SINGAPORE (Mar 23): Here are two charts for our technical analysis:
Straits Times Index (3,421, daily)
The Straits Times Index lost 91 points during the week, to end at 3,421, the lowest level since the index closed at 3,383 on Feb 7. The intra-day low in Feb was 3,340. The downmove takes the index below its triangle consolidation pattern, and below its 50- and 100-day moving averages at 3,502 and 3,464 respectively.
ADX – which was declining – has turned up. This is actually a negative signal as the DIs are negatively placed. The 21-day RSI is falling, and is not sufficiently oversold to trigger a rebound.
Quarterly momentum remains miraculously above its equilibrium line, giving traders some hope that there could be a rebound. Any rebound is unlikely to get much beyond the breakdown level of 3,491. The move below this level indicates an initial downside of 3,340, which coincides with the Feb low.
Annual momentum has definitely turned down. More alarmingly, the smoothed annual momentum is also turning down. This means that the largest gains are over for the 2016-2018 cycle, and the STI is likely to move progressively lower. These moves could be imperceptible for the next few months as bear markets inevitably run down a river of hope.
DBS Group Holdings ($27.40, daily) breakdown at hand
Prices are barely hanging on to the 50-day moving average which is currently at $27.64.
In effect, the counter has broken below the moving average which has been acting as a support line. However, in Feb, prices fell below the moving average for one session and rebounded subsequently. They could do the same thing here. However, any rebound is likely to be temporary – with resistance appearing at $27.67 to $28 - as quarterly momentum is displaying a consistent negative divergence with price. A sustained break below $27.64 points to a decline towards an initial downside of $25.
