease in momentum). Overall, the trend is still up, but those trading on a shorter term basis may want to be a bit more cautious due the high volatility of the current market condition. I suspect that the index may want to move closer to the SMA before bouncing off it (like what happened in late Apr 09).
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