SINGAPORE (June 12): The Straits Times Index has been impacted by the volatility in the Dow and S&P500 indices, and the uncertainty in the Hang Seng Index.
Technically, though, the breakout above 2,620 still looks good, and this level provided support for the retreat. The 50-day moving average is at 2,581, and is likely to coincide with the breakout level which would provide additional support. This could occur during the week of June 15-19.
A minor negative signal showed up in the chart pattern and this involves the close below 2,700 at the end of the trading week, but the index remained above the breakout level. On June 12 the STI opened at 2,629, and moved to a low of 2,609, testing the support but it managed to rebound off this level to end the session at 2,684, confirming 2,620 as a support.
In the next few sessions, the STI would inevitably follow global markets up and down but the 2,620 area should be able to hold.
The 21-day RSI rose to a high of just under 64 on June 9 before retreating. The pre-Covid high this year for 21-day RSI was 68. Short term stochastics has not worked well because it turned up after the market did, and has yet to turn down.
Annual and two year momentum have rebounded, but their trend, based on their weighted moving averages, remains downwards. The moving averages are providing resistance for these long term momentum indicators.
The break above 2,620 indicated an initial upside of 2,889 and a subsequent target of 3,000 and these remain valid. The market surge in the first two weeks of June stopped at 2,800, and this should be the new resistance/breakout level. At this juncture, any further retreat should be supported at around 2,620, in particular if volume remains light on retreats.
