Top pick for the day - Thailand’s SET

Moving lower now?

Thailand’s SET remains in a long term downtrend could be continuing right this moment following the breakdown of its bearish flag pattern earlier this month.

Our LT view has been bearish on the SET (see 14th September, 19th August and 10th July issues) and that view has not changed.

The recent fall away from the underside of the previous bearish flag support (now resistance) and also its 50-day SMA could be telling.

Falling below 1,341 would likely confirm that the next leg down to below 1,292 is underway. Our LT target is at a minimum a move below 1,205, the 2014 low.

A 38%FR pullback could potentially see the index at 942, a level not seen since 2011.

There is no use moving too far ahead of ourselves. Hence, we are keeping to our minimum target of a move below 1,205 in the coming months.

Then we will take it step by step. From the looks of the longer term chart, 2016 is likely going to be a weak year for the SET.

Near term resistance is seen at 1,401 but the critical resistance is at 1,431. Barring a move above 1,431, continue to look lower here.

Our selling on the rebound strategy has worked well so far and is expected to continue to do so going forward. (Read Report)

Source : CIMB Research