The Straits Times Index drifted lower in the week of Aug 23-27, ending 22 points lower week-on-week at 3,080. The move takes the index below both the 50- and 100-day moving averages which are currently at 3,138 and 3,153 respectively. The 200-day moving average is at 3,045. On the negative front, ADX is rising, and the DIs are negatively placed, suggesting that lower levels are likely.
Support/ breakdown is at the 200-day moving average. Any rebound is likely to be tepid, with resistance appearing at 3,138.
A break below the 200-day moving average is usually a bearish sign. The Singapore Exchange fell below its 200-day moving average at $10.19 on Aug 27, a Friday, which suggests that traders are not comfortable holding the stock over a weekend.
A positive divergence has developed between the Hang Seng Index and its quarterly momentum. However, this in itself is not a sign of a turn of the tide, as momentum has yet to form its own base. The HSI’s support levels to watch out for at 24,748, a low made on July 27, and 24,581 made on Aug 20. A break below these levels would indicate a downside of 23,512.
The HSI had already fallen below its 200-day moving average back in early July, exacerbated by a negative cross in early August by the 50- and 200-day moving averages. As at Aug 20, the 200-day moving average is at 27,985 and it has made a negative cross with the 100-day moving average, currently at 27,875. Meanwhile, the declining 50-day moving average is at 27,019 coupled with natural resistance at 27,000 is likely to provide a temporary ceiling for any attempted rebound.
