SINGAPORE (July 17): Week-on-week, the Straits Times Index slipped to 2,618, from 2,652. However, the chart pattern shows resilience. ADX is at 11, wiith the DIs neutral, indicating that a sharp move in either direction during July 20–24 is of a low probability. Stochastics has turned down in mid-range, as has 21-day RSI.
On a positive note, the 50-day moving average — currently at 2,622 — continues to rise, but its pace has slowed this week (July 13–17), rising six points during the week compared with nine points in the previous week. The 100-day moving average is at 2,632 and looks set to meet with the 50-day moving average in the week of July 20–24 (next week). If the STI can rise above the confluence the these moving averages, it has the potential to strengthen a lot more.
Quarterly momentum has faded somewhat and has retreated towards a support level at its equilibrium line. The indicator should be able to hold at this level.
While annual momentum appears slightly weak, the 104-week (two-year) momentum has strengthened, and that could put a floor under the index near current levels.
North Asian markets appear mixed. While the Shanghai Composite Index (3,233) pulled back to 3,214 from a high of 3,443, its chart pattern is a lot stronger than that of the Hang Seng Index. Overall, Asian markets should continue to strengthen over the next several weeks and months. In the US, the S&P 500 (3,215) appears to have stalled near its resistance range of 3,200–3,300.
As a result of the different undercurrents of global markets and its own indicators, the STI is likely to meander sideways within a narrow range, with support at 2,600 and resistance/breakout at last week’s close of 2,652.
