There is good news and bad news. The good news is that the Straits Times Index is attempting to hold at a support area. At the same time, yields on 10-year US Treasuries have not made a new high. Interestingly, the crude oil price as represented by North Sea Brent is labouriously attempting to rebound despite threats by OPEC of cutting production, and prices are meandering below the breakdown level of US$100. The bad news is that the uptrend in yields of the 10-year US Treasuries remains intact, and the STI is stuck below its 50-, 100- and 200-day moving averages.
Week-on-week, the STI rose by 15 points to end the week of Oct 3-7 at 3,145. Support at the three-times tested 3,120 is holding for the time being, althoug the index touched a low of 3,107 on Oct 3 before rebounding swiftly. Hence, there is also support at the several-times tested 3,090 level.
As a result of the rebound off 3,107, quarterly momentum stayed at and marginally above its equilibrium line. However, ADX continues to fall as DIs stay negative, a sign that the STI may continue to drift sideways to lower. Despite this, the index may not break below the low end of its trading range.
Although yields on 10-year US Treasuries has maintained an uptrend, a negative divergence has developed with the short term indicators. In addition, ADX has turned down from a multi-year high of 65. These indicators suggest that the largest gains may well be over for the time being.
