SINGAPORE (Aug 25): Here are two charts for our analysis this week:
STI daily (3,213): Holding above July low
The Straits TImes Index rose four points during the week, and managed to hold above the July low of 3,191 despite testing an intra-day low of 3,187. This test establishes support at 3,191.
Short-term indicators remain weak, with short-term stochastics approaching the low end of its range. The 21-day RSI is drifting sideways. ADX is rising and DIs are negatively placed. These indicators could support another feeble bounce, with resistance appearing at 3,256. A break above this level would trigger a relief rally to 3,290 during which oversold pressures can be alleviated.
The weekly chart shows declining annual momentum and a downturn by two-year momentum, which indicate that the market is in a downtrend, and the downtrend has yet to run its course. That suggests that the 3,191 level could be broken when the index next tests this level.
Singapore Telecommunications ($3.20): Surge may not sustain
The 10-cent or 6.5% surge on Aug 23 has given way to a downwards drift. The inability to follow through on the surge coincides with quarterly momentum retreating after meeting with resistance at its equiibrium line.
The retreat by momentum suggests that prices could drift lower. The gap at $3.17 may provide support for the immediate decline. An attempt to break above $3.28 needs to be accompanied by significantly higher volume. In the absence of this, prices could drift downwards towards $3.11.
