STI Update.

This technical commentary on the STI was released by AM Fraser Research yesterday.

Note: I do not necessarily share the view of this commentary, but it is useful to know what the key support and resistance levels are.

Key support - 2610-2620

Next support - 2500 (half way mark of 2003 bottom and Oct 2006 peak)

Minor resistance - 2814 (38.2% mark)

Major resistance - 2915 (2007 low)

STI 2747 at around 2.45pm today(yesterday) is down 1084 points or 28% from 3831 peak.

Next major support after the decisive break of 2915-3000 yesterday and today is the 2600 area (2618 May 2006 high (old STI 2666) and 2618 (Jan 2000 high 2583).

The 38.2% retracement of the 5 year bull run from 1170 in March 2003 to 3831 last October at 2814 has also been broken. But there seems to be a rebound back to around 2814.

The half way mark is 2500, which would mean almost 35% crash from 3831 peak. Around 2600, the loss will be 32%.

Previous crashes in 1987, 1997-98 and 2000-2001 saw the old STI down between 53% to 62% from peak to trough, spread as short as within the fourth quarter of 1987 to as long as 20 months from Jan 2000 to Sept 2001.

The Asian crisis period saw the STI losing 62.4% from 2130 in 1q07 to 800 in Sept 1998.

The October 1987 crash saw the old STI bottoming out at 597 in December after its August peak of 1288, down 53.7%. The long-drawn fall from 2583 peak in Jan 2000 finally bottomed out at 800 after 9-11.

If the present crisis leads to a global financial crisis of the scale of the Asian crisis of 1997-98, then we could look at another protracted fall with the bottom seen not earlier than mid-year or even later.

Hopefully this crisis does not drag on too long well into this year and continue into 2009.

We do not expect the final bottom to be as terribly low as the 3 previous periods in 1987, 1997-98 and 2000-01:

Which could translate into an STI of 1800 or even lower if the 53% to 62% crashes recur.