THAILAND STOCK MARKET EXPECTED TO REMAIN SIDEWAYS IN THE NEAR TERM

Since the double bottom formed on the SET Index Chart in a month ago, the market went on to trade sideways although initially there was a bullish momentum in the market. When new Prime Minister Abhisit Vejjajiva took over office on just before Christmas, after a year-long protest that sees the fall of two prime ministers believed to be closely associated formed prime minister Mr. Thaksin Shinawatra who is currently in exile, the market was bullish. The SET Index rose from 440 points on 23rd December 2008 to a high of 488.12 points on the 6th of January 2009. The high was a pivot resistance high formed in November 2008.

The benchmark index has corrected since and now it is back to the level before the new PM took office at 433.19 points. Investors were still not convinced although the primary focus of the new PM is to revive the economy with was battered by the protests that led to lower inflow of tourist. Tourism is a major component in Thailand's GDP. Exports which made up two thirds of Thailand's GDP have declined because of lower demand worldwide. Bangkok Bank estimates Thai GDP growth for the year 2009 to be 2%. For the past four years Thailand have been enjoying a moderate growth in GDP of slightly more than 4%.

Technically, The SETI is in a sideway consolidation period between the support and resistance range between 380 and 480. The SETI is currently in the middle of this sideway range. The bullish momentum still exists in the SET Index in the longer term. The RSI level still holds upwards. The SETI which broke the down trend line resistance level still stays above it. However, the bulls are being hold by the bears strongly at the resistance level.


Daily SETI chart as at 20 Janaury 2009 using NextVIEW Advisor. Click on chart to view enlarged chart.

The SETI is expected to remain in this trading sange in the near term. The future direction of the SETI depends on whether it is going to break the support or resistance level. If the SETI breaks and stay above the resistance level of 480, there is a high chance that the SETI can rally to 600 points. However, if the SETI breaks below the support line of 380, the down trend may resume to test the next support level at 320 points.

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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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