STI Direction: Will It Repeat The 45% Rally of Sep 2006 - Jul 2007?

Looking back at the STI from 2006 - 2007, there's some similarity between the current technical setup of STI as compared to then.

STI started to recover from the 2003 SARS crisis and took 3 years to gain about 100% (1300 - 2600). In mid Jul 2006, STI 50-day MA cut below the 200-day MA and continue until mid Sep 2006 after which it performed a golden cross (50-day MA cut above 200-day MA). This is normally a bullish sign. STI then continued to make an impressive 45% gain in the following 10 months to reach about 3700. In total, STI gained more than 180% from May 2003 to Jul 2007 (Slightly more than 4 years).

At the current level, STI has gained about 110% from Mar 2009 (slightly more than 2 years). In early Apr 2011, STI 50-day MA cut below the 200-day MA and continue to until end May 2011 after which it also performed a golden cross. This is similar to the above scenario in 2006. From the STI TA alone, it looks bullish as it's well supported along the major support level of 200-day MA.

If STI does repeat the 2003-2007 bull run, then STI might reach about 4000 in Feb / Mar 2012 from the current level. It's an upside potential of about 28%. The downside risk is near the 2800 level which is about 10%.