The Straits Times Index continued to gain ground in the week of March 27-31 to end at 3,259, up 47 points week-on-week. In total, the STI has gained 165 points from the intra-day low on March 14. This takes the STI to the confluence of its 50- and 100-day moving averages at 3,270 +/-.
As such, the area around 3,270 is likely to provide resistance for the rebound move. A doji coupled with a small black body on the candlestick charts after five days of white candles suggest some sort of short term pause in the current up-tic. In terms of support, the 200-day moving average is at 3,216 and this may provide a preliminary level of support.
On a positive note, ADX is at zero. The DIs which were at extreme negative levels in early March, are now neutral. Most likely the short-term trading range could turn out to be narrow. The VIX Index is at 19, and this suggests, that volatility has receded and market movements may be relatively narrow, and possibly calmer than in the first half of March.
Even then, investors and traders should be watchful of any sudden volatility given that the STI is facing some resistance after a number of sessions of white candles. In addition, the small black candlestick body was accompanied by a larger volume than during the white candle days. This is also suggesting some sort of retreat. If markets stay calm, the retreat is likely to be shallow.
Yields on the 10-year Singapore Government Securities didn’t move much, rising by about 10 basis points during the week to end at 3.94%. The yield on 10-year US treasuries has rebounded, but its range is also likely to be narrow. It ended the week at 3.54% while its support at 3.44% is barely holding.
