Straits Time Index (STI) is just trading above a critical support at about 3,042.

Things to watch:

1. If this previous resistance level (3,042 which is also the 200D MA support) cannot turned into support, STI will start the down trend and head towards at least the 2914 level (78.6% Fibonacci Support).
2. Another important level to watch is 3,122 resistance which is also the neckline of the complicated Head and Shoulders pattern. If STI cannot break this resistance and bounces down, the chances of breaking the 200D MA support is extremely high.

One thing for sure base on the chart pattern, Bull is still enjoying the Chinese New Year and not back to work yet!

Singapore Straits Times Index may be forming a  Head and Shoulders with the neckline at about 3,120. Successful forming of this Head and Shoulders will send STI down to 2,928. Be cautious! Some negative factors to trigger the bear:

• War in Korea Peninsula
• European Debt Crisis
• China continue to tighthen the Monetary Policy

However, STI may continue the up trend if the patterns fails with some positive factors:

• Hot Money is flowing to Asia.
• Year End Window Dressing Effects.

Trade with Cautious!