The Straits Times Index fell 100 points week-on-week to 3,191 by May 13. On May 12, the STI touched a low of 3,165, falling below the 200-day moving average, currently at 3,217. Following the decline below the 200-day moving average, the STI appears to have built a rather large top.
Initially, though, short term oversold pressures could cause a temporary bounce in which event resistance appears at the breakdown level of 3,300. If the market is weak - which it is likely to be - the index in unlikely to reach 3,300.
The next important level for the STI is at 3,150 because this could turn out to be the neckline of a double top. When (not if) the index breaks down from this level, a downside objective would be indicated. The year’s low is also at 3,150. The next support appears at the one year low of 3,041.
The STI’s medium term indicators are weak, with quarterly momentum retreating, and directional movement taking on a negative stance, both suggesting ongoing weakness for the STI.
