The Straits Times Index is likely to struggle to break above the 3,250 area as this would require volume to expand and this is absent currently. In the week of Mar 25-28, the STI moved higher to a closing high of 3,251 on Mar 27 before retreating to end the week at 3,224 on Mar 28. This is the third time that the index has tested the 3,250 area and retreated.
In the absence of an expansion of volume, the index is likely to remain rangebound. The STI could ease from the 3,250 level. Support has been established at 3,100.
Although the STI’s quarterly momentum remains above its equilibrium line, short-term indicators appear to be turning down from the high end of their range. For a breakout to be successful, various different periods of short, medium and long term indicators need to be in sync.
Additionally, although the S&P 500 Index (5,254) ended 1Q2024 at a new high, it could encounter resistance and stage a temporary retreat based on the chart pattern of SGX-listed SPDR S&P 500 ETF. The SPDR ETF ended at US$525 on Mar 28. However, on Mar 25 it formed a shooting star with the top of the shadow at US$533. That level has not been bettered. The shooting star, coupled with the inability of short term indicators to move any higher as they are at the high end of their range suggests some consolidation for the SPDR ETF before it can make any headway. At present, the uptrend depicted by the chart structure remains entrenched indicating that the ETF is likely to experience a consolidation rather than a significant correction.
See also: STI continues to move sideways as ominous signs develop in US Treasury yields
Elsewhere, the Lion-OCBC Securities China Leaders ETF, which replicates the action of the 80 largest Chinese stocks on the Stock Connect, is testing the top of a base formation and may attempt a breakout.
GuocoLand ($1.50), which had moved up significantly since early March is attempting to break out of the $1.50 level, which is also the top of a double bottom formation. Prices have moved above the still declining 200-day moving average at $1.49, which should provide support for what appears to be a temporary retreat currently underway. If prices are able to hold above the 200-day moving average, they could sustain a breakout of the double bottom, indicating an upside of $1.80.
