Short term term technical indicators have turned down, as evidenced by declining stochastics. The 21-day RSI has also retreated after hitting a high of 76 on Nov 23, the day when the Straits Times Index tested an intra-day high of 2,903. The breakaway gap which starts at 2,891 continues to provide resistance.
The index may undergo further consolidation in the week of Dec 14-18. During that time, the 200-day moving average, currently at 2,589 and the 100-day moving average at 2,592 could turn decisively upwards. This would provide the trigger for the STI to attempt a test of 2,903, a level that is now viewed as a minor resistance. The two moving averages have already made a positive cross. A break above 2,903 provides the impetus for the index to test the next area of resistance at 3,110. Support is raised to 2,793.
There are signs that selected cyclical stocks - most likely the banks - are encountering resistance. This has caused the STI to ease 18 points to end the week at 2,821.
For more stories about where the money flows, click here for our Capital section
DBS Group Holdings was one of the first stocks to break out of a trading range. It appears that prices could have run ahead of themselves and perhaps fundamentals as well. Its price to net asset value (NAV) is at 1.18x compared to Oversea-Chinese Banking Corp at 0.93x and United Overseas Bank at 0.95x. Technically too, quarterly momentum has started to move sideways, and has the potential to fall. This does not necessarily imply a severe correction, but more likely a sideways consolidation. Support is at $24.60, below which a deeper correction could materialise.
Singapore Airlines has met with an air pocket as prices faced resistance at the four-times tested $4.50 to $4.60 range, a level that is likely to be the top of a multi-month base formation. Prices may stay within a narrow range for another week or so with support at $4.30, at the bottom of the range. A successful break above the resistance area would indicate a target of $6.83.
SEE:STI up 1.33% following vaccine rollout; positive outlook in 2021
