Potential short term technical rebound on the cards :

1. STI reached Fibonacci retracement support level of around 3320 –this level must hold up for market to stage a good technical rebound

2. BOTH STI and Hang Seng showing positive divergence MACD signals and stochastic signals with indicators forming higher lows while indices hit lower lows – this one sign of potential market bottoming, though we must still watch if the latest support level can hold up. For STI case, support would be around 3320 and Hang Seng short term support would be yesterday low of 26400

I must remind that the medium term signals are still WEAK, so not a time to trade in big positions on the long side. Even if I were to trade for the rebound, would nibble on small positions and set my CUT LOSS level TIGHT !!

Stocks in U.S. tanked for a fourth day out of five on Friday, ending a forgettable week that saw financial stocks being hammered due to growing subprime problems and the technology heavy Nasdaq Composite Index losing almost 7%. Wachovia Corp, the nation’s fourth-largest bank, said in a regulatory filing that it expects loan losses of as much as $600 million in the fourth quarter. This sparked further selling of embattled financial stocks.

The Dow Jones Industrial Average lost another 223.5 points, or 1.7%, to 13,042.7, giving it a weekly drop of nearly 4%. Of the Dow’s 30 components, 24 ended in the red, led by IBM Corp. and General Motors Corp. both of them losing about 5.5%. The S&P 500 Index also fell 21.07 points, or 1.4%, to 1,453,70, dropping 3.7% for the week.

Despite an unexpected decline in the U.S. trade deficit in September, which the Commerce Department attributed to a surge in exports, investors chose to focus on the negative news. The U.S. dollar continued its downward path, dropping about 1.75% against the Japanese yen as financial woes on Wall Street took their toll on stocks. A bleak consumer sentiment survey further raised concerns about U.S. economic growth. The consumer sentiment index released by Reuters and the University of Michigan is now at its lowest level in 13 months. The decline in consumer sentiment could lead to a grim holiday sales season for retailers.

The Nasdaq Composite Index fell 68.06 points, or 2.5%, to 2,627.94. The technology-heavy index has declined 6.5% since last week as the tech sector experienced another sell-off session.

Even the high-flying Google Inc. was not spared, with the Internet search engine dropping 4.2% to $663.50, down sharply from the intraday high of $747.24 hit just two days.

In commodities market, oil futures saw volatile trading before closing up 86 cents at $96.32 a barrel amid concerns about supply problems and the weakening U.S. economy.

Gold futures finished slightly lower, down $2.80 to $834.70 an ounce, but still posted a gain of more than $26 on the week, as U.S. dollar weakness continues to provide support for Gold prices.

US stocks dropped for a second straight day on Thursday, led by declines in the Nasdaq after tech bellwether Cisco Systems signalled the credit crisis was hurting demand from key customers, including banks. A late-day rebound in beaten-down financial stocks, however, pulled the indexes well off their worst levels of the day, partly due to traders covering short positions.

The Dow Jones industrial average dropped 33.73 points, or 0.25 per cent, to end at 13,266.29. The Standard & Poor’s 500 Index was down just 0.85 of a point, or 0.06 per cent, at 1,474.77. The Nasdaq Composite Index was down 52.76 points, or 1.92 per cent, at 2,696.00.

The European Central Bank held its key interest rate at 4.0 per cent on Thursday as the bank contends with conflicting pressures from a soaring euro and a jump in euro zone inflation. The Bank of England held interest rates at a six-year high of 5.75 per cent for the fourth month running on Thursday, but expectations of a cut soon are growing as stocks slide and house prices fall.

Asian markets fell yesterday after Wall Street posted its second big drop in a week as investors worried about the extent of fallout from the global credit crisis. Japan’s benchmark Nikkei 225 index sank 2 per cent, while the Hang Seng Index in Hong Kong tumbled 3.2 per cent. China’s benchmark Shanghai Composite Index lost 4.9 per cent in its biggest one-day decline in four months. Shares also fell in Australia, India, South Korea and the Philippines.

In Japan, the Nikkei 225 index fell 325.11 points, or 2.02 per cent, to 15,771.57. In Hong Kong, the benchmark Hang Seng index dropped 948.71 points, or 3.2 per cent, to 28,760.22.

Stock markets in Singapore and Malaysia were closed for the Deepavali holiday yesterday.