By the end of the week of Apr 10-14, the Straits Times Index closed at 3,302, up just two points week-on-week. But, from an intra-day low of 3,094 on March 14, the index is up 208 points, or 6.7%. In this staggered upmove, the STI has managed to regain and move above the confluence of its 50- and 100-day moving averages at 3,266.
In the short-term, a minor shooting star has formed on the candlestick chart, and this may cause the STI to pause. Having said that, its strength is better than anticipated since it managed to move above the the 3,270 resistance level with ease. ADX has turned up from a neutral level, and the DIs are positive, and this could provide some underpinnings for the STI. On the other hand, short term RSI is approaching the top end of its range while quarterly momentum has recovered. These various indicators suggest a rangebound trading range.
Since the 50- and 100-day moving averages are at the 3,266 level, the area between 3,266 and 3,270 is likely to provide support. The next resistance is at 3,350.
Since the start of April, risk-free rates have been declining. Yields on 10-year treasuries are hovering around 3.4%. These yields are now below their 50-, 100- and 200-day moving averages. With quarterly momentum now in negative territory, yields may stay under pressure. While lower risk-free rates imply lower cost of capital levels for equities (or higher prices). economists reckon that global growth is slowing, and the US could experience a mild recession.
