The Straits Times index dippd marginally week-on-week to 3,384 which is to be expected. Overall, the chart pattern following the breakout of the five-times tested 3,306 is almost text-book like. The breakout has been followed by a retreat. Usually the retreat could approach the breakout level but it has not done so for the STI as at Feb 3.
The 50-day moving average is at 3,282 while the 100- and 200-day moving averages have just made a positive cross. Quarterly momentum has taken a dip, suggesting that the consolidation phase is not quite over. On the other hand, directional movement indcators are supportive of an uptrending phase.
As a result, the STI should be able to hold above breakout-turned-support level, and eventually head towards a target of 3,600.
Risk-free rates as represented by the yield on 10-year Singapore Government Securities (SGS) may have peaked. A tentative downtrend has developed, wth the yield breaking below 3%. Support is at 2.79%, a recent trough from which prices rebounded. A move below 2.79% could materialise.
That would likely be the phase where the STI readies itself for the next leg of its upclimb
