STI is at 2383, below the 200MA line. As bearish as it seems, all is not lost. On Tuesday 23rd May I wrote that my past studies shown that 200MA once broken need to close back within days to maintain the uptrend. I was taking reference from Mar'04 and Oct'05. These were the 2 times STI broke the 200MA and came back up within the next 3 days. Time factor is important here. Alot of stocks are very attractive right now and most of them have gapped down. If they are common gaps, it should be closed in the next trading session. Very coincidentally, if they really close up the gaps, STI will also move up it's 200MA. This anticipation of mine allows me to take actions as it is happening. I have missed buying at lows because of FEAR back in Oct'05. Back then, I was not fully prepared. My holdings were negative, I did not look out for signs of reversal and simply just stayed by the sideline. I'm all ready to jump in for a try. If I end up losing, it is a calculated risk rather than a gut feel bet. I prefer to ascertain the market direction before jumping in.
There are 4 types of gaps, common gap, exhaustion gap, breakaway gap and continuation gap. If you are concerned about the gap in your holdings, you may want to do a google on the above terms and learn the characteristics. Our STI has 3 gaps on the daily each with different volume. This is clue to where we are heading in the next couple of days.
