Looking back at the recent two sharp market corrections

The most recent sharp corrections happened in February 2007 and May 2006.

Just to refresh readers’ memory, the February 2007 correction happened due to concerns of “yen carry trade”.  The correction came hard and fast, with the Singapore Straits Times (STI) index falling about 11.6% within 5 days, dropping 385 points in total from 3316 to 2931 points.

The second recent major correction happened in May 2006, right before the World Cup started.  The correction was more pro-longed then, with the STI falling about 14.6% over 26 days, dropping 388 points from 2665 to 2277 points.

So how about the STI correction this time?

The recent high for STI is 3685 (day high on13th July).  So if we assume the market is in a sharp correction mode, it needs to correct a minimum of 10%, which will bring it to about 3316 points, close to the next psychological 3300 support level before we see a stronger technical rebound.