The Straits Times Index (STI) fell 91 points week-on-week to end at 3,719 during the week of Dec 16-20.
The STI can fall towards 3,600, and the uptrend formed since March this year would still be intact. The moving averages are intact. However, given the volatility in the US, the STI is likely to move below the 50-day moving average currently at 3,698, probably before Christmas.
Since the STI remains above its 200-day moving average, technically, its uptrend remains intact. ADX has turned down, but is above 20. The DIs are still postiviely placed. However, quarterly momentum is falling and this will pressure the index with lower levels likely during the week of Dec 23-27.
Resistance has been established at 3,822, which is the high attained on Dec 5.
Nasdaq loses bullish momentum
See also: STI tests resistance, may attempt breakout
Kelvin Wong, senior market analyst at Oanda, says the Nasdaq 100 has reversed its bullish momentum where at the start of this week, it was the sole major US benchmark stock index to print a fresh all-time high of 22,133 on 16 December.
“The ex-post release of the US Federal Reserve monetary policy's latest dot plot and Fed Chair Powell's press conference on Dec 18 have spooked the US stock market,” Wong says.
The Fed has indicated the prospect of fewer interest rate cuts in 2025 due to the risk of inflationary pressure resurgence and some Fed officials have taken into account the effects of the incoming Trump administration’s America First policy, he indicates.
See also: Local stocks to remain resilient despite the absence of a large stimulus in China
Some technical indicators are point to some form of correction. These include the percentage of Nasdaq 100 component stocks trading above their respective 20-day moving averages plummeting to 9.9% as of Dec 19. Also, the Nasdaq 100 component stocks above their respective 50-day moving averages have declined to 33.7%, according to Wong.
Risk-free rates are near their highest level this year, rising to 4.59% before easing to 4.52% on Dec 20. With quarterly momentum and directional movement indicators looking strong, the 10-year US Treasury Yield may well break above 4.6%. Yield curve remains normalised, but it has clearly steepened.
