The Thailand SET tumbled 2.27% to close at 1495.22, its sixth straight week of losses, as Kasikorn Research Centre trimmed its Thailand GDP forecast for 2015 from 4.0% to just 2.8% on Tuesday, citing a decline in exports, weak consumer spending and a slowdown in investments from the private sector. The move follows the Bank of Thailand’s (BOT) downward revision of its 2015 GDP estimate last Friday, from 4.0% to 3.8%. 

This week, the Asian Development Bank (ADB), a Metro Manila, Philippines-based Asia-Pacific region multilateral finance institution, also revised its Thailand economic growth forecast for this year downward, to 3.6% from 3.9%, due to weak exports, low farm prices and high household debts. The Thailand Commerce Ministry said on Thursday that the exports in February fell 6.14% year-on-year to U.S. $17.23 billion, imports rose 1.47% to U.S. $16.84 billion, citing a slower-than-expected global economic recovery and lower global oil and farm product prices.

PTT PLC, Thailand's state-controlled fully integrated gas and oil company, with an almost 11% weighting on the SET, bucked the trend and closed up 0.93% for the week. Speculators ran up the oil price 7.39% in four days, blaming the Yemen conflict for the reason.

The 10-year Thailand Government bond yield declined 1.77% to close at 2.78% on Friday. The yield of the 10-year Thailand Government bond began its downward trend since it hit the high of 4.41% in August 2013 reflecting uncertainties in the Thailand economy. Investors buy bonds to secure cash flow and to reduce their risks in the stock market, which then drives the bond yield lower.

Thai economic uncertainties have led to low consumer confidence and cautious spending. One of the shop owners at the Chatuchak market, Bangkok's largest weekend market, told us that his sales have dropped as much as 50% year-on-year and there is no end in sight as most shoppers are hesitate to spend. Thai consumers may also skip eating out, leaving some popular restaurants in Bangkok half-full, as we recently observed.

The Thai baht finished unchanged against the dollar at 32.57 baht per dollar for the week, but fared poorly against the euro and the Japanese yen. The EUR/THB and JPY/THB rose 0.68% and 0.85%, respectively, to close at 35.4704 baht per euro and 27.3283 baht per 100 Japanese yen. 

The Thai baht weakened for the second straight week on the BOT rate cut and the outlook for the Thailand economy. Since May 2014, the rising Thai baht against the euro, at a near 10-year high level, and against the Japanese yen, at an over 6-year high level, has created trouble for Thai exports. 

From the technical viewpoint, the Thailand SET may find a tradable low of 1484.91 as a bullish trend reversal Hammer candlestick emerged. The Hammer may signal a bullish trend ahead but requires confirmation that the new buyers will step in and move the Thailand SET higher. 

Although the Relative Strength Index (RSI) has now dropped slightly below 30, meaning the Thailand SET may be oversold, the overall chart pattern is still very much bearish. First, the bullish falling wedge chart pattern is breaking down and could force the Thailand SET to pull back and retest the December 16 low of 1422.63. Second, a series of bearish lower-lows chart pattern, or a “swing low”, still poses a downside risk until the Thailand SET can manage a close above 1520.88 in the coming week. 

Third, the head-and-shoulders pattern may be confirmed if the Thailand SET continues to pull back and closes below the 1488 level. In our opinion, the projected price is 1357, if the head-and-shoulders pattern is confirmed. 

One should also keep an eye on the 50-day SMA, which is converging with the 200-day SMA. A death cross occurs when the 50-day moving average crosses the 200-day moving average on the downside. Although the death cross may not necessarily signal that the market is going to crash soon, one may want to be cautious about the markets as other technical indicators are already very bearish.