Stochastics signal lines crossed today as expected in Thurday's post, STI - Heading for the Next Leg?, and the STI has bounced up higher than yesterday's close. This bodes well that price is likely to find its way back to the 50day moving average by next week, before heading higher still.
Anyone looking into investing into the STI ETF can consider nibbling into the security. However at a high of 3800 in 2008 before the crash, the current 3200 leaves about another 15% upside. This is if it heads back to its previous high. Should it exceed this, my estimate is that it'd have a maximum of 20% upside to go. Pure guesswork that but that said, PE ratios would be expensive by then too. So it'll be more likely for stocks to come back down instead of rising further. Of course I know that the euphoria (euphemism for madness) of the crowd could drive it higher still, so I'm not wagering the house on this.
However, as the blue chips have all climbed considerably since the downturn, the best returns now lie in the penny stocks for they normally rise last in a bull market. Here's where the gems are and also where the most volatility lies though so be warned. Have a good buy and more importantly, sell plan. Investigate your company properly. Do some thorough research to prevent yourself being scared out of the stock. This recent correction is a good time to start shopping for some quality buys.
Best of luck everybody!
~K
STI falls 1.15 point, or less than 0.1%, to 3,158.08 at closing
Friday, 26 November 2010
Friday, 26 November 2010
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