Can the new Thailand government gain investors confidence?

Amazing Thailand political struggle for nearly a year has led to a change of Prime Ministers three times in four months. The new democrat and one of the youngest prime minister in Thailand history, Mr. Abhisit Vejjajiva age 44, managed to get just enough votes to be elected as Thailand's 27th Prime Minister. Yesterday, he and his newly formed cabinet members were installed by the King. You can read more news about Thailand here.



Mr. Abhisit said that his first priority was to strengthen the Thailand economy which was badly hit because of street protests that lasted for almost a year. The latest was a week-long protest at both local and international airports. Political pundits believed that this event helped Mr. Abhisit's ascension to become the prime minster, after the courts rules out previous prime minister Mr. Somchai party to be illegal for election fraud.

Thailand SET index (SETI) was at a strong support at 380 points during the protests in late November to early December. The benchmark index strongly rebound and climbed to as high as 70 points or 18% at 450 points just a few days ago. However, after Mr. Abhisit's new cabinet installation, the SETI fell to 434.08 points. The weak regional markets were partly to be blamed.

The SETI is currently at the resistance line of the long term down trend line that started since May this year, when the SETI was at 880 points. The stock market value has fallen to more than half in just over half a year. For the past 2 months, the SETI formed a double bottom chart pattern which indicates market is at the bottom. The divergence on the RSI helped strengthens the support at this bottom. The neckline resistance or confirmation for this double bottom is at 470 points is a crucial level because if the SETI is able to break above this level, the SETI is expected to rally to 560 points. The increasing RSI indicator indicates that there is a high chance that the SETI is able to break the neckline.

However, in the short term, the SETI is expected to pull back further because of the resistance to the temporary support at 411 points and if this level fails to hold, it may test the strong 380 points support level again.


Daily SETI chart as at 22 December 2008 using NextVIEW Advisor. Click on chart to view enlarged chart.

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.

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