In sum, the STI may continue to trend sideways but with an upward bias. The breakout needs to be well defined and clear and this has not materialised yet. Immediate support is at the flat 50-day moving average, currently at 4,938. When the breakout materialises, it is likely to indicate an upside of several hundred points from the STI's current level, perhaps even towards JP Morgan’s earlier target (of 6,000).
Rotational interest will continue among the lower liners as they take turns to advance and inevitably retreat. A number of penny stocks are taking advantage of positive market sentiment to raise equity.
Separately, the Straits Times Index managed to move above the psychological 5,000 level to test a high of 5,021 on April 15. On Feb 23, the STI made an all-time high of 5,041. As a result of the several times the STI tested and managed to move above 5,000, the breakout level is likely to be at 5,022. The 21-day RSI and quarterly momentum are moving in different directions, and not quite synchronised. Quarterly momentum is falling, and 21-day RSI appears to be turning up from neutral levels. ADX is at 18, but has turned up from 16. At this level, it is still suggesting a sideways trend. The DIs are positively placed.
