Our queen chartist has returned with her latest thoughts! Key point watch the foreign buy/selling in the banking sector!

 “I will never leave you, nor forsake you. – Hebrew 13:5”

Well, the Divine may not leave us, but I am pretty sure someone is forsaking us, leaving us in misery: Foreign investors.

The foreign volume in the SET is backing down from the resistance I have been talking about for some time. This is a significant fall, because it happens at the juncture where the SET is backing down from its strong weekly resistance.

 

The SET failed to make a rebound last week, and the fall continues. As I am writing this comment, the SET is attempting to make a rebound from the support at 1,159-1,151. However, the SET will have to breach above the barrier at 1,202-1,205 and the weekly resistance at 1,250-1,255 so that it can pass through this strong barrier that has caused high volatility in the SET for 4 times.

For the past 3 times, when the SET tested this same resistance line, the volatility usually extended for 5-7 week. This time, this week is the second week of volatility. If the SET can’t breach above 1,202-1,205 and falls below 1,159-1,151, the volatility may continue into next week or weeks after that. The next supports will be at 1,140 and 1,130. Also, I still have the same downside at 1,100-1,080, mentioned weeks ago, in mind.

 

The foreign investor’s selling coincides with the Bank sector about to form a Double Top pattern. As shown below, if the Bank sector fails to make a breakout above 453-454 and falls below 437, the Double Top pattern will occur, and the sector may tumble to 425-420 or lower at 415-413. The Bank sector has outperformed the Energy sector since early this year, and the Double Top pattern in the Bank sector will be a serious warning in the SET.

 

The US dollar index has made another breakout and is now testing the resistance at 80.74. On breakout, it may head up to test 81.44 (from Nov-2010) or 81.80. The support is now at 80.40-80.35 and 80.

 

The Baht/Dollar exchange rate that has been weakened for more than a week is another factor that adds pressure to the SET. Right now, it is testing the barrier at 31.37. A breakout above this barrier will signal more foreign selling. On breakout, the exchange rate may head up to test the resistance at 31.65-31.70. The support is now at 31.20-31.16 and 30.82-30.78.

 

In sum, we are at the hi-risk-hi-return juncture. The rebound in the SET, if happens, is yet to re-test key weekly resistance at 1,250-1,255. The Bank sector needs to make a sharp rebound, and our beloved foreign investors must come back to be our savior. Yes, dear, I am still pretty bearish. 

Thanks Ploy! If you have any questions please feel free to contact her @ ploy@thaicapitalist.com